JPMorgan Chase is in the market with a CMBS deal called Commercial Mortgage Securities Trust 2012-PHH.
The offering is structured with a two-year, floating-rate commercial mortgage loan totaling $175 million, which is secured by the fee interest in the 1,639 guest room Palmer House Hilton hotel in Chicago, Ill.
In addition to the first-mortgage loan, there is additional debt in the form of $190 million of mezzanine debt comprising five tranches.
Standard & Poor’s has assigned a preliminary rating to the bonds. The class A notes have been rated ‘AAA’; the class X-CP and X-EXT notes are both rated ‘BB+’. S&P has also assigned ratings to the class B,C,D and E tranches of ‘AA’, ‘A’, ‘BBB-‘, and ‘BB+’ respectively, according to a presale report.
“The transaction is structured such that the borrower is responsible for most expenses that would typically result in shortfalls to the certificate holders, such as special servicing, work-out, and liquidation fees, as well as costs and expenses incurred in connection with appraisals and inspections that the special servicer conducts,” S&P analysts said in the report.
The ratings agency also said that the market for U.S. lodging has rebounded rapidly with the improving U.S. economy. Revenue per available room (RevPAR) increased by 8.2% in 2011 and 7.3% in the year-to-date period ended August 2012 compared with the same periods in previous years. Limited supply growth since 2010 has also benefited the lodging sector.
“The Palmer House Hilton's performance has improved in the past two years with the recovery in the economy and from the recently completed and ongoing renovations,” said S&P analysts in the report. According to agency, RevPAR increased 7.2% in 2011 and 10.2% in the following 12 months ended Sept. 30.