Braemar Hotels & Resorts: DBRS Morningstar Changes Trends on Four Classes and Confirms All Reviews of Braemar Hotels & Resorts Trust 2018-PRME

DBRS Limited (DBRS Morningstar) confirmed its ratings on the following categories of Commercial Mortgage Certificates, Series 2018-PRME issued by Braemar Hotels & Resorts Trust 2018-PRME.

Class A to AAA (sf)

Class B to AA (high) (sf)

Class C to A (high) (sf)

Class D to BBB (high) (sf)

Class E to BB (sf)

Class F to B (low) (sf)

DBRS Morningstar changed the trends for Classes A, B, C and D from Negative to Stable. Classes E and F continue to show negative trends, reflecting DBRS Morningstar’s concerns about the portfolio, in particular the Chicago and Philadelphia cream properties, which have been slower to rebound after the relaxation of travel restrictions linked to the global coronavirus disease (COVID-19) pandemic.

The loan was transferred to the special service in april 2020 because the sponsor could not make his april 2020 debt service payment. In june 2020, the sponsor agreed to a modification that included the waiver of deposits in the Furniture, Fixtures and Equipment (FF&E) Reserve Account of april 2020 To January 2021. In addition, the borrower was allowed to use FF&E reserve funds to cover debt service deficits. The borrower is currently in the process of replenishing these reserves as indicated in the loan modification. Since the September 2021 surrender, the loan is in progress and is no longer monitored on the manager’s watch list.

The wallet in question is secured by four full-service hotels, managed under two different brands and three different flags in four different cities: Seattle (361 keys; 31.0% of the allocated loan amount), San Francisco (410 keys; 26.7% of the loan amount allocated), Chicago (415 keys; 22.9% of the allocated loan amount), and Philadelphia cream (499 keys; 19.4% of the allocated loan amount). The $ 370.0 million mortgage subject with $ 65.0 million of refinanced mezzanine debt $ 344.3 million of the existing debt, returned approximately $ 65.7 million of the sponsor’s own funds, and of the escrow and reserves financed $ 20.0 million. The sponsor of this loan is Braemar Hotels & Resorts, formerly known as Ashford Hospitality Prime, which is a publicly traded real estate investment trust from the largest Ashford Hospitality Trust. The sponsor focuses its investments in full-service luxury hotels and resorts in key entry markets.

The portfolio has a combined number of rooms of 1,685 keys with management ensured by Marriott International (Marriott) and AccorHotel Group. The portfolio operates under three flags: Courtyard by Marriott (two hotels; 46.2% of the total loan amount), Marriott (one hotel; 31.0% of the total loan amount) and Sofitel (one hotel; 22.9% of the total loan amount). Each property was renovated within two years of issuance. In 2019, both Courtyard by Marriott hotels underwent extensive renovations that converted them to the Autograph Collection, one of Marriott’s luxury brands. The estimated costs of the conversion were $ 29.6 million ($ 72,525 by key) for the Courtyard San Francisco Downtown and $ 17.2 million ($ 34,419 by key) for the Courtyard Philadelphia Downtown. The renovations focused on improving the rooms, meeting rooms, lobby, common areas, restaurant, meeting space and exteriors.

According to June 2021 operating account analysis report, the portfolio reported a 12-month end June 30, 2021, occupancy rate of 23.9%; average daily rate of $ 167; and revenue per available room (RevPAR) of $ 46. The portfolio posted YE2019 operating figures of 81.9%, $ 242, and $ 201 as well as YE2018 figures of 83.3%, $ 243, and $ 203. According to July 2021 Smith Travel Search (STR), both the Seattle hotel and San Francisco hotel reported RevPAR penetration rates greater than 100% in the past three months and the past six months. Both properties rank 1 or 2 in the RevPAR over their respective competing sets in 2021. The Chicago hotel and Philadelphia cream The hotels both struggled in 2021, reporting RevPAR penetration rates below 100% and reporting the lowest RevPAR numbers compared to their respective competitors.

