DROT 2015-2 is expected to be collateralized by approximately $152.5 million of timeshare loan receivables at closing out of an expected collateral balance of approximately $187.5 million after completion of the prefunding period. The prefunding feature allows up to approximately 19% of the collateral pool to be funded until April 30, 2016. The preliminary ratings reflect the initial credit enhancement levels of 16.00% for the Class A notes and 5.00% for the Class B notes. Credit enhancement consists of overcollateralization, a cash reserve account, excess spread and, in the case of the Class A notes, subordination of the junior note class. This transaction is Diamond’s second securitization in 2015 and its seventh securitization since 2009.
Diamond is a leading global hospitality and vacation ownership interest company. The Company, through its predecessors, has been managing and operating timeshare resorts since 1996. On July 24, 2013, Diamond sold over 17.8 million shares of the Company’s common stock to the public through an initial public offering and an additional 7.5 million shares were offered by certain stockholders in a secondary offering in March 2015. The Company announced a common stock repurchase program in 4Q 2014, and on July 29, 2015, Diamond announced that it was expanding its common stock repurchase program up to an additional $100 million. To date, Diamond has repurchased $122.7 million worth of common stock leaving approximately $77.3 million available under the program for additional share repurchases. Diamond has an experienced management team with senior leadership holding approximately 35% equity stake in the company.
KBRA applied its U.S. Timeshare ABS methodology as part of its analysis of the transaction’s underlying collateral pool, the proposed capital structure and Diamond’s historical static pool data. KBRA also conducted an operational assessment on the originator and servicer, as well as a review of the transaction’s legal structure and transaction documents. KBRA will also review the operative agreements and legal opinions for the transaction prior to closing.
For complete details on the analysis, please see KBRA’s Pre-Sale Report, Diamond Resorts Owner Trust 2015-2 Presale Report, which was published today at www.kbra.com
Preliminary Ratings Assigned: Diamond Resorts Owner Trust 2015-2
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Rosemary Kelley, 646-731-2337
William Carson, 646-731-2405
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PRESS RELEASE SOURCE: Kroll Bond Rating Agency