A commercial mortgage loan financing 19 hotel properties, will secure a $913 million, commercial mortgage-backed securities deal from the KSL Commercial Mortgage Trust, 2023-HT.
KSL Capital Partners, which indirectly own or control the 19 special purpose entities that are also borrowers, is sponsoring the deal, according to ratings analysts from S&P Global Ratings.
Citigroup Global Markets and Wells Fargo Securities are managers on the deal, and their related entities are also loan sellers to the transaction, according to the Asset Securitization Report's deal database.
The underlying mortgage is a two-year, floating-rate commercial mortgage loan that is slated to mature on Dec. 9, 2025, and the loan has three one-year extension options. The extension options are subject to the borrowers providing a replacement interest rate cap agreement. For the second and third extension options, the debt yield must be at least 9.50% and 10.0%, respectively. The loan is interest-only for its entire term, and has an interest rate equal to a one-month term Secured Overnight Financing Rate (SOFR), plus a 3.668% spread.
The transaction has additional debt, a $204 million mezzanine loan, S&P said.
As for the notes' payment structure, KSL Commercial Mortgage Trust will comply with risk retention requirements through the HRR certificates, the eligible horizontal residual interest. The transaction has a total required credit risk retention percentage of 5.0%, S&P said. KSL's initial 30.0% of principal prepayments will be distributed to the certificates pro rata and pari passu. After that, principal payments will be made sequentially to the classes A, B, C, D, E and HRR certificates.
S&P notes that the mortgage loan has a low leverage, a 79.8% loan-to-value ratio, which drops to 49.5% when based on the aggregate "as-is" appraised value of $1.19 billion, and 43% when based on the aggregate "as-stabilized" appraised value of $1.69 billion.
The rating agency also points out that the portfolio is somewhat granular, with the largest assets making up 30.4% of the pool balance by allocated loan amount. The remaining 16 properties each account for 7.9% or less, according to S&P.
The rating agency plans to assign 'AAA' to the class A notes; 'AA-' to the X-CP, X-NCP and B notes; 'A-' to the class C notes; and 'BBB-' to the class D notes.
DBRS also will rate the notes, and assigns 'AAA' to classes A, X-CP and X-NCP notes; 'AA' to classes B and C; 'A' to class D; 'BBB' to the class E notes and 'BB' to class HRR.
