DBRS Confirms Ratings and Changes Trends on Junior Classes of Mint 2015 Plc

DBRS Ratings Limited (DBRS) has today confirmed the ratings of all EUR notes issued by Mint 2015 Plc (the Issuer) and changed the trends for the Class C, D and E Notes to Positive as follows:

-- Class EUR-A at AAA (sf) with a Stable trend
-- Class EUR-B at AA (high) (sf) with a Stable trend
-- Class EUR-C at A (low) (sf) with a Positive trend
-- Class EUR-D at BBB (low) (sf) with a Positive trend
-- Class EUR-E at BB (high) (sf) with a Positive trend

Following the full repayment of the Senior GBP Loan, DBRS has discontinued the ratings of all GBP notes.

The rating confirmations and Positive trend changes reflect the improvement in the underlying asset’s performance and the deleveraging of Mint 2015 Plc following the repayment of the GBP loans. At issuance, the transaction consisted of two loans denominated in GBP and EUR separately and secured by three hotels. BlackStone Group L.P.’s (the Sponsor) plan at issuance was to dispose of the collateral during the life of the transaction, which has been carried out recently.

The Sponsor of the transaction recently sold all the London hotels included in the transaction and repaid the Senior GBP Loan accordingly. As a result, the Amsterdam hotel, DoubleTree by Hilton Amsterdam Centraal Station, securing the Senior EUR Loan, is the only remaining collateral. These property sales and repayments have positively impacted the transaction as the remaining balance of the Senior EUR Loan has been reduced to EUR 106,645,823 as a result of the release premiums (115% over the relevant property’s allocated loan amount) achieved by the sales of the London hotels. Consequently, the loan-to-value (LTV) ratio of the transaction has been reduced to 36.3% based on the latest valuation (with management contract in place) dated in March 2016.

DBRS has revised its net operating income (NOI) assumption of the Amsterdam hotel based on the latest performance data that has increased by 18.81% since issuance. The hotel was opened in 2011 and was rebranded in 2014. The updated DBRS NOI of the Amsterdam hotel is EUR 15.5 million, representing a 4.5% increase from the DBRS NOI at issuance. As a result, the new DBRS Value has increased to EUR 200.4 million, a 4.48% increase from issuance. All other issuance assumptions have remained unchanged in the DBRS analysis.

Resulting from the increased DBRS NOI and lower LTV ratio, DBRS has changed the trends of the Class C, D and E Notes to Positive. The upcoming Dutch election and overall political environment in Europe increase the uncertainty surrounding the sponsor’s disposal plan for the DoubleTree by Hilton Amsterdam Centraal Station, however given the low leverage and increasing NOI, DBRS believes the Positive trend change is supported.

The ratings assigned to Class C and D differ from the higher rating implied by the direct sizing parameters that are a substantial component of the DBRS “European CMBS Rating and Surveillance” methodology. DBRS considers a material deviation to be a rating differential of three or more notches between the assigned rating and the rating implied by a substantial component of a rating methodology. In this case, the assigned lower ratings reflect the fact that the sustainability of loan performance trend is not yet demonstrated.

DBRS amended this press release on 11 October 2017 to identify the aforementioned material deviation from a substantial component of the “European CMBS Rating and Surveillance” methodology, as this disclosure was not previously included.

Notes:
All figures are in EUR unless otherwise noted.

The principal methodology applicable to the rating is: European CMBS Rating and Surveillance Methodology.

DBRS has applied the principal methodology consistently and conducted a review of the transaction in accordance with the surveillance section of the principal methodology.

In DBRS’s opinion, a discontinued-repaid rating action does not warrant the application of the entire principal methodology, as the bond has been repaid in full.

A review of the transaction legal documents was not conducted as the legal documents have remained unchanged since the most recent rating action.

Other methodologies referenced in this transaction are listed at the end of this press release.

These may be found on www.dbrs.com at: http://www.dbrs.com/about/methodologies

For a more detailed discussion of the sovereign risk impact on Structured Finance ratings, please refer to DBRS commentary “The Effect of Sovereign Risk on Securitisations in the Euro Area” found at http://www.dbrs.com/industries/bucket/id/10036/name/commentaries/

The sources of data and information used for this rating include CBRE Loan Services Limited, CBRE Hotels Limited and U.S. Bank Global Corporate Trust Services.

DBRS did not rely upon third-party due diligence in order to conduct its analysis.

At the time of the initial rating DBRS was not supplied with third-party assessments. However, this did not impact the rating analysis.

DBRS considers the data and information available to it for the purposes of providing this rating to be of satisfactory quality.

DBRS does not audit or independently verify the data or information it receives in connection with the rating process.

The last rating action on this transaction took place on June 22, 2016, when DBRS has confirmed all classes’ ratings.

Information regarding DBRS ratings, including definitions, policies and methodologies, is available on www.dbrs.com.

To assess the impact of changing the transaction parameters on the rating, DBRS considered the following stress scenarios, as compared to the parameters used to determine the rating (the “Base Case”):

A decrease of 10% and 20% in the DBRS net cash flow (NCF), derived by looking at comparable properties, market rents and market occupancies, in addition to expenses ratios, capital expenditures and re-tenanting costs, would lead to the following ratings in the transaction, as noted below for each class respectively:

Class EUR-A Note Risk Sensitivity:
-- 10% decline in DBRS NCF, expected rating of Class EUR-A to AAA (sf)
-- 20% decline in DBRS NCF, expected rating of Class EUR-A to AAA (sf)

Class EUR-B Note Risk Sensitivity:
-- 10% decline in DBRS NCF, expected rating of Class EUR-B to AA (high) (sf)
-- 20% decline in DBRS NCF, expected rating of Class EUR-B to AA (high) (sf)

Class EUR-C Note Risk Sensitivity:
-- 10% decline in DBRS NCF, expected rating of Class EUR-C to A (low) (sf)
-- 20% decline in DBRS NCF, expected rating of Class EUR-C to A (low) (sf)

Class EUR-D Note Risk Sensitivity:
-- 10% decline in DBRS NCF, expected rating of Class EUR-D to BBB (low) (sf)
-- 20% decline in DBRS NCF, expected rating of Class EUR-D to BB (high) (sf)

Class EUR-E Note Risk Sensitivity:
-- 10% decline in DBRS NCF, expected rating of Class EUR-E to BB (low) (sf)
-- 20% decline in DBRS NCF, expected rating of Class EUR-E to BB (sf)

Generally, the conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. DBRS’s outlooks and ratings are monitored.

For further information on DBRS historical default rates published by the European Securities and Markets Authority (ESMA) in a central repository, see: http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml.

Ratings assigned by DBRS Ratings Limited are subject to EU regulations only.

Lead Analyst: Rick Shi
Rating Committee Chair: Erin Stafford
Initial Rating Date: 29 May 2015

DBRS Ratings Limited
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Registered in England and Wales: No. 7139960

The rating methodologies used in the analysis of this transaction can be found at: http://www.dbrs.com/about/methodologies

-- European CMBS Rating and Surveillance Methodology
-- Legal Criteria for European Structured Finance Transactions
-- Unified Interest Rate Model for European Securitisations

A description of how DBRS analyses structured finance transactions and how the methodologies are collectively applied can be found at: http://www.dbrs.com/research/278375