Credit Suisse is tapping the securitization market to refinance a loan used to acquire the remaining interestin a portfolio of hotel properties.
The $775 million CSMC Trust 2015-Deal is backed by a six-year loan that pays only on interest for its entire term and is secured by the Highland Hospitality portfolio, according to Morningstar.
The portfolio is jointly owned by Ashford Hospitality Trust and Prudential Real Estate Investors; it was acquired through consensual foreclosure on a loan to JER Partners, which purchased the Highland Hospitality portfolio in 2007 for $2.1 billion. Since 2010, when the prior owners were near default, the portfolio’s net cash flow has grown by 52.0%, or 11.0% annually, according to Morningstar.
The loan that is being securitized funds Ashford’s acquisition of Prudential’s 28.26% interest and the repayment of existing debt. Based on the portfolio’s appraised value of $1.34 billion, it has a loan-to-value ratio of 57.9%.
The hotel portfolio also secures four tranches of mezzanine debt totaling $295.56 million; this debt is held outside of the securitization trust. That means Ashford obtained total financing of $1.07 billion; it also contributed $63.9 million of cash equity toward this recapitalization.
The portfolio is comprised of 24 hotels, located in 12 U.S. states and the District of Columbia. Twenty-one of the hotels are operated under nationally recognized brands that include Marriott International Inc., Hilton Worldwide Inc., Hyatt Hotels Corp. and InterContinental Hotels Group, and three hotels are operated without a franchise agreement.
Morningstar has assigned a preliminary rating of AAA’ to $255 million of class A notes; AA-’ to the class B notes; A-’ to the class C notes; BBB-’ to the class D notes; BB-’ to the class E notes; and B-’ to the class F notes.
