Ashford Hospitality Trust is tapping the securitization market to refinance a hotel portfolio.
The transaction, dubbed JPMCC 2016-ASH is backed by a $415 million first mortgage on 18 hotels located in seven states with a total of 3,540 rooms. The real estate investment trust acquired the properties in 2007 as part of a larger acquisition from CNL Financial Group for a total of $520.6 million; the sponsor’s total basis, including capital expenditures is $620 million.
The loan, underwritten by J.P.Morgan Chase, has a two-year initial term and four, 12-month extension options. It pays only interest, and no principal, for its entire term. There is also a $35 million mezzanine loan on the portfolio that is not included in the trust collateral.
Proceeds of the loan were used to pay off existing debt, fund upfront reserves, pay closing costs, and return equity to the sponsor.
Morningstar’s valuation of the portoflio resulted in a loan-to-value ratio of 75.3% on the senior note and 81.7% when factoring in the mezzanine loan.
The top five states based on the allocated loan amounts are California (six properties, 41.9%), New Jersey (two properties, 22.9%), Texas (three properties, 11.9%), Arizona (three properties, 10.8%), and Pennsylvania (two properties, 5.5%). The portfolio includes four extended stay hotels, eight select-service hotels, and six full-service hotels. The hotels operate under nationally recognized brands with Marriott International, Hilton Worldwide Holdings, and Sheraton Hotels & Resorts.
Since 2011 the properties have undergone $79.3 million of capital improvements. In addition, the sponsors have budgeted for capital expenditures of more than $20.1 million for 2016.
Wells Fargo Bank is the master service and Trimont Reasl Estate is the special servicer.