Two Los Angeles entertainment complex developers are offering ABS investors a piece of the stars.
Gaw Capital Partners and DJM Capital partners are sponsoring $211.3 million large-loan securitization that will include as collateral the famed Hollywood Walk of Fame, according to a presale report Thursday from Moody’s Investors Service.
Technically, the securities sold will be collateralized by the interest-only mortgage that is secured by the Hollywood & Highland mixed-use entertainment center, which includes the famous strip and its celebrity plaques that the deal sponsors say draws 25 million tourists annually.
The Hollywood Walk of Stars is a nationally recognized landmark, administered by the Hollywood Chamber of Commerce and maintained by a self-financing trust.
The 462,827-square-foot retail, restaurant and entertainment complex is also home to the Ray Dolby Theater that hosts the annual Academy Awards show – but the theater is excluded as collateral from the trust’s transaction.
The $263.8 million loan was issued by Natixis Real Estate Capital LLC, which sold the loan to the NCMS 2019-FAME Mortgage Trust. The capital stack includes six classes of rated principal and/or interest notes, with a senior Class A note tranche of $73.1 million in notes with a preliminary Aaa rating from Moody’s. The trust will also market four exchangeable note classes eligible to be traded for equivalent Class A, B, C or D notes.
The transaction was part of a $325 million acquisition financing package. The two sponsors put up $151 million in equity in the deal, resulting in loan-to-cost ratio of 65.4%, according to Moody’s.
The revenue that will be tapped to pay the investor notes will come from over $19 million in annualized cash flow from leases for retail, entertainment and dining tenants in the complex, including event revenues from the fifth-floor Wolfgang Puck Catering space.
The deal also sources unusual revenue sources for a CMBS transaction: billboard advertising income and naming/special access rights associated with the Ray Dolby Theater.
The complex was approximately 90% leased at the time the deal closed.
“The property does not contain any traditional anchor tenants, though it is host to a number of high profile retailers and national chains,” the report stated.
