DBRS Confirms All Classes of J.P. Morgan Chase Commercial Mortgage Securities Trust 2017-MAUI with Stable Trends

DBRS Limited (DBRS) confirmed the ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2017-MAUI (the Certificates) issued by J.P. Morgan Chase Commercial Mortgage Securities Trust 2017-MAUI:

-- Class A at AAA (sf)
-- Class B at AA (high) (sf)
-- Class C at A (high) (sf)
-- Class X at A (sf)
-- Class D at A (low) (sf)
-- Class E at BB (sf)
-- Class F at B (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction since issuance. This transaction closed in July 2017 at an original trust balance of $469.0 million, with two mezzanine loans totalling $131.0 million held outside of the trust. The collateral for this transaction is the Four Seasons Resort (the Four Seasons) located on Wailea Beach on the island of Maui in the state of Hawaii. The underlying trust loan is interest-only (IO) throughout the term, structured with a two-year initial term with five one-year extension options. The loan is sponsored by MSD Capital, a private equity firm founded by Michael Dell.

The five-star oceanfront resort is one of the premier resorts on the island and is the only AAA Five-Diamond and Forbes Travel Guide Five-Star luxury resort in Maui. The borrower, MSD Capital, owns a fee simple interest on the 16.2-acre beachfront parcel, which is rare in Hawaii. The hotel management agreement with the Four Seasons runs through March 2025 with two 15-year extension options remaining.

Per the trailing-12 months (T-12) Smith Travel Research report dated January 2018, the subject is reporting an occupancy rate, average daily rate and revenue per available room (RevPAR) of 87.0%, $957 and $832, respectively. The subject is outperforming its competitive set and has seen its occupancy rate and RevPAR increase 8.3% and 17.3% year over year, respectively. Maui also experienced an improvement in the number of annual visitors from 2015 to 2016 as the island attracted a total of 2.7 million visitors in 2016, a 3.8% increase from 2.6 million visitors in 2015.

The T-12 financial statement dated March 2018 shows the whole loan is reporting a debt service coverage ratio (DSCR) of 2.09 times (x) compared with the YE2017 DSCR of 1.87x and DBRS Term DSCR at issuance of 1.96x. The net cash flow improvement is attributed to an occupancy rate improvement and increased income from food and beverage. Operating expenses also increased 4.1% due to increased management fees and labour costs. The servicer reports the actual DSCR for the T-12 March 2018 totalled 2.11x due to lower variable interest rates.

Class X is an IO certificate that references a single rated tranche or multiple rated tranches. The IO rating mirrors the lowest-rated applicable reference obligation tranche adjusted upward by one notch if senior in the waterfall.

All ratings will be subject to ongoing surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed or discontinued by DBRS.

As part of this review, DBRS has provided updated analysis and in-depth commentary in the DBRS Viewpoint platform for this transaction.

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

The principal methodology is CMBS North American Surveillance, which can be found on dbrs.com under Methodologies. For a list of the Structured Finance related methodologies that may be used during the rating process, please see the DBRS Global Structured Finance Related Methodologies document on www.dbrs.com. Please note that not every related methodology listed under a principal Structured Finance asset class methodology may be used to rate or monitor an individual structured finance or debt obligation.

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 under Related Documents or by contacting us at info@dbrs.com.

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

The rated entity or its related entities did participate in the rating process for this rating action. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

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