KBRA Assigns Preliminary Ratings to PGA 2024-RSR2
May 21 2024 - 1:44PM
Business Wire
KBRA announces the assignment of preliminary ratings to 10
classes of PGA 2024-RSR2, a CMBS single-borrower
securitization.
The collateral for the transaction is a $315.0 million
non-recourse, first lien mortgage loan that is expected to be
co-originated by Morgan Stanley Bank, N.A. and Wells Fargo Bank,
National Association. The floating rate loan is expected to have a
two-year initial term with three 12-month extension options and
require monthly interest-only payments. The mortgage loan will be
secured by the borrower’s fee simple interest in PGA National
Resort, located in Palm Beach Gardens, Florida. The subject
property, which opened in 1981, features 360 keys, eight food &
beverage outlets, six golf courses totaling 99 holes, golf
clubhouse, approximately 60,000 sf of meeting space, four pools, a
40,000 sf full-service spa, a 35,000 sf fitness, sports and racquet
club facility with 16 tennis courts, 12 pickleball courts and a
five-lane swimming pool, and several retail shops. The property
also features a private membership club and vacation home rentals
that participate in a hotel-managed rental program. Between 2019
and 2023, the property underwent a $113.0 million comprehensive
renovation. For the TTM 3/2024 period, the subject property
achieved an occupancy of 60.9% with an ADR of $324.11, resulting in
a revenue per available room (PAR) of $197.43. As of the TTM 1/2024
period, the property achieved occupancy, ADR and RevPAR penetration
rates of 96.7%, 103.8% and 100.3%, respectively.
KBRA’s analysis of the transaction included a detailed
evaluation of the property’s cash flows using our U.S. CMBS
Property Evaluation Methodology, and the application of our U.S.
CMBS Single Borrower & Large Loan Rating Methodology. In
addition, KBRA also relied on its Global Structured Finance
Counterparty Methodology for assessing counterparty risk in this
transaction, its Methodology for Rating Interest-Only Certificates
in CMBS Transactions, and its ESG Global Rating Methodology, to the
extent deemed applicable.
The results of our analysis yielded a KBRA net cash flow (KNCF)
for the subject of approximately $28.3 million, which is 15.0%
below the issuer’s NCF, and a KBRA value of approximately $283.2
million, which is 40.0% below the appraiser’s as-is value. The
resulting in-trust KBRA Loan to Value (KLTV) is 111.2%. In our
analysis of the transaction, we also reviewed and considered third
party engineering, environmental, and appraisal reports, the
results of our site inspection of the property, and legal
documentation review.
To access rating and relevant documents, click here.
Click here to view the report.
Methodologies
- CMBS: U.S. CMBS Property Evaluation Methodology
- CMBS: U.S. CMBS Single Borrower & Large Loan Rating
Methodology
- CMBS: Methodology for Rating Interest-Only Certificates in CMBS
Transactions
- Structured Finance: Global Structured Finance Counterparty
Methodology
- ESG Global Rating Methodology
Disclosures
Further information on key credit considerations, sensitivity
analyses that consider what factors can affect these credit ratings
and how they could lead to an upgrade or a downgrade, and ESG
factors (where they are a key driver behind the change to the
credit rating or rating outlook) can be found in the full rating
report referenced above.
A description of all substantially material sources that were
used to prepare the credit rating and information on the
methodology(ies) (inclusive of any material models and sensitivity
analyses of the relevant key rating assumptions, as applicable)
used in determining the credit rating is available in the
Information Disclosure Form(s) located here.
Information on the meaning of each rating category can be
located here.
Further disclosures relating to this rating action are available
in the Information Disclosure Form(s) referenced above. Additional
information regarding KBRA policies, methodologies, rating scales
and disclosures are available at www.kbra.com.
About KBRA
Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit
rating agency registered with the U.S. Securities and Exchange
Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is
registered as a CRA with the European Securities and Markets
Authority. Kroll Bond Rating Agency UK Limited is registered as a
CRA with the UK Financial Conduct Authority. In addition, KBRA is
designated as a designated rating organization by the Ontario
Securities Commission for issuers of asset-backed securities to
file a short form prospectus or shelf prospectus. KBRA is also
recognized by the National Association of Insurance Commissioners
as a Credit Rating Provider.
Doc ID: 1004401
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Analytical Contacts
Laura Wolinsky, Senior Director (Lead Analyst) +1 646-731-2379
laura.wolinsky@kbra.com
Samuel O'Connell, Associate +1 646-731-1300
samuel.oconnell@kbra.com
Nitin Bhasin, Senior Managing Director, Global Head of CMBS
(Rating Committee Chair) +1 646-731-2334 nitin.bhasin@kbra.com
Business Development Contact
Daniel Stallone, Managing Director +1 646-731-1308
daniel.stallone@kbra.com