KBRA announces the assignment of preliminary ratings to six classes of LQR 2025-CALI, a CMBS single-borrower securitization.

The collateral for the transaction is a $300.0 million non-recourse, first lien mortgage loan that is expected to be originated by Morgan Stanley Bank, N.A. The floating rate loan is expected to have a two-year initial term with three 12-month extension options and require monthly interest-only payments. The mortgage loan will be secured by, among other things, the borrower’s fee simple interests in the La Quinta Resort & Club located in La Quinta, California. Originally constructed in 1926, the hotel is situated on 69.1 acres and features 787 keys, including 644 collateral keys as well as 143 keys that are contained within 67 villas that are third-party owned and participate in a hotel-managed rental program. Facilities and amenities include four food & beverage outlets, 54,101 sf of indoor meeting space, roughly 144,200 sf of outdoor meeting space, 41 outdoor pools, a business center, a fitness center, tennis courts, a 30,000 sf full-service spa, retail space, pickle ball courts, and bicycle rentals. The property underwent a comprehensive renovation between May 2024 and December 2024 totaling $62.4 million ($96,865 per collateral key), which included a comprehensive guestroom and bathroom renovation, upgrades to the public spaces, and addition of event space. For the TTM 10/2025 period, the subject property achieved an occupancy of 59.2% with an ADR of $390.13, resulting in a RevPAR of $230.83. The property achieved occupancy, ADR and RevPAR penetration rates of 96.0%, 125.8% and 120.8%, respectively, as of the TTM 9/2025 period.

KBRA’s analysis of the transaction included a detailed evaluation of the property’s cash flows using our North American CMBS Property Evaluation Methodology, and the application of our North American CMBS Single Borrower & Large Loan Rating Methodology. In addition, KBRA also relied on its Global Structured Finance Counterparty Methodology for assessing counterparty risk in this transaction, and its ESG Global Rating Methodology, to the extent deemed applicable.

The results of our analysis yielded a KBRA net cash flow (KNCF) for the subject of approximately $25.5 million, which is 10.3% below the issuer’s NCF, and a KBRA value of approximately $261.7 million, which is 37.7% below the appraiser’s as-is value. The resulting in-trust KBRA Loan to Value (KLTV) is 114.6%. In our analysis of the transaction, we also reviewed and considered third party engineering, environmental, and appraisal reports, the results of our site inspection of the property, and legal documentation review.

To access ratings and relevant documents, click here.

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Methodologies

• CMBS: North American CMBS Property Evaluation Methodology
• CMBS: North American CMBS Single Borrower & Large Loan Rating Methodology
• Structured Finance: Global Structured Finance Counterparty Methodology
• ESG Global Rating Methodology

Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

Doc ID: 1012762

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