Fitch Assigns Final Ratings to GSCCRE Commercial Mortgage Trust 2015-HULA
--$131,000,000a class A notes 'AAAsf'; Outlook Stable;
--$243,915,485ab class X-CP notes 'B-sf'; Outlook Stable;
--$243,915,485ab class X-NCP notes 'B-sf'; Outlook Stable;
--$26,000,000a class B notes 'AA-sf'; Outlook Stable;
--$19,000,000a class C notes 'A-sf'; Outlook Stable;
--$29,000,000a class D notes 'BBB-sf'; Outlook Stable;
--$44,000,000a class E notes 'BB-sf'; Outlook Stable and
--$51,000,000a class F notes 'B-sf'; Outlook Stable
a Privately placed pursuant to Rule 144A.
b Notional amount and interest-only.
The ratings are based upon information provided as of Aug. 13, 2015.
The certificates represent the beneficial ownership in the trust, the primary asset of which is one loan having an aggregate trust principal balance of $300 million as of the cutoff date. The trust is primarily secured by the fee and leasehold interests in the 243 room Four Seasons Hualalai Resort, the Hualalai club operations and associated facilities and approximately 55 acres of residential land and five acres of unimproved commercial land parcels located along the Kohala Coast of the Big Island of Hawaii.
The loan is sponsored by MSD Capital, L.P. The sponsor was formed in 1998 and is affiliated with Michael S. Dell. Affiliates of MSD also own Four Seasons Resorts Maui and the Fairmont Miramar hotel in Santa Monica, CA.
KEY RATING DRIVERS
Superior Asset Quality and Amenities: The Four Seasons Hualalai enjoys a premier location along the oceanfront in Kailua-Kona on the Big Island of Hawaii. With meticulously groomed grounds and well-maintained structures, the resort offers a true high-end luxury option not found elsewhere on the island. Amenities include multiple pools and food and beverage (F&B) outlets, a 28,000-square-foot spa, tennis courts and two golf courses.
Market Positioning: The hotel is one of the top-performing hotels within the Four Seasons brand and outperforms three separate competitive sets composed of local, statewide and high-end luxury properties across North America, with revenue per available room (RevPAR) penetration levels of 481.1%, 236.5% and 175.0%, respectively, as of the trailing 12-month (TTM) period ended June 2015.
Nontraditional Collateral Components: The collateral for the loan also includes the private membership Hualalai Club (318 current members) and 55 acres of fee simple residential land as well as five acres of unimproved commercial land parcels. The club net cash flow (NCF) represents less than 3.0% of total hotel revenue. Future lot sales are expected to result in loan paydown equal to approximately 50% of the sale proceeds for each parcel sold.
Trust Leverage and Basis: Fitch's stressed DSCR and LTV for the trust component of the debt are 1.05x and 100.4%, respectively, and the debt per key is $1.2 million.
Fitch found that the property could withstand a 79.2% decline in value and an approximate 65.8% decline in Fitch's implied net cash flow prior to experiencing $1 of loss to the 'AAAsf' rated class. Fitch performed several stress scenarios in which the Fitch net cash flow (NCF) was stressed. Fitch determined that a 43.5% reduction in Fitch's implied NCF would cause the notes to break even at a 1.0x debt service coverage ratio (DSCR), based on the actual debt service.
Fitch evaluated the sensitivity of the ratings for class A and found that an 8.1 % decline in Fitch's implied NCF would result in a one-category downgrade, while a 36.8% decline would result in a downgrade to below investment grade.
The Rating Sensitivity section in the presale report includes a detailed explanation of additional stresses and sensitivities. Key Rating Drivers and Rating Sensitivities are further described in the accompanying presale report. The presale report is available to all investors on Fitch's web site 'www.fitchratings.com'.
DUE DILIGENCE USAGE
Fitch was provided with third-party due diligence information from KPMG LLP. The third-party due diligence information was provided on ABS Due Diligence Form-15E and focused on a comparison and re-computation of certain characteristics with respect to the mortgage loan and related mortgaged properties in the data file. Fitch considered this information in its analysis, and the findings did not have an impact on our analysis.