DBRS Upgrades Three and Confirms Six Classes of COMM 2012-MVP Mortgage Trust

DBRS Limited (DBRS) has today upgraded the ratings on following classes of Commercial Mortgage Pass-Through Certificates, Series 2012-MVP issued by COMM 2012-MVP Mortgage Trust:

-- Class B to AAA (sf) from AA (high) (sf)
-- Class C to AA (sf) from A (sf)
-- Class D to BBB (high) (sf) from BBB (sf)

DBRS has also confirmed the ratings on the following classes:

-- Class A at AAA (sf)
-- Class X-A-CP at AAA (sf)
-- Class X-A-EXT at AAA (sf)
-- Class X-B-CP at AAA (sf)
-- Class X-B-EXT at AAA (sf)
-- Class E at BBB (low) (sf)

All trends are Stable.

The rating upgrades reflect the overall performance of the transaction, which was originally secured by a single loan collateralized by three full-service hotels located within three separate urban markets. There has been increased credit enhancement since issuance largely attributed to the prepayment of the allocated balance, $47.2 million (representing 16.0% of the loan balance), for the Hyatt Regency St. Louis property. This prepayment combines with scheduled amortization for a total collateral reduction of 36.8% for the transaction since issuance. The remaining collateral for the loan consists of the Sheraton Dallas and the Sheraton Denver, both of which are discussed in greater detail below. The underlying loan has an original maturity date of November 2015; however, there is one 12-month extension option available. According to the Servicer, the Borrower is still looking at options at this time. The outlook for a refinance is considered strong, with a refinance debt service coverage ratio (DSCR) of 2.22 times (x) on the trust loan based on the YE2014 net cash flow figures for the two remaining properties.

The Sheraton Dallas is secured by a 1,840-key full-service hotel in Dallas, Texas, comprising three towers and a convention centre for a total of 1.6 million square feet. It is the largest hotel in the area with the Dallas Convention Center (DCC) located one mile from the subject. According to the Smith Travel Research (STR) report, the trailing 12-month (T-12) June 2015 occupancy, average daily rate (ADR) and revenue per available room (RevPAR) were 61.1%, $113.74 and $69.51, respectively. The occupancy, ADR and RevPAR for the competitive set over the same period were 61.6%, $159.53 and $98.23, respectively. Although the subject is underperforming its competitive set in the ADR and RevPAR categories, the occupancy has increased 6.6% over the previous 12 months and is above the occupancy at issuance of 50.0%.

As the largest hotel in the area, the subject has 233.0% more rooms than the average room count in its competitive set. The size of the hotel requires a different strategy in filling rooms through group rates that are likely contributing to lower ADR and RevPAR figures as compared with the other hotels in the competitive set. In addition, the Omni Dallas, a 1,001-key hotel was completed in 2011 and captures the majority of the demand in connection with the DCC because of its location right next to the convention center. The subject continues to perform well, however, with a YE2014 DSCR of 2.48x, which is consistent with the YE2013 DSCR of 2.46x.

The Sheraton Denver is a 1,231-key full-service hotel located in the Denver central business district comprising two buildings – The Plaza and The Tower. It is located just three blocks east of the Colorado Convention Center and has the largest amount of meeting space in the city. According to the STR report, the T-12 June 2015 occupancy, ADR and RevPAR were 77.3%, $150.50 and $116.31, respectively. Similar to the Sheraton Dallas, this subject underperforms in the ADR and RevPAR categories because of its size but is above the occupancy for its competitive set, which reported 73.9%, $166.61 and $123.19 for occupancy, ADR and RevPAR, respectively. Additionally, as compared with the prior year, the subject has reported positive percentage increases across all three categories. Although the YE2014 DSCR of 3.72x has declined slightly from the YE2013 DSCR of 3.98x, the subject continues to perform well.

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.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.