Hotel CMBS loans worth $2B fall into special servicing

Single-borrower loans suffer from lack of diversification as virus slams lodging

TRD NATIONAL /
Apr.April 16, 2020 04:42 PM
Courtyard by Marriott Boston Downtown. Homewood Suites Chicago and Sheraton San Jose Hotel (Credit: Google Maps)

Courtyard by Marriott Boston Downtown. Homewood Suites Chicago and Sheraton San Jose Hotel (Credit: Google Maps)

As the coronavirus roils the commercial-mortgage backed securities market, loans on hotel properties have been ahead of the curve when it comes to delinquencies and special servicing.

Three massive CMBS hotel portfolio loans, covering 186 hotels with a total outstanding balance of about $2 billion, were among the largest to be transferred into special servicing so far this month, Commercial Observer reported citing Trepp. Single-borrower transactions backed by only hotels have been the hardest hit of all.

“Of the top 24 loans that were sent to special servicing with the April remittance cycle to date, all but three have been hotel loans,” Trepp analysts wrote in a Thursday update.

The three big portfolio loans are all of recent vintage, having been originated in 2018 and 2019.

The most recent was a $752 million loan on the 92-hotel HIT portfolio, which included Homewood Suites Chicago Downtown and the Residence Inn Los Angeles-El Segundo among other properties. A Morgan Stanley-led group originated the loan last May, and more than a dozen of the hotels in the portfolio have already been paid off. But the debt backed by the remaining hotels in the deal was moved to special servicing due to “imminent monetary default.”

The servicer on another deal, the Tharaldson Hotel portfolio loan, provided more detailed commentary. The borrower, Tom Barrack’s Colony Capital, had requested a 90-day deferral for debt payment as well as suspension of various deposits and other accommodations, which the master servicer could not provide. The $777 million loan covered 135 hotels at issuance in 2018, about a third of which have since been released since.

Colony, formerly a junior mezzanine lender on the Tharaldson portfolio, had gained control of the hotels — mostly in California, Nevada and Texas — in 2017 when the previous borrower failed to secure refinancing.

Finally, a $720 million loan on the Ashford Highland portfolio was also put into special servicing, but no detailed commentary was provided.

Last month, Kroll Bond Rating Agency assigned a “Underperform” outlook to all single-asset single-borrower lodging deals that it was tracking — including the Tharaldson portfolio — citing a likely decline in occupancy to around 10 percent as had been the case in China and Italy.

Occupancy at U.S. hotels fell to 21 percent during the week ending April 11, according to the hospitality data firm STR. That’s a 70 percent drop from a year ago.

“If occupancy levels among KBRA-rated CMBS SASB lodging properties fall to this level for an extended period, none would be able to achieve breakeven debt service coverage,” Kroll analysts wrote. [CO]Kevin Sun

(Caption: top to bottom: the HIT, Tharaldson, and Ashford Highland portfolios. Source: Trepp)

(Caption: top to bottom: the HIT, Tharaldson, and Ashford Highland portfolios. Source: Trepp)


Related Articles

arrow_forward_ios
With a cooling trade war, stocks perform well, including real estate. (Credit: iStock)

Real estate stocks push up this week as U.S.-China trade tensions ease

Real estate stocks push up this week as U.S.-China trade tensions ease
416 West 25th Street and Maverick Real Estate Partners principal David Aviram (Credit: Google Maps and LinkedIn)

Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case

Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
Joy Construction’s Eli Weiss (left), Maddd Equities’ Jorge Madruga (top), and Drew Katz with 20 Bruckner Boulevard in the Bronx (Getty; Google Maps)

“Dream” comes true for long-vacant Bronx ice house

“Dream” comes true for long-vacant Bronx ice house
The Hotel Indigo Lower East Side at 171 Ludlow Street and Rotem Rosen (Credit: Hotel Indigo)

Tallying crisis’ toll on MRR Development’s Hotel Indigo

Tallying crisis’ toll on MRR Development’s Hotel Indigo
 David Bistricer of Clipper Equity and 77 Commercial Street in Greenpoint (REIT and Google Maps)

Bistricer lands $386M construction loan for Greenpoint project

Bistricer lands $386M construction loan for Greenpoint project
109 East 79th Street and Victor Sigoura (Google Maps; Getty)

Victor Sigoura lands $133M construction loan for UES condo

Victor Sigoura lands $133M construction loan for UES condo
From left: Mapleton Rentals at at 1555-1575 61st Street in Mapleton, 1440 Story Avenue in Soundview, Beard-Van Brunt at 411 Van Brunt Street in Red Hook

Abraham Leser targets $74M refi for Brooklyn, Bronx properties

Abraham Leser targets $74M refi for Brooklyn, Bronx properties
Mall of America in Minnesota (Farragutful via Wikipedia)

Mall of America falls behind on $1.4B mortgage

Mall of America falls behind on $1.4B mortgage
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...