DBRS Confirms All Classes of BX Trust 2018-GW

DBRS Limited (DBRS) confirmed the ratings on the Commercial Mortgage Pass-Through Certificates, Series 2018-GW issued by BX Trust 2018-GW as follows:

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

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction since issuance. This transaction closed in May 2018, with an original trust balance of $510.5 million. The subject loan consists of a $510.5 million first mortgage and $289.5 million in mezzanine debt, totalling $800.0 million in financing. The collateral for this transaction is the Grand Wailea, a 776-key luxury beachfront resort located in Maui. There are an additional 120 villas that are third-party-owned and are not collateral; however, 62 participate in a rental management program whereby the hotel receives a fee for use of its amenity space. The underlying loan is interest-only (IO) throughout the term, structured with an initial 24-month term and five one-year extension options. The loan in sponsored by Blackstone Real Estate Partners, which acquired the portfolio from GIC Private Limited. The hotel has been managed by Waldorf Astoria, an affiliate of Hilton Worldwide Holdings Inc., since 2013, with the current management agreement running through 2024 with one ten-year extension option remaining.

The hotel received over $61.1 million ($78,700 per key) of capital investment in the five years prior to this securitization, including approximately $22.6 million ($29,182 per key) since 2015, allocated to guest rooms and suites. Per the trailing 12 months ending December 2018 Smith Travel Research (STR) report, the subject reported an occupancy rate, average daily rate (ADR) and revenue per available room (RevPAR) of 89.6%, $521.10 and $466.87, respectively, compared with the competitive set figures of 86.7%, $538.33 and $466.91. In addition, the subject has experienced improvements in occupancy of 3.7% (year over year (YOY)), ADR of 6.7% (YOY) and RevPAR of 11.2% (YOY) compared to the figures per the December 2017 STR report. According to the YE2018 financials, the loan is reporting a debt service coverage ratio (DSCR) of 1.80 times (x), compared with the DBRS Term DSCR at issuance of 1.59x. The increase in cash flow from issuance is driven by higher occupancy and ADR as annualized room revenue increased 13.1% ($14 million).

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.

DBRS provides updated analysis and in-depth commentary in the DBRS Viewpoint platform for this transaction.

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 commercial mortgage backed security (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 Methodology, 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. Please note a sensitivity analysis is not performed for CMBS bonds rated CCC or lower. The DBRS long-term rating scale definition indicates that ratings of CCC or lower are assigned when the bond is highly likely to default or default is imminent, thereby prevailing over a sensitivity analysis.

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

DBRS Limited
DBRS Tower, 181 University Avenue, Suite 700
Toronto, ON M5H 3M7 Canada