Bank of America will securitize a $285 million commercial mortgage loan that is backed by eight hotel properties, four of which are Hilton Hotels operated properties, according to Morningstar.
Remington Hospitality manages the other four properties, which include three full service hotels that operate under the Starwood Hotels and Resorts Worldwide and InterContinental Hotels Group brands and a single, independent hotel in the historic district of Annapolis, Maryland. The hotels are located in located in Oregon, California, Florida, Virginia, Minnesota, and Maryland.
Dallas, Texas based Ashford Hospitality Trust, a publicly traded real estate investment trust, is the sponsor on the loan. Ashford acquired the properties from 2005 to 2007. The borrower currently owns and operates a hotel portfolio of 116 properties, which are comprised of 23,000 guest rooms.
The securitized loan backing the transaction called BAMLL 2015-ASHF has a two-year initial term but can be extended up to a total five years. Ashford pays only on interest throughout the life of the loan.
Morningstar has valued the properties at approximately $342.09 million, which equals to $174,181 per room, 27.4% lower than the appraised as-is market value of $471.0 million. Based on the appraised value of $471.0 million, the leverage on the loan financing (which includes both the $49.5 million Mezzanine A loan and the $49.5 million Mezzanine B loan) is moderately high at 80.0%.
However Morningstar's more conservative valuation of $342.1 million, elevates the level of debt in this transaction to a loan to value ratio of 112.3%. “If the loan were to mature during an economic downturn, it is highly likely that there would be some refinance risk for the mezzanine financing,” analysts stated in the presale report.
Since 2009, the sponsors have invested $63.1 million ($32,128 per key) in aggregate capital expenditures across the portfolio.