Westgate Resorts is securitizing cash flow from mortgage loans that are financing timeshares and expects to raise $207 million from the asset-backed securities market.
Structured as a 144A transaction, Westgate Resorts 2026-1 will issue the notes through four tranches of class A, B, C and D notes, and is expected to close in March 31, according to Morningstar DBRS.
All the notes are expected to mature on Oct. 20, 2039, the rating agency said. Also, Westgate Resorts have credit enhancement levels of 66.44%, 38.83%, 19.34% and 11.22%, on classes A, B, C and D, respectively.
The deal structure includes credit support from a full turbo structure, the rating agency said. All excess cash flow will be used to repay note holders without the issuer receiving excess spread until the notes are fully repaid.
Westgate's underlying collateral pool is composed of fixed-rate, fully amortizing loans that are secured by first-mortgage liens, DBRS said. On average, the loans have a principal balance of $14,318, with an interest rate of 14.24% and an original term of 117 months. Underlying loans in the pool have a remaining term of 83 months, DBRS said.
In terms of the pool's geographic mix, Florida, Georgia, New York, Texas and North Carolina account for the five states with the highest concentrations in the pool, with 13.07%, 6.66%, 5.86%, 5.24% and 4.80%, respectively. Those five states also account for the top five states in the pool going back to the 2015-2 series, the rating agency said.
Borrowers have a weighted average FICO score of 737, and an original equity amount of 23.69%, the rating agency said.
DBRS assigns ratings of AAA, A, BBB and BB to classes A, B, C and D, respectively.
