Lone Star Funds, the private-equity firm founded by billionaire John Grayken, is securitizing a $340 million loan it used to fund the purchase 38 U.S. Hyatt Hotel properties last September.
JP Morgan and Goldman Sachs underwrote the loan, according to a Kroll Bond Ratings' presale report. The loan has an initial two-year term with three, one-year extension options for a full term of five years. The loan, which pays only interest for its entire term, has a KBRA in-trust loan-to-value of 91.6%, which is high in the for a single-borrower commercial mortgage securitization.
Loan Star used the mortgage loan, along with $167.0 million of mezzanine financing, $117.7 million of cash equity and a $19.0 million letter of credit contributed by the loan sponsor, to finance the acquisition of Hyatt Hotel portfolio. The properties are managed by Aimbridge Hospitality, a leading independent hotel investment and management firm, which currently operates more than 249 hotels in 37 states and the Caribbean.
All of the properties are operated under the Hyatt House flag. Twenty-seven are select-service hotels built between 1990 and 2013; the remaining 11 assets are extended-stay hotels built between 1997 and 2010. All of the properties in the portfolio have been renovated since 2007, and a total of $41.0 million has been spent on capital improvements across the portfolio from 2007 to 2014.
Kroll and Standard & Poor's assigned preliminary ratings to six tranches issued under the trust called Hyatt Hotel Portfolio Trust 2015-HYT.