DBRS Confirms All Classes of J.P. Morgan Chase Commercial Mortgage Securities Trust 2018-ASH8

DBRS Limited (DBRS) confirmed the ratings on all of the following classes of the Commercial Mortgage Pass-Through Certificates, Series 2018-ASH8 issued by J.P. Morgan Chase Commercial Mortgage Securities Trust 2018-ASH8:

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

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction since issuance. The deal closed in February 2018 with an original trust balance of $395.0 million, and loan proceeds were used to refinance $378.9 million of existing portfolio debt, cover closing costs and fund an upfront reserve of $5.8 million. Approximately $2.5 million of the reserves funded a property improvement plan for Embassy Suites Crystal City (11.7% of total loan amount). The loan is a two-year interest-only (IO) floating-rate loan with five one-year extension options. The collateral set remains unchanged from issuance and consists of eight full-service hotels, totalling 1,964 keys across six states and eight metropolitan statistical areas. The portfolio benefits from a diverse collateral set under multiple hotel brands and flags (including Embassy Suites by Hilton, Crowne Plaza, Hilton and Sheraton) and one operating as an independent establishment.

At issuance, the DBRS Term Debt Service Coverage Ratio (DSCR) and DBRS Debt Yield were 1.58 times (x) and 9.1%, respectively. Per the trailing nine-month (T-9) ending September 2018 annualized financials, the loan reported a DSCR and debt yield of 1.50x and 9.6%, respectively, with net cash flow (NCF) growth of 5.7% over the DBRS NCF figure derived at issuance.

As of the October 2018 Smith Travel Research (STR) report, by allocated loan balance, the portfolio reported a trailing 12-month (T-12) weighted-average (WA) occupancy, average daily rate (ADR) and revenue-per-available-room (RevPAR) of 78.9%, $185.83 and $142.28, respectively, compared with the T-12 WA occupancy, ADR and RevPAR of 82.8%, $184.08 and $152.49, respectively, per the November 2017 STR report.

There were three properties that had notable performance declines per the T-9 ending September 2018 financials: Embassy Suites Portland Downtown (22.4% of total loan amount), Hilton Orange County Costa Mesa (16.6% of total loan amount) and Sheraton Minneapolis (5.3% of total loan amount). The performance decline was attributed to lower occupancy as a result of new supply added to their respective markets. Cash flow swings for hospitality property types are not uncommon given the partial-year financials.

Classes X-CP and X-EXT are IO certificates that reference 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 are subject to 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 the following loans in the transaction:

-- Embassy Suites Portland Downtown (22.4% of total loan amount)
-- Hilton Orange County Costa Mesa (16.6% of total loan amount)
-- Sheraton Minneapolis (5.3% of total loan amount)

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrs.com. The platform includes loan-level data for most outstanding CMBS transactions (including non-DBRS rated), as well as loan-level and transaction-level commentary for most DBRS-rated and -monitored transactions.

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

The principal methodology North American CMBS Surveillance, which can be found on www.dbrs.com under Methodologies & Criteria. 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, which can be found on www.dbrs.com in the Commentary tab under Regulatory Affairs. 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.

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.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.

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

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