Hotels, Skyscraper Back Next Two Single-Asset CMBS

Register now

The commercial mortgage bond market got off to a busy start Monday, with the launch of two single-asset deals – one backed by a Manhattan office building and the other by a portfolio of hotels  –  and a conduit.

Olympic Tower 2017-OT is secured by a portion of a $760 million whole loan co-originated by Deutsche Bank (50%), Goldman Sachs (30%), and Morgan Stanley (20%) on May 1. It pays only interest, and no principal, for its entire 10-year term. The loan is secured by the borrower’s leasehold interest in a Class-A, mixed-use retail and office complex, comprised of a 52-story mixed-use retail, office and residential tower and three adjoining five and seven-story buildings located off Fifth Avenue between 51st and 52nd Streets in Midtown Manhattan’s Plaza District.

Proceeds from the $760 million whole loan, along with $240.0 million of mezzanine financing, were used to retire existing balance sheet debt of $249.9 million from Wells Fargo, fund reserves related to outstanding tenant improvement and leasing commissions and free rent obligations ($11.8 million), fund the borrower’s planned lobby renovation ($26 million), and pay closing costs ($22.7 million).

In conjunction with the financing, approximately $665.8 million of equity was returned to the sponsors, affiliates of OMERS Administration Corp. (67% ownership) and Crown Acquisitions (33%).

According to Kroll, the mortgage loan exhibits “moderate” leverage, with an in-trust loan-to-value ratio of 80%. This compares favorably to the weighted average KLTV of office properties in the 32 conduits that were rated by KBRA over the past 12 months of 98.9%.

The Hospitality 2017-HIT transaction is collateralized by an $805 million floating-rate loan, which is supported in turn by a portfolio of 87 limited-service and extended stay hotels, which comprise 10,040 rooms across 29 states, according to Morningstar Credit Ratings.

Morningstar puts the property’s underwritten net cash flow at $95.1 million (9.2% less than the issuer’s underwritten NCF), resulting in an interest-only debt service coverage ratio of 1.71. It values the collateral at  $990.7 million, and puts the in-trust loan-to-value ratio at 81.3%.

The conduit, dubbed FCRE 2017-C8, is a $644.7 million transaction collateralized by 43 commercial mortgage loans secured by 67 properties. The loans were contributed by Cantor Commercial Real Estate (18 loans, 47.3%); Rialto Mortgage Finance (15 loans, 37.9%); and UBS (10 loans, 14.8%).

For reprint and licensing requests for this article, click here.