Fitch Ratings has made a rare move in the UK and commented on a CMBS deal it didn’t rate, saying it would have taken a more conservative stance on JP Morgan’s £251m/€131m Mint 2015, than rivals Standard & Poor’s and DBRS.
Mint is secured by two loans on three DoubleTree by Hilton hotels, two in London and one in Amsterdam. The 2.7-year multi-tranche offering, launched this week, is secured by an equivalent £450m loan to Blackstone on the three hotels that now remain in the ‘Mint’ portfolio.
Both Standard & Poor’s and DBRS have given the dual-jurisdiction transaction’s Class A euro and sterling tranches provisional ‘AAA’ ratings.
“The exposure of hotel profitability to changes in supply and demand for rooms would have led to lower ratings on some tranches of the Mint 2015 plc CMBS transaction if rated by Fitch,” said Fitch in a statement.
“The difference is more pronounced for senior classes denominated in euros, where Fitch would not have assigned a ‘AAAsf’ rating.”
The Amsterdam hotel market suffers from a structural declining trend in hotel revenues, which would affect its analysis at the higher rating levels, said Fitch. Moreover, the underlying long-term trend is downward, which would warrant a greater haircut, particularly in the higher rating stresses.
Fitch did not regard either of the London hotels as best in class or unique in its offering, and their current outperformance was likely to be unsustainable, the rating agency suggests.
The statement is a rare announcement in the CMBS market in the UK and Europe, although competitors commenting publicly on other agencies’ ratings is more common in the US.
However, with more CMBS transactions coming to market in the UK and Europe, agencies like Fitch are being encouraged both internally and by investors to comment on ratings of deals made by competitors.
Fitch last made a specific public comment on the ratings from a competitor on a CMBS deal in the UK in 2009, about Deutsche Bank’s £302.2m first securitisation of Chiswick Park.