DBRS Morningstar Confirms Ratings on All Classes of LUXE Trust 2021-TRIP

DBRS Limited (DBRS Morningstar) confirmed its ratings on all classes of Commercial Mortgage Pass-Through Certificates, Series 2021-TRIP issued by LUXE Trust 2021-TRIP as follows:

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

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction, which has remained in line with DBRS Morningstar expectations since issuance. The loan is secured by the fee-simple leasehold interest in a portfolio of nine luxury resorts and high-quality full-service hotels, which consist of 3,269 rooms across five U.S. states. All hotels in the portfolio operate under nationally recognized flags, including the Four Seasons, Fairmont, Marriott (Ritz-Carlton), and Loews.

The interest-only (IO) loan of $1.8 billion has an initial term of 36 months, with two one-year extension options available. The loan proceeds were used to refinance $1.2 billion of existing debt, fund upfront reserves, and return approximately $500.0 million of equity to the sponsor. Based on the appraiser’s as-is valuation of $2.8 billion, the sponsor will have approximately $1.1 billion of unencumbered market equity remaining in the transaction. The property benefits from institutional-quality sponsorship by an affiliate of Strategic Hotels and Resorts (Strategic), which owns and manages 15 luxury hotels across North America and Europe. Strategic employs brand-specific hotel management companies to operate its management contracts and operating leases.

According to the May 2022 STR reports, the portfolio reported a trailing 12-month (T-12) ended May 31, 2022, weighted-average (WA) occupancy rate of 55.5%, average daily rate (ADR) of $680.40, revenue per available room (RevPAR) of $376.51, and a RevPAR penetration of 127.3%. This is an improvement from the T-12 ended August 31, 2021, WA occupancy rate, ADR, and RevPAR of 28.6%, $546.58, and $156.46, respectively. As of this review, six properties had RevPAR penetrations greater than 100%, which is comparable with historical trends. The loan reported T-12 ended March 31, 2022, net cash flow (NCF) of $145.8 million, compared with the DBRS Morningstar NCF of $141.7 million.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/396929/dbrs-morningstar-criteria-approach-to-environmental-social-and-governance-risk-factors-in-credit-ratings.

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

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

The DBRS Viewpoint platform provides additional information on this transaction and underlying loans including DBRS Morningstar metrics, commentary, servicer-reported cash flows, and other performance-related data. For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrsmorningstar.com.

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

The principal methodology is North American CMBS Surveillance Methodology (March 4, 2022), which can be found on dbrsmorningstar.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 Morningstar Global Structured Finance Related Methodologies document, which can be found on dbrsmorningstar.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 DBRS Morningstar Sovereign group releases baseline macroeconomic scenarios for rated sovereigns. DBRS Morningstar analysis considered impacts consistent with the baseline scenarios as set forth in the following report: https://www.dbrsmorningstar.com/research/384482.

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 [email protected].

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar 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.dbrsmorningstar.com or contact us at [email protected].

DBRS Limited
DBRS Tower, 181 University Avenue, Suite 700
Toronto, ON M5H 3M7 Canada
Tel. +1 416 593-5577