DROT 2015-1 is collateralized by approximately $177.1 million of timeshare loan receivables as of June 30, 2015. The preliminary ratings reflect the initial credit enhancement levels of 11.50% for the Class A notes and 5% 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 first securitization in 2015 and its sixth 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 as of March 31, 2015, has repurchased over 2.5 million shares for a total of $77.2 million. 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.
Preliminary Ratings Assigned: Diamond Resorts Owner Trust 2015-1
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KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).