DBRS Confirms Ratings on BHMS 2014-ATLS Mortgage Trust

DBRS Limited (DBRS) has today confirmed all classes of Commercial Mortgage Pass-Through Certificates issued by BHMS 2014-ATLS Mortgage Trust as follows:

-- Class A-FX at AAA (sf)
-- Class A-FL at AAA (sf)
-- Class X-CPFX at AAA (sf)
-- Class X-EXTFX at AAA (sf)
-- Class X-CPFL at AAA (sf)
-- Class X-EXTFL at AAA (sf)
-- Class B-FX at AA (low) (sf)
-- Class B-FL at AA (low) (sf)
-- Class C-FX at A (low) (sf)
-- Class C-FL at A (low) (sf)
-- Class D-FX at BBB (low) (sf)
-- Class D-FL at BBB (low) (sf)
-- Class E-FX at BB (low) (sf)
-- Class E-FL at BB (low) (sf)
-- Class F-FX at B (low) (sf)
-- Class F-FL at B (low) (sf)

All trends are Stable.

The rating confirmations reflect that the current performance of the transaction remains in line with DBRS expectations at issuance. The transaction closed in August 2014 and is interest only for the entire term. The transaction is secured by one loan – the Atlantis Resort (Atlantis) located on Paradise Island in the Bahamas. The collateral includes four unique hotel towers (Royal, Coral, Beach and The Cove) consisting of 2,917 rooms and an on-site amenity package including 39 restaurants and bars; a 60,000 square feet (sf) casino; a 141-acre Aquaventure Waterpark; 73,391 sf of retail space; and 458,000 sf of meeting and group space. Not included in the collateral are a condominium tower and a timeshare with an additional 887 rooms. Approximately 35.0% of the revenues are generated from the room nights. The majority of revenues is generated by the restaurants and bars, casino and water attractions. In addition to guests staying at the resort, the resort amenities are sold as packages to travelers aboard cruise ships, which dock near the subject during the day. The close proximity of the cruise ship terminal to the Atlantis creates consistent demand.

As of the August 2015 remittance, the YE2014 debt service coverage ratio was 3.44 times (x). According to the Smith Travel Research report, the trailing 12 months ending March 2015 occupancy for the Royal, Coral and Beach Towers was 70.0%, the average daily rate was $250.42 and the revenue per available room was $175.19. The remaining hotel tower, The Cove, which consists of 600 rooms and is considered the luxury tower, reported figures of 71.2%, $447.35 and $318.31, respectively.

At issuance, DBRS identified the expected future opening of the Baha Mar resort as a competitive threat to the subject. Baha Mar was scheduled to open for business in December 2014; however, the resort has yet to be completed and, in June 2015, the borrower filed for Chapter 11 bankruptcy protection amid disputes between the developer and the contractor, resulting in major delays for the project. As a result, existing guest reservations were cancelled and, in August 2015, it was reported that Rosewood Hotels and Resorts International, which was slated to be one of the hotel brands at the resort, wants to terminate its hotel agreement with the resort. Baha Mar would have been the first direct competitor of Atlantis located just 7.3 miles away.

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

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

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

The applicable methodologies are North American CMBS Rating Methodology (June 2015) and CMBS North American Surveillance (January 2015), which can be found on our website under Methodologies.