Bank of America Merrill Lynch’s next large loan transaction is backed the Intercontinental New York Times Square, a 36-story, 607-room full-service luxury hotel in New York City.
The deal, BAMLL Commercial Mortgage Securities Trust 2014-ICTS, is secured by a $188 million floating-rate loan, according to Morningstar. The interest-only loan has an initial term of 25 months but allows for four one-year extensions.
Morningstar expects to rate the $74.8 million class A notes, AAA’; the $28.19 million class B notes, AA’; the 20.95 million class C notes, A’; the $27.6 million class D notes, BBB’ and the $36.35 million of lass E notes, BB’.
The loan is secured by the Intercontinental New York Times Square, which is managed by an affiliate of InterContinental Hotels Group PLC.
Among other risk factors, the deal lacks the diversification inherent in multi-borrower conduit deal and cash flow generated by hospitality properties tends to be volatile because of the absence of long-term tenant leases, a feature common to other types of commercial real estate.
However, Morningstar said in the presale report that it views the InterContinental as a strong performer in "what is arguably the strongest hotel market in the country.” For the trailing 12-month period ended March 31, 2014, the hotel reported an occupancy rate of 91.6%, with an average daily rate, of $341 and revenue per available room of $313.
Large loan deals have picked up the pace in recent weeks. This week kicked off with $614 million of securities backed by large loans issued over three deals. The first half of 2014 saw 19 single-borrower transaction totaling $11.2 billion and 23 conduit deals totaling $25.8 billion, according to figures reported by Commercial Real Estate Direct.