Morningstar DBRS Assigns Provisional Credit Ratings to BOCA Commercial Mortgage Trust 2024-BOCA

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

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

All trends are Stable.

The Trust is secured by the borrower's fee-simple interest in a 1,047-key full-service resort and private, members-only Boca Raton Club. Adjacent to the blue water of the Atlantic Ocean, the luxury resort is well located in the coastline of Miami-Fort Lauderdale-West Palm Beach, conceptualizing the allure of a premier South Florida resort. The Boca Raton Club attracts wealthy family who relocated to South Florida post pandemic, making the resort one of the most renowned social occasions for wealthy locals and individuals nationwide in South Florida. Morningstar DBRS expects its competitive position to persist given the transformative capital improvements at the property.

Originally opened as the Ritz-Carlton Cloister Inn in 1926 and situated on approximately 165 acres, the resort features 1,047 total keys and approximately 120,000 sf of event space. The property also hosts the Boca Raton Club, with approximately 4,000 active memberships as of May 2024 representing approximately 12,000 individual members. The Club features amenities such as a new Pool Club along with several F&B venues providing a lazy river, three pools, a splash pad, a FlowRider, waterslides, separate kids and teen clubs, cabanas, an event lawn, a poolside F&B experience, and a rooftop bar and sundeck. The Club's amenities are generally available to club members and hotel guests, and guests of each. The Property also features five additional pools, an approximately 50,000 SF spa, an 18-hole golf course, 16 tennis courts, four pickleball courts, and several retail outlets. Since the sponsor's acquisition in June 2019, the sponsor committed approximately $378 million (approximately $276 million spent with an additional approximately $102 million anticipated) in capex to enhance guest rooms and resort-wide amenities and services. The sponsor's unwavering commitment to conceptualizing the luxurious South Florida resort experience has earned the resort various five-star ratings by the Forbes Travel Guide.

The subject mortgage loan of $1.0 billion will be used to retire $900 million of existing debt, return $64.6 million of cash equity to the sponsor, cover $35.2 million of closing costs, and fund an upfront membership fee refund reserve of $166,000. 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 WA component spread, which is assumed to be 2.90%. The borrower will be required to enter into an interest rate cap agreement, with a one-month Term SOFR strike price of 3.00% during the initial term, and for each extension term, the strike price equal to the greater of 4.50% and a strike rate that, when added to the spread of each component, results in a minimum DSCR of 1.10x on the Mortgage Loan, which as of the date of this report is less than the spot rate.

The sponsor for this transaction is an affiliate of BDT and MSD, a merchant bank with an advisory and investment platform built to serve the distinct needs of business owners and strategic, long-term investors. BDT & MSD was established in 2023 through the combination of BDT & Company, the merchant bank to the closely held, founded in 2009 by Byron Trott, and MSD Partners, an investment firm that since 2009 invested on behalf of Dell Technologies Founder Michael Dell, his family, and other investors. The resort is independently flagged and managed by an affiliate of the sponsor.

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 Principle Distribution Amounts and Interest Distribution Amounts for the rated classes.

Morningstar DBRS' credit rating does not address non-payment risk associated with contractual payment obligations contemplated in the applicable transaction document(s) that are not financial obligations. For example, 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

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 (July 11, 2024) https://dbrs.morningstar.com/research/436004

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 final credit ratings on the above-mentioned securities is 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
-- Legal Criteria for U.S. Structured Finance (April 15, 2024),
https://dbrs.morningstar.com/research/431205
-- Morningstar DBRS North American Commercial Real Estate Property Analysis Criteria (June 28, 2024),
https://dbrs.morningstar.com/research/435293

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