Hotels feature heavily in the collateral pool that backs the latest Deutsche Bank and Cantor Fitzgerald-led conduit CMBS.
COMM 2015-LC23 is marketing a total of $906.9 million of securities backed by 62 commercial mortgage loans that are secured by 120 properties.
Fitch Ratings and Kroll Bond Rating Agency have assigned preliminary 'AAA' ratings to the super senior notes and junior senior notes that benefit from 30% and 23.67% credit enhancement, respectively.
The pool’s lodging exposure (19.9%) is higher than the average of the CMBS conduits rated by Kroll over the last six months (14.6%). The lodging exposure for these deals ranged from 3.7% to 23.7%. Hospitality assets can have more volatile cash flows than other property types due to their dependence on nightly room rates.
The largest loan in the pool is the $80 million Equity Inn Portfolio, which is a collection of 21 extended stay hotels located in 20 cities and 13 states across the country owned by American Realty Capital Hospitality Trust.
Equity Inns Portfolio is in the middle of a $45.6 million ($17,836 per key) brand-mandated Property Improvement Plan (PIP) which is scheduled to take place at 20 of the 21 collateral properties between 2015 and 2020.
The loan is part of a larger $232 million wholesale loan. The $80 million controlling A-1 note is securitized in this transaction. The $132 million non-controlling A-2 note will be securitized in a future transaction.
The properties are part of a larger portfolio of 116 hotels that was purchased for $1.81 billion in 2007. The portfolio was broken out into two pools: Pool one consists of 96 hotels that were securitized in EQTY 2014-INNS and pool two contains the hotels that are included in this securitization.
Loans in the collateral pool backing COMM 2015-LC23 have a weighted average remaining life of 8.4 years and a WA LTV based on the appraised value of the properties of 61.9%. Kroll's LTV calculation is 102.1% and Fitch Ratings 108.5%.
The pool also includes the 11 Madison Avenue loan, which accounts for 7.2% of the pool balance. Rated an investment-grade 'A-' by Fitch and 'AAA' by Kroll, this loan lowers the overall leverage in the transaction. According to Fitch, without the loan the LTV in the pool would be 112.5%
The loan is part of a larger, $1.17 billion whole mortgage secured by 11 Madison Avenue in New York City. The loan is comprised of 16 pari passu A notes totaling $764.3 million and three B notes totaling $310.6 million. The A-2-C1 and A-2-C2 notes with an aggregate balance of $91.7 million are securitized in MSBAM 2015-C26; a $70 million A-1-C2 note is securitized in COMM 2015-CCRE27; a $70 million A-1C1 note is securitized in the COMM 2015-CCRE26 transaction; and a $35.0 million A-1-C1 note is securitized in the WFCM 2015-NXS3 transaction.
Nine of the senior notes totaling $397.5 million along with all three junior B notes were contributed to the single-borrower CMBS MAD 2015-11MD trust.
