Morningstar DBRS Confirms Credit Ratings on All Classes of WSTN Trust 2023-MAUI

DBRS Limited (Morningstar DBRS) confirmed its credit ratings on the Commercial Mortgage Pass-Through Certificates, Series 2023-MAUI issued by WSTN Trust 2023-MAUI as follows:

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

All trends are Stable.

The credit rating confirmations and Stable trends reflect Morningstar DBRS' view that, despite the significant impact to the property's revenue related to the wildfires that broke out on the island of Maui in August 2023 and the effects that had on tourism, the underlying hotel was not damaged and is generally well positioned to capture increased demand as travel begins to rebound. As such, Morningstar DBRS did not update the loan-to-value (LTV) sizing benchmarks as part of this review.

The transaction is secured by a 771-key, full-service resort and spa located on the island of Maui. Built in 1971, the Westin Maui Resort & Spa, Ka'anapali offers 700 feet (ft) of direct ocean frontage on the Ka'anapali Beach on an outer island. The resort offers two guest room buildings, the Hokupa'a and Ocean Towers. In 2021, the sponsors, Oaktree Capital Management, LP and Trinity Investments LLC, completed a $121.0 million capital improvement plan that included a full renovation of the Hokupa'a Tower and comprehensive upgrades to the common areas and amenities. Shortly after completing the capital improvement plan, the sponsors invested an additional $29.0 million to renovate the Ocean Tower and revamp the vacant retail and office space into a multifunctional entertainment complex, including bowling lanes, arcade games, and virtual golf suites. The resort features six outdoor pools overlooking Ka'anapali Beach, a 270-ft water slide, six food and beverage (F&B) outlets; 68,000 square feet (sf) of indoor and outdoor event space for various events; an award-winning, full-service spa with nine treatment rooms; a fitness center; 20,000 sf of retail space; and preferred access to the Ka'anapali Golf Courses.

The four-year, fixed-rate loan is interest-only (IO) through its maturity in July 2027, with no extension options available. Loan proceeds of $515.0 million were used to repay the existing debt of $362.5 million, return $144.9 million of equity to the sponsor, and cover closing costs associated with the transaction. Like most beachfront developments in Hawaii, the collateral is encumbered by a ground lease. The ground lease is scheduled to expire on December 31, 2086, and contains rent provisions that escalate at five-year intervals. Terms for the lease require the greater of (1) annual minimum rent of $4.5 million between January 1, 2019, and December 31, 2026, or (2) percentage rent equal to the sum of the percentages of gross revenues: 6.0% of rooms revenue, 4.0% of F&B revenue, 10.0% of other revenue, and 25.0% of concessions.

The resort experienced a contraction in operating performance during the past couple of years as a result of business interruptions related to wildfires that broke out on Maui in August 2023. The fires closed down the island to visitors for several months with significant impacts on Maui's economy, which relies heavily on tourism. According to the Hawaii Department of Business, Economic Development, Tourism, however, the island of Maui had 235,370 tourists in March 2025, representing an 11.3% growth over the March 2024 figure of 211,498. While this figure is less than the 271,934 visitors (-13.4%) reported pre-COVID-19 pandemic in March 2019, signs of recovery are evident, with the Hawaii Tourism Authority recently announcing a $6.0 million marketing campaign to accelerate Maui's tourism recovery.

The loan is currently being monitored on the servicer's watchlist, given the low debt service coverage ratio, most recently reported at 1.04 times based on the trailing 12 months ended March 31, 2025. Based on the same reporting, the loan reported a net cash flow (NCF) of $42.1 million, significantly less than the Morningstar DBRS Derived NCF at issuance of $57.9 million. However, departmental revenue of $182.2 million has surpassed the Morningstar DBRS figure of $180.2 million, with the performance decline primarily stemming from increased expenses, driven by promotional offers and discounts provided to attract customers. Per the December 2024 STR, Inc. report, the portfolio's reported weighted-average occupancy rate, average daily rate, and revenue per available room (RevPAR) metrics were 65.2%, $517, and $338, respectively, which is higher than the performance of the property's competitive set with reported figures of 62.2%, $391, $243 respectively. At issuance, Morningstar DBRS concluded to a stabilized RevPAR figure of $459.

At issuance, Morningstar DBRS derived a value of $677.2 million based on a capitalization rate of 8.6% and a Morningstar DBRS NCF of $57.9 million. The Morningstar DBRS Value represents a -26.3% variance from the issuance appraised value of $918.9 million. The resulting Morningstar DBRS LTV Ratio was 76.1% compared with the LTV ratio of 56.0%, based on the appraised value at issuance. Morningstar DBRS maintained positive qualitative adjustments totaling 8.25% to reflect the high quality of the asset, strong historical cash flows, and Maui's tourism-driven economy, which welcomed more than 2.9 million visitors in 2022.

Morningstar DBRS' credit ratings on the applicable classes address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. Where applicable, a description of these financial obligations can be found in the transactions' respective press releases at issuance.

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.

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 Factors in Credit Ratings (May 16, 2025), https://dbrs.morningstar.com/research/454196.

Classes X-CP and X-NCP 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 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 U.S. dollars unless otherwise noted.

The principal methodology is North American CMBS Surveillance Methodology (February 28, 2025), https://dbrs.morningstar.com/research/448963.

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

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@morningstar.com.

The credit ratings were initiated at the request of the rated entity.

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

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

These are solicited credit ratings.

For more information on Morningstar DBRS' policy regarding the solicitation status of credit ratings, please refer to the Credit Ratings Global Policy, which can be found in the Morningstar DBRS Understanding Ratings section of the website: https://dbrs.morningstar.com/understanding-ratings

Please see the 17g-7 disclosure report and/or the related appendix for additional information regarding the sensitivity of assumptions used in the credit rating process.

As applicable, the conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. Morningstar DBRS' outlooks and credit ratings are monitored.

DBRS Limited
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Toronto, ON M5H 3M7 Canada
Tel. +1 416 593-5577

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, 2024), https://dbrs.morningstar.com/research/438283
-- Morningstar DBRS North American Commercial Real Estate Property Analysis Criteria (September 19, 2024), https://dbrs.morningstar.com/research/439702
-- North American Single-Asset/Single-Borrower Ratings Methodology (February 28, 2025), https://dbrs.morningstar.com/research/448962
-- Legal Criteria for U.S. Structured Finance (December 3, 2024), https://dbrs.morningstar.com/research/444064

A description of how Morningstar DBRS analyzes structured finance transactions and how the methodologies are collectively applied can be found at (July 2023): https://dbrs.morningstar.com/research/417279.

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