Blackstone Real Estate Partners is tapping the securitization market for a cash out refinancing of The Cosmopolitan Las Vegas hotel and casino.

A $1.04 billion first mortgage loan on the property serves as collateral for an offering of commercial mortgage bonds from JP Morgan and Deutsche Bank.

This loan pays only interest, and no principal, for its entire term. Together with $513 million in mezzanine debt, it is being used to refinance existing debt of $1.3 billion and return approximately $234.5 million of equity to the sponsor.

DBRS expects to assign ratings on the notes ranging from AAA to BB.

In its presale report, the rating agency cited the property’s high-quality, its “irreplaceable” location on the Las Vegas Strip, and relatively low leverage. DBRS calculates its loan-to-value ratio at 67.5%, which is higher than the LTV of 42.9% LTV based on the appraiser’s estimate of as-is market value.

The subject property is a 3,005-room luxury hotel and casino completed in 2010 and situated in an excellent mid-Strip location between the Bellagio and MGM Resorts International’s CityCenter. The collateral amenities include, but are not limited to, over 250,000 of convention and banquet space facilities, 111,500 sf of casino space, 96,000 sf of entertainment space (including a 3,200-capacity multi-use entertainment venue), 23,500 sf of retail space, 50,000 sf of spa and fitness facilities and a five-level underground parking garage. 

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