Press Release

Morningstar DBRS Assigns Provisional Credit Ratings to BAMLL Commercial Mortgage Securities Trust 2024-NASH

CMBS
May 29, 2024

DBRS, Inc. (Morningstar DBRS) assigned provisional credit ratings to the following classes of Commercial Mortgage Pass-Through Certificates, Series 2024-NASH (the Certificates) to be issued by BAMLL Commercial Mortgage Securities Trust 2024-NASH (the Trust):

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

All trends are Stable.

CREDIT RATING RATIONALE/DESCRIPTION

The collateral for the BAMLL 2024-NASH transaction is secured by the borrower’s fee-simple, leasehold, and condominium interests and the Operating Lessee’s leasehold interests in the Renaissance Nashville hotel, encompassing 674 keys. The upper-upscale hotel is well situated within downtown Nashville, adjacent to Broadway, and within walking distance to Music City Hall, the main convention center of Nashville. Renaissance Nashville hotel has long been viewed as an anchor in downtown Nashville’s lodging market. Morningstar DBRS has a positive view on the collateral considering its favorable location and believes that the recent property improvements should support the property’s financial performance and competitiveness in the growing Nashville market.

The subject rebranded as the Renaissance Nashville Hotel in 1996, and was connected to the old Nashville convention center. While the old convention center was razed in 2017 and moved to Music City Hall, Renaissance Nashville consolidated and renovated some meeting spaces of the old convention center along with its lobby and F&B outlets. Since 2019, the property has undergone renovation projects to update the lobby and restaurants, add a presidential suite, and broader property upgrades.

The hotel features two F&B outlets, Little Fib and Bridge Bar, a retail shop, the Five Chords Mercantile, 112,498 sf of meeting spaces including ballrooms and breakout rooms used for large events, a fitness center, a complementary lounge, and an indoor pool with sundecks, which is expected to be open to guests by May 2024. Its prime location, renowned meeting spaces, and comprehensive amenity package have made Renaissance Nashville one of the best performing hotels under the Renaissance brand.

The subject mortgage loan of $267.2 million will be used to retire $241.7 million of existing BAMLL 2019-AHT debt, return $16.9 million of equity to the sponsor, and cover closing costs of approximately $8.6 million. The loan is a two-year floating-rate IO mortgage loan, with three one-year extension options. The floating rate will be based on the one-month Secured Overnight Financing Rate (SOFR) plus the initial weighted-average component spread, which is 3.98%. The borrower will be required to purchase an interest rate cap agreement, with one-month Term SOFR strike price of 5.00%, which as of the date of this report is below the spot rate.

Ashford Hospitality Limited Partnership (Ashford) is the Borrower Sponsor for this transaction. Headquartered in Dallas, TX, Ashford and its predecessor companies had over 50 years in the hotel business. Externally advised by Ashford Inc., Ashford benefited from successful transaction track record, disciplined capital market activities, and managed economic downturns. As of March 2024, Ashford has interests in 75 hotels totaling approximately 18,000 keys across different markets.

In 2019, prior to the COVID-19 pandemic, the subject reported an occupancy rate of 85.3%, ADR of $246.53, and resulting RevPAR of $210.17. While occupancy has declined since 2019, the sponsor has been successful in achieving an ADR that is above the pre-pandemic level. The property achieved a RevPAR of $230.93 as of the T-12 ended March 31, 2024, compared with a RevPAR of $210.17 in 2019 and a RevPAR of $49.15 in 2020. Morningstar DBRS believes that the room rate has been normalizing because of the phasing out of the pent-up transient demand witnessed in the first half of 2023 as a result of the removal of the pandemic-related travel restrictions, as evidenced by the RevPAR of $230.33 in 2023, which was almost in line with the RevPAR of $230.93 as of the T-12 ended March 31, 2024. Morningstar DBRS expects moderate room rate growth because of the subject’s location, capital improvements, and experienced sponsorship. Morningstar DBRS concluded to a RevPAR of $222.41, which is +5.8% above the 2019 level and -3.7% lower than the March 2024 T-12 level.

Morningstar DBRS’ credit rating on the Certificates addresses the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. The associated financial obligations are the related Principal Amounts and the Interest Distribution Amounts for the rated classes.

Morningstar DBRS’ credit rating does not address nonpayment risk associated with contractual payment obligations contemplated in the applicable transaction document(s) that are not financial obligations. For example, Morningstar DBRS’ ratings do not address the payment of Spread Maintenance Premiums.

Morningstar DBRS’ long-term credit ratings provide opinions on risk of default. Morningstar DBRS considers risk of default to be the risk that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued. The Morningstar DBRS short-term debt rating scale provides an opinion on the risk that an issuer will not meet its short-term financial obligations in a timely manner.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS

There were no Environmental/Social/Governance factor(s) that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (January 23, 2024) https://dbrs.morningstar.com/research/427030/morningstar-dbrs-criteria:-approach-to-environmental,-social,-and-governance-risk-factors-in-credit-ratings

Classes X-CP, and X-NCP are interest-only (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 credit ratings are subject to surveillance, which could result in credit ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by Morningstar DBRS.

Notes:
All figures are in US Dollars unless otherwise noted.

The principal methodology is North American Single-Asset/Single-Borrower Ratings Methodology (March 01, 2024) https://dbrs.morningstar.com/research/428799/north-american-single-assetsingle-borrower-ratings-methodology

Other methodologies referenced in this transaction are listed at the end of this press release.

With regard to due diligence services, Morningstar DBRS was provided with the Form ABS Due Diligence-15E (Form-15E), which contains a description of the information that a third party reviewed in conducting the due diligence services and a summary of the findings and conclusions. While due diligence services outlined in Form-15E do not constitute part of Morningstar DBRS’ methodology, Morningstar DBRS used the data file outlined in the independent accountant’s report in its analysis to determine the credit ratings referenced herein.

The credit rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for this credit rating action.

Morningstar DBRS had access to the accounts, management and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is a solicited credit rating.

A provisional credit rating is not a final credit rating with respect to the above-mentioned securities and may change or be different than the final credit rating assigned or may be discontinued. The assignment of the final credit ratings on the above-mentioned securities are subject to receipt by Morningstar DBRS of all data and/or information and final documentation that Morningstar DBRS deems necessary to finalize the credit ratings.

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

DBRS, Inc.
22 West Washington Street
Chicago, IL 60602 USA
Tel. +1 312 332-3429

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

North American Commercial Mortgage Servicer Rankings (August 23, 2023)
https://dbrs.morningstar.com/research/419592/north-american-commercial-mortgage-servicer-rankings

DBRS Morningstar North American Commercial Real Estate Property Analysis Criteria (September 22, 2023)
https://dbrs.morningstar.com/research/420982/dbrs-morningstar-north-american-commercial-real-estate-property-analysis-criteria

Rating North American CMBS Interest-Only Certificates (December 13, 2023)
https://dbrs.morningstar.com/research/425261/rating-north-american-cmbs-interest-only-certificates

Legal Criteria for U.S. Structured Finance (April 15, 2024)
https://dbrs.morningstar.com/research/431205/legal-criteria-for-u.s.-structured-finance

For more information on this credit or on this industry, visit dbrs.morningstar.com or contact us at [email protected].

ALL MORNINGSTAR DBRS RATINGS ARE SUBJECT TO DISCLAIMERS AND CERTAIN LIMITATIONS. PLEASE READ THESE DISCLAIMERS AND LIMITATIONS AND ADDITIONAL INFORMATION REGARDING MORNINGSTAR DBRS RATINGS, INCLUDING DEFINITIONS, POLICIES, RATING SCALES AND METHODOLOGIES.