Fitch Affirms HILT 2014-ORL Mortgage Trust Series 2014-ORL

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed seven classes of HILT 2014-ORL Mortgage Trust commercial mortgage pass-through certificates series 2014-ORL.

The certificates represent the beneficial interest in a trust that holds a single two-year floating-rate interest-only mortgage loan, subject to five one-year extension options, in the amount of $345 million secured by the fee interest in Hilton Orlando, a 1,417-room full service hotel located at 6001 Destination Parkway in Orlando, FL. A full list of rating actions follows at the end of this ratings action commentary.

KEY RATING DRIVERS

The affirmations and Stable Outlooks reflect the stable performance of the collateral as expected since issuance. The collateral has demonstrated an upward trend in cash flow since it was constructed in 2009, which parallels the U.S. lodging industry's performance over the same time period. The transaction is secured by a single hotel property and therefore more susceptible to single event risk related to the market. Hotel performance is considered to be more volatile due to their operating nature. Fitch will continue to monitor the subject property's performance to ensure that revenues and incomes considered at the time of Fitch's initial ratings are sustainable over the loan term.

The Hilton Orlando was constructed in 2009 and has 232,000 sf of meeting and event facilities, a full service salon and spa, a large fitness center and six food and beverage venues. Amenities include a large family pool, a 10,000-sf deck, a quiet pool with whirlpool, lazy river, 12 cabanas, water slide, nine-hole executive putting course, jogging track, two fire pits, as well as volleyball, basketball and tennis courts. The hotel is well located within Orlando's major entertainment district, within five-15 minutes of SeaWorld Orlando, Universal Orlando Resort and Walt Disney World Resort.

The property's performance has remained stable since issuance. Occupancy, ADR, and RevPAR as of trailing twelve month (TTM) March 2015 reported at 71.2%, $172.44, and $122.71, respectively, compared to TTM May 2014 at 70.6% occupancy, $167.36 ADR, and $118.20 RevPAR. The year end (YE) 2014 net cash flow (NCF) was approximately 19% over YE 2013 NCF, primarily due to a 16% increase in revenue. The improved revenue was driven by a 31% increase in 'Food & Beverage' income which includes higher revenue generated by The Promenade, a recently opened 50,000 square foot outdoor event space at the hotel. Fitch's stressed DSCR and LTV for the entire trust at issuance was 1.07x and 98.3%, respectively. The Fitch stressed DSCR and LTV at issuance through class D, the lowest tranche rated by Fitch Ratings in this transaction, was 1.56x and 67.3%, respectively.

RATING SENSITIVITIES

The Rating Outlook for all classes remains Stable. Due to the recent issuance of the transaction and stable performance, Fitch does not foresee positive or negative ratings migration until a material economic or asset level event changes the transaction's portfolio-level metrics. Additional information on rating sensitivity is available in the report 'HILT 2014-ORL Mortgage Trust, Series 2014-ORL (US CMBS)' (July 8, 2014), available at www.fitchratings.com.

DUE DILIGENCE USAGE

No third party due diligence was provided or reviewed in relation to this rating action.

A comparison of the transaction's Representations, Warranties, and Enforcement (RW&E) mechanisms to those of typical RW&Es for the asset class is available in the following report:

-- 'HILT 2014-ORL Mortgage Trust, Series 2014-ORL - Appendix' (July 8, 2014).

Fitch has affirmed the following ratings:

--$116,508,000 class A at 'AAAsf'; Outlook Stable;

--$2,639,250 * class X-FP at 'AAAsf'; Outlook Stable;

--$10,557,000 * class X-CP at 'AAAsf'; Outlook Stable;

--$13,196,250 * class X-EXT at 'AAAsf'; Outlook Stable;

--$43,885,000 class B, at 'AA-sf'; Outlook Stable;

--$32,623,000 class C at 'A-sf'; Outlook Stable;

--$43,108,000 class D at 'BBB-sf'; Outlook Stable

* Notional amount and interest-only.

Fitch does not rate the $67,963,000 class E certificates or the $40,913,000 class F certificates.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions (pub. 20 Mar 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=862818

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

Related Research

HILT 2014-ORL Mortgage Trust, Series 2014-ORL - Appendix

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=752052

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=987976

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=987976

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

View source version on businesswire.com: http://www.businesswire.com/news/home/20150715006458/en/

Fitch Ratings
Primary Analyst
Benson Thomas
Director
+1-212-908-0645
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
Email: [email protected]

Source: Fitch Ratings

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