DBRS Confirms Ratings of SCG 2013-CWP Hotel Issuer Inc.

DBRS has today confirmed the ratings on the following classes of SCG 2013-CWP Hotel Issuer Inc.:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class B at AA (sf)
-- Class C at A (high) (sf)
-- Class D at BBB (sf)
-- Class E at BBB (low) (sf)
-- Class X at AAA (sf)

All trends are Stable. The Class X balance is notional.

The rating confirmations reflect the overall stable performance of the deal since issuance. The transaction consists of a single mortgage loan secured by five full-service hotel properties located in five urban Canadian markets: Westin Calgary; Westin Harbour Castle (Toronto); Westin Ottawa; Westin Bayshore (Vancouver); and Westin Edmonton. In addition to the mortgage loan, which has a current balance of $394.2 million, there is also $80.0 million of subordinate mezzanine debt held outside of the trust. As of YE2013 reporting, the combined net cash flow (NCF) for the portfolio has improved 8.8% over the DBRS underwritten NCF, and the properties generally continue to outperform their respective competitive sets in occupancy, average daily rate and revenue per available room. At YE2013, the portfolio debt service coverage ratio was 1.93 times.

The only hotel under renovation is the Westin Edmonton, with renovations currently 50% complete out of 72 total guest rooms. There are two hotel developments planned in Calgary, which are expected to increase the market supply by 560 rooms by the end of 2016, and two hotel developments planned in Toronto, which are expected to increase market supply by 973 rooms by the end of 2015. DBRS recognized the diversity of the collateral geographically and financially, with the largest NCF contributor representing 31.1% of the YE2013 reported NCF. The transaction also benefits from strong sponsorship and management in Starwood Capital Group and Westin Hotel Management, both of which are sophisticated and experienced operators in the hospitality industry.

DBRS continues to monitor this transaction in its Monthly CMBS Surveillance Report, with additional information on the DBRS viewpoint for this transaction, including details on the largest loans in the pool. The September 2014 Monthly CMBS Surveillance Report for this transaction will be published shortly. If you are interested in receiving this report, contact us at info@dbrs.com.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodologies are CMBS Rating Methodology (January 2012) and CMBS North American Surveillance (November 2012), which can be found on our website under Methodologies.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.