Park Hotels & Resorts, the real estate investment trust being spun out of Hilton Worldwide Holdings, is making another trip to the securitization market. 

This deal, the $750 million Hilton USA Trust 2016-HHV, is backed by a portion of a $1.275 commercial mortgage that it obtained from five banks to refinance the Hilton Hawaiian Village Waikiki Beach Resort.

The securitization trust is issuing 10 series of notes, including $171.6 million in senior primary “Trust A” notes and $578.4 million in five junior promissory notes.

The “Trust A” tranches carry provisional ‘AAA’ structured finance ratings from Moody’s Investors Service and Morningstar Credit Ratings.

The loan used as collateral for the deal pays only interest, and no principal, for its entire 10-year term. 

The mortgage was sold by the trust to JPMorgan, German American Capital Corp., and the commercial mortgage arms of Goldman Sachs, Barclays and Morgan Stanley.

Hilton Hawaiian sits on a 22-acre beachfront location near Honolulu’s downtown district and Diamond Head. The property includes five towers with 2,860 guest rooms and over 150,000 square feet of tenant retail and restaurant space. According to presale reports, the owners have poured in more than $232 million in improvements, with another $137.3 million capital expenditures set aside for additional upgrades through 2021.

The profitable resort (with an underwritten annual net cash flow of $120.8 million) has a debt-to-service ratio of approximately 2.2x, as assigned by the ratings agencies. Morningstar applied an 8.9% net cash flow haircut to the trust’s projections, while Moody’s was slightly more bearish by slashing net cash flow projection by 12.4%, based primarily on lower expected room revenue.

The Park Hotels real estate investment trust had cash out refi $2.7 billion in revenue in 2015, and is the second-largest publicly traded hotel REIT in the U.S. The pro forma adjusted earnings for 2016 were projected between $795 million and $825 million, according to a release. Park Hotels’ other Hawaiian property is Big Island’s Hilton Waikoloa Village resort.

It has tapped the securitization market for a cash out refi of two San Francisco hotels.

Park Hotels & Resorts was formerly the real estate business of Hilton, and is a planned spin-off into a publicly traded REIT that will own 69 hotels. Hilton is also spinning off its timeshare business (now Hilton Grand Vacations) and its fee-based franchise and management business that retains the Hilton Worldwide name.

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