JPMorgan has launched the refinancing of Blackstone’s reduced Mint hotel portfolio, in the investment bank’s return to European CMBS and also the first post-crisis multi-jurisdictional, dual-currency securitisation, in the three-year Mint 2015 PLC transaction.
Mint 2015 PLC is comprised of two loans which are secured by three four-star hotels, rebranded as DoubleTree by Hilton hotels in 2012, with a separate capital structure for the sterling and euro component parts.
The transaction comprises a £251.1m sterling tranche and a €131.0m euro tranche, which both carry a margin of 229 basis points over three-month LIBOR and Euribor, respectively. The loans are floating-rate, interest-only, and fully hedged via interest rate caps.
The £251.1m sterling capital structure is as follows:
Class Size Exp. Rating LTV
- A £109.3m AAA/AAA 25.7%
- B £42.0m AA/AA(low) 35.6%
- C £14.2m AA-/A(low) 39.0%
- D £48.8m BBB+/BBB(low) 50.5%
- E £29.3m BBB-/BB(low) 57.4%
- F £7.5m BB+/B(high) 59.2%
- Total: £251.1m
The €131.0m euro capital structure is as follows:
Class Size Exp. Rating LTV
- A €54.8m AAA/AAA 24.8%
- B €21.9m AA/AA(high 34.7%
- C €21.9m A/A(low) 44.6%
- D €26.3m BBB-/BBB(low) 56.4%
- E €6.0m BB+/BB(high) 59.2%
- Total €131.0m
Standard & Poor’s and DBRS are expected to provide the above ratings.
The three hotels are:
- DoubleTree by Hilton Tower of London (valued at £289.1m);
- DoubleTree by Hilton Westminster (valued at £157.6m, together the London hotels comprise 1,043 rooms); and
- DoubleTree by Hilton Amsterdam (valued at €233m, the hotel has 557 rooms).
The appraised market value for the three hotels is £632m, reflecting a senior LTV of 59.2%. The remaining loan term is 2.7 years which the option of two 12 month extensions.
JPMorgan extended the loans under a single agreement – including an additional £100m mezzanine loan – to refinance the existing acquisition finance by Deutsche Bank when Blackstone acquired the original eight-strong Mint hotel portfolio in 2011.
Both the senior and mezzanine loans are split into pound-sterling and euro-denominated loans that rank pari passu with each other.
The senior loans are cross-collateralized and cross-defaulted, but they are constructed so the pound sterling loan receives pound sterling cash flows from the London hotels and the euro loan receives euro cash flows from the Amsterdam hotel, confirmed Standard & Poor’s in its pre-sale report.
In turn, the issuer will use funds received under each currency loan to pay its notes of that currency. The senior loans default if the LTV ratio or interest coverage ratio (ICR) is greater than 75% or not less than 1.25x, respectively.
Expected maturity is 22 February 2018 with a seven year tail to legal final maturity. Initial pricing guidance is expected in the week beginning 8 June with a closing slated for the following week.
S&P reported: “The three remaining hotels have traded successfully after Blackstone acquired the portfolio, as their net cash flow increased by 40% to £38.0m in 2014 £28.9m in 2012. Occupancy increased to 83.5% from 77.6% over that same time.”
Five of the hotels in the initial Mint portfolio, located in major regional UK towns and cities, were sold before this securitisation was launched.
Hilton UK Manage Ltd and Hilton Worldwide Manage Ltd is the hotel operator.