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Hospitality Properties $125 Million Pass-Thrus Rated 'A' By Fitch -- Fitch Financial Wire --

NEW YORK, Nov. 25 /PRNewswire/ -- Hospitality Properties Mortgage Acceptance Corp.'s $125 million commercial mortgage pass-through certificates, series 1996-C1, are rated 'A' by Fitch Investors Service. Underlying the variable-rate certificates is a $125 million first mortgage loan evidenced by a single floating-rate interest-only note that bears interest at one-month LIBOR plus 0.65%, subject to a LIBOR cap of 7.0%. Fitch's rating addresses timely payment of interest and ultimate repayment of principal by the rated final maturity date in Dec. 2004, three years after the loan maturity date of Dec. 1, 2001.

The note is secured by cross-defaulted and cross-collateralized first mortgages on 29 hotel properties (4,118 rooms) in 16 states, flagged as Residence Inns and Wyndham Garden Hotels. The properties are owned by two bankruptcy-remote special purpose entities wholly owned by Hospitality Properties Trust (HPT), a publicly traded real estate investment trust. The properties were net leased to two unaffiliated lessees and the borrower or lessor entered into long-term management agreements, with the former operators of the properties, an affiliate of Marriott International, Inc. to operate the 18 Residence Inns and a subsidiary of Wyndham Hotel Corp. to operate the 11 Wyndham Garden Hotels.

The rating reflects the overall low loan-to-value of 43%, using Fitch's adjusted net cash flow (NCF) as the basis for valuation, and high property- level debt service coverage ratio of 2.50 times (x), applying Fitch's hypothetical hotel refinance constant of 11.33% to Fitch NCF, or 3.69x based upon the actual five-year maximum floating all-in rate and Fitch NCF. The rating also considers the strong performance of the properties, good sponsorship and management and Fitch's assessment of the integrity of the legal and financial structure of the transaction, including a prohibition on additional secured debt, restrictions of transfer or release of properties and servicer advancing of interest through liquidation of the properties. Concerns addressed in the rating include the interest-only loan, the existence of the lease structures (effectively necessitated by federal tax rules regarding qualifying REIT income), the low coverage of Fitch property level NCF to required lease payments and the fact the lessees are not bankruptcy remote special purpose entities.

HPT was formed in Feb. 1995 to acquire, own and lease hotels to unaffiliated tenants. HPT currently owns 82 hotels (11,728 rooms) net leased to operators under similar arrangements. The $125 million loan was originated by Column Financial, Inc., an affiliate of Donaldson, Lufkin & Jenrette (DLJ), and conveyed at closing to a newly established grantor trust, which issued the 'A' rated certificates under a Trust and Servicing Agreement, dated Nov. 25, 1996, between the Issuer, Hospitality Properties Mortgage Acceptance Corp.'s, Trustee, Chase Manhattan Bank and Servicer, Amresco Management, Inc. The certificates were privately placed by DLJ, pursuant to Rule 144A under the Securities Act of 1933.

SOURCE Fitch Investors Service
 -0- 11/25/96

/CONTACT: Dot Coddington, 212-908-0683, or Don Belanger, 212-908-0668/

CO: Hospitality Properties Mortgage Acceptance Corp. ST: IN: FIN SU: RTG

BS -- NYM139 -- 3922 11/25/96 16:35 EST
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Publication:PR Newswire
Date:Nov 25, 1996
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