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S&P Lowers, Affirms Hilton Hotels Pool Trust Ratings on 2000-HLT

NEW YORK, April 1 /PRNewswire/ — Standard & Poor's today lowered its ratings on five classes of Hilton Hotels Pool Trust's commercial mortgage pass-through certificates series 2000-HLT. At the same time, ratings are affirmed on three other classes in the pool (see list).

While subordination levels for this mortgage pool have actually increased slightly due to scheduled amortization, the downgrades reflect the deterioration in the pool's overall operating performance as evidenced by a decrease in debt service coverage and an increase in the loan-to-value (LTV) ratio since issuance. The rating actions also reflect the strong sponsorship from Hilton Hotels Corp. (rated triple-'B'-minus) and the strong name recognition of the Hilton brand.

Using full year 2001 results, Standard & Poor's adjusted the borrower's net operating income for franchise fees, sales and marketing expenses, and management fees to arrive at an adjusted net cash flow (NCF) of $71.55 million. Utilizing a capitalization rate of 11%, the LTV is estimated at 76% and the debt service coverage ratio (DSCR) is 1.42 times (x), based on a refinance rate of 10.25%. These levels have deteriorated from Standard & Poor's original underwriting at the 2000 issuance, when the LTV was 60% and the DSCR was 1.78x. In addition, actual DSCR has declined to 1.66x from 2.22x at underwriting.

This transaction consists of one loan secured by five crosscollateralized and crossdefaulted Hilton hotels located in San Francisco, Calif., Chicago, Ill., McLean, Va., Short Hills, N.J., and Phoenix, Ariz. The two largest assets are in San Francisco and Chicago (representing 42% and 29% of the pool's total 2001 NCF), and have seen revenue per available room decline by 17% and 13%, respectively, from 2000 to 2001. Overall occupancy at the five hotels declined to 67.3% in 2001 from 76.4% in 2000. While expenses declined by 8% in 2001 compared to 2000, this favorable trend was more than offset by a 17% decline in revenues in 2001.

The current insurance policy, which includes terrorism insurance for this portfolio of hotels, expires in June 2002. Standard & Poor's will continue to monitor this issue. The rating actions also reflect the belief that the year 2001 represented a trough, and that the lodging industry in general and this portfolio of hotels in particular should rebound as the economy rebounds.


Hilton Hotels Pool Trust
Commercial mortgage pass-thru certs series 2000-HLT

Class To From Balance ($ mil.) LTV (%) DSCR (x)
B AA AA+ 60.8 49.4 2.18
C A+ AA- 66.8 59.7 1.81
D A- A+ 32.9 64.7 1.66
E BBB+ A 24.7 68.6 1.57
F BBB A- 46.9 75.8 1.42


Hilton Hotels Pool Trust
Commercial mortgage pass-thru certs series 2000-HLT

Class Ratings Balance ($ mil.) LTV (%) DSCR (x)
A-1 AAA 84.1 40 2.69
A-2 AAA 175 40 2.69
X AAA 491.2* N/A N/A

*Notional balance of interest only class.

Posted by on February 11, 2006.

Categories: Trends

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