A description of how DBRS Morningstar views ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social and Governance Risk Factors in Credit Ratings at https: / /www.dbrsmorningstar.com/research/ 373262.

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Remarks:

All figures are in we dollars, unless otherwise specified.

The main methodology is the North American CMBS Surveillance Methodology (March 26, 2021), which can be found on dbrsmorningstar.com under Methodologies and Criteria. For a list of structured finance related methodologies that may be used during the rating process, please see the DBRS Morningstar Global Structured Finance Related Methodologies document, which can be found on dbrsmorningstar.com in the Commentary tab under Regulatory Affairs. Please note that all of the related methodologies listed in a Core Structured Finance asset class methodology cannot be used to assess or monitor an individual structured finance or debt security.

DBRS Sovereign Morningstar the group publishes benchmark macroeconomic scenarios for rated sovereigns. The DBRS Morningstar analysis took into account the impacts consistent with the baseline scenarios as presented in the following report: https://www.dbrsmorningstar.com/research/384482/baseline-macroeconomic-scenarios-application- to-credit-ratings.

Related regulatory information under National Instrument 25-101 Designated Rating Organizations is incorporated by reference and can be viewed by clicking on the link under Related Documents or by contacting us at [email protected]

The rated entity or its related entities participated in the rating process for this rating action. DBRS Morningstar has had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Please see the related appendix for more information on the sensitivity of the assumptions used in the rating process. Please note that a sensitivity analysis is not performed for CMBS bonds rated CCC or lower. The definition of the DBRS Morningstar long-term rating scale indicates that ratings of CCC or lower are assigned when the obligation is very likely to default or default is imminent, thus taking precedence over a sensitivity analysis.

Usually, the conditions that lead to the attribution of a negative or positive trend are usually resolved within 12 months. DBRS Morningstar Outlook and Ratings are being watched.

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Assessments

Date Issued	Debt Rated	Action	Rating	Trend	Attributesi

United States = Principal Analyst based in the United States

CA = Lead Analyst based at Canada

EU = Lead Analyst based in the EU

UK = Senior analyst based at UK

E = EU approved

U = UK approved

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Unsolicited Non-participant

28-Sep-21 	Commercial Mortgage Pass-Through Certificates, Series 2018-PRME, Class A	Trend Change	AAA (sf)	Stb	CA

28-Sep-21 	Commercial Mortgage Pass-Through Certificates, Series 2018-PRME, Class A	Confirmed	AAA (sf)	Neg	CA

28-Sep-21 	Commercial Mortgage Pass-Through Certificates, Series 2018-PRME, Class B	Trend Change	AA (high) (sf)	Stb	CA

28-Sep-21 	Commercial Mortgage Pass-Through Certificates, Series 2018-PRME, Class B	Confirmed	AA (high) (sf)	Neg	CA

28-Sep-21 	Commercial Mortgage Pass-Through Certificates, Series 2018-PRME, Class C	Trend Change	A (high) (sf)	Stb	CA

28-Sep-21 	Commercial Mortgage Pass-Through Certificates, Series 2018-PRME, Class C	Confirmed	A (high) (sf)	Neg	CA

28-Sep-21 	Commercial Mortgage Pass-Through Certificates, Series 2018-PRME, Class D	Trend Change	BBB (high) (sf)	Stb	CA

28-Sep-21 	Commercial Mortgage Pass-Through Certificates, Series 2018-PRME, Class D	Confirmed	BBB (high) (sf)	Neg	CA

28-Sep-21 	Commercial Mortgage Pass-Through Certificates, Series 2018-PRME, Class E	Confirmed	BB (sf)	Neg	CA

28-Sep-21 	Commercial Mortgage Pass-Through Certificates, Series 2018-PRME, Class F	Confirmed	B (low) (sf)	Neg	CA

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