INTOWN 2022-STAY is preparing to launch a $1.2 billion transaction of commercial mortgage-backed securities (CMBS). The single-borrower transaction, ultimately secured by 196 extended-stay lodgings, will recapitalize the portfolio of loans and pay closing costs.
A vast majority of the collateral properties in the InTown pool are located in primary and secondary markets, for a combined 89.1% ratio of the collateral pool, KBRA said. Tertiary markets account for just 10.9% of the pool, according to a pre-sale report from Kroll Bond Rating Agency.
Coincidentally, the InTown brand operates with very little marketing and brand positioning, as virtually all, 93.0% of bookings are made directly with InTown and 42.0% come from direct walk-ins, according to KBRA. The hotels securing the loan total about 24,936 keys located in 22 states and 44 MSAs, according to KBRA.
BREIT Operating Partnership and SCG InTown NRE Fund are loan sponsors. As for the direct collateral, Deutsche Bank, Barclays Capital Real Estate, Morgan Stanley Bank and Wells Fargo Bank co-originated the non-recourse, first-lien mortgage loan structured initially as a two-year term with three, 12-month extension options.
KBRA expects to assign ratings ranging from 'AAA' on the $678.4 million, class A notes, to 'BBB-' on the $69.6 million, class E notes.
At the time of the loan funding, the borrower will enter into an interest rate cap agreement, which will have a strike rate equal to or no greater than 5.5%, according to KBRA.
The portfolio of extended-stay hotels exhibits a number of solid performance trends that speak to potentially positive credit on the repayment of notes. In the trailing twelve-month period up to May 2022, the portfolio experienced an occupancy rate of 82.8%, with an average daily rate of $46.83, and revenue per available room (RevPAR) of $38.76. Also for the trailing twelve-month period that ended in April 2022, the portfolio had achieved a weighted average occupancy, average daily rate and RevPAR of 118.4%, 76.4% and 90.5%, respectively.
Also, prior to the onset of the COVID-19 pandemic, INTOWN 2022-STAY's portfolio experienced historically strong occupancy levels and ADRs. The portfolio's net cash flow had reached $153.6 million in 2018, compared with $151.7 million in 2017.
During the COVID-19 downturn, portfolio net cash flow had decreased to $144.1 million in 2020, before recovering to $181.3 million in 2021 and $195.9 million for the trailing twelve-month period that ended in May 2022.
