A floating-rate, non-recourse mortgage loan is collateralizing a planned issuance of $685 million in mortgage pass-through certificates from the MOTEL Trust 2021-MTL6, where the bulk of proceeds will be used to refinance a previous commercial mortgage-backed securitization.
Other funds from the deal will be used to repay other debt and fund reserves, and pay closing costs.
The borrower, G6 Hospitality Property, LLC, has fee simple interests in 100 lodging properties with about 12,415 keys and a leasehold interest in six lodging properties totaling 741 keys, according to Kroll Bond Rating Agency.
That represents interests in 106 hotels, comprising 98 economy lodgings under the Motel 6 brand and eight extended-stay properties under the Studio 6 brands, according to S&P Global Ratings.
Goldman Sachs Mortgage Company is acting as the retaining sponsor on the deal, as well as one of the loan sellers. JPMorgan Chase Bank is another mortgage seller, according to the rating agencies.
KeyBank is servicer and special servicer on the deal.
Among the portfolio’s strengths is that 35 of the properties, representing 43.7% of the collateral’s allocated loan amount (ALA), are located in what is considered primary markets. Thirty-seven of the properties, or 31.1% by ALA are in secondary markets.
While the 34 remaining properties, which represent about 25.2% ALA of the pool, are in tertiary markets, theCOVID-19 pandemic drove demand for lodgings in suburban areas, as Americans sought to spend time in less densely populated areas, according to S&P. The rating agency also noted that the economy-lodging sector was less impacted by the COVID-induced economic downturn, because of their accessible, so-called drive-to locations, low price points and high net cash flow (NCF) margins.
KBRA noted that the deal’s net cash flow (KNCF) and RevPAR grew consistently between 2012 and 2017, due to an increase in occupancy levels and ADRs. NCF actually was $89.1 million in 2017, up from $47.3 million in 2012. Then 2017 and 2018 were years of decline, as rooms were taken offline for renovations. All in all, NCF by June 2021 was $39.2 million, a 126.3% increase from 2020, but below 2019’s NCF.
Both KBRA and S&P plan to assign ‘AAA’ ratings to the $187 million class A notes. Otherwise, the notes will get ratings ranging from ‘AA+’ through ‘B-’ from KBRA, and ‘AA-’ through ‘BBB-’ from S&P.
