JP Morgan is marketing $585 million of bonds backed by a single loan secured by a portfolio of 30 hotel properties, according to Fitch Ratings.
JPMCC 2016-ATRM represents the interest in a fixed-rate mortgage that pays only interest for its entire five-year term. Proceeds from the loan, along with $151.8 million of mezzanine debt, were used to refinance existing debt backed by the properties
The trust will issue eight classes of notes with preliminary ratings from Fitch Ratings and a single unrated tranche. The senior, triple-A rated notes benefit from credit enhancement of 67.2%.
The portfolio exhibits geographic diversity, with 30 properties located across 16 states; no state represents more than 15.2% of portfolio cash flow. The top 10 properties account for approximately 54.0% of the portfolio cash flow and 39.0% of the total keys.
The 30 properties comprising the portfolio have an average age of 23.5 years (built from 19792000), which is considered to be of older vintage. The portfolio’s assets are well maintained, with $258.9 million ($35,785 per key) of capital improvements spent from 2005 through November 2015. In addition, $125.2 million ($17,300 per key) in capital improvements are budgeted through 2020
Fitch’s stressed DSCR and loan-to-value (LTV) ratios for the trust component of the debt are 1.04x and 103.0%, respectively
Twenty nine of the 30 hotels are franchised with Hilton, Marriott, Intercontinental Hotel Group (IHG), Carlson Rezidor, and Starwood and benefit from their respective loyalty point and reservations systems. The Embassy Suites by Hilton represents the largest brand, with 34.5% of the portfolio’s total keys and 47.1% of the portfolio’s TTM November 2015 net cash flow (NCF). The remaining brands include Marriott, Renaissance, Holiday Inn, Hilton, Sheraton, Homewood Suites, Hampton Inn & Suites, Crowne Plaza, Radisson and one independently operated hotel.