CMBS funds another tranche of MGM-Mandalay casino loan

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A $ 107.68 million CMBS transaction this week funded a small portion of a $ 3 billion bank loan that funded a sale and leaseback transaction last year at two Las Vegas casinos – the MGM Grand and the Mandalay Bay.

BX Commercial Mortgage Trust 2021-VIV5, which was led by Société Générale and valued on Monday, was the fifth SASB issued in the past year that was backed by part of the original loan. The offer was marketed and awarded to a select group of investors before its official price, according to two sources of purchase.

Citigroup, Barclays, German Bank and Societe Generale is at the origin of the jumbo loan MGM-Mandalay for the agreement between black stone and MGM Growth Properties and began securitizing it in May 2020. Originally, the banks planned to bundle US $ 1.9 billion of the loan into a single SASB offering in March 2020, but the deal was reached when the pandemic of Covid forced the city’s casinos to close for two months. .

Banks sold CMBS debt in chunks rather than a single transaction to allow it to be more easily absorbed by investors who remain cautious about the recovery of the Las Vegas casino industry from the pandemic, said market players. Banks now plan to bundle the remainder of the loan into conduit offerings, according to Moody’s.

“They were pinched by Covid which has become so strong. They leaked it to the market instead of a big deal,” said a senior portfolio manager.

The Triple A rated single class offering had a weighted average life of 8.40 years and was valued at swaps plus 100bp.

Each successive “VIVA” operation aroused more interest because it was backed by a more senior part of the loan. The previous transaction sold in December, BX 2020-VIV4 Trust, was backed by a $ 550 million portion of the $ 1.634 billion “global A notes”, which takes precedence over the loan’s “senior B notes” of 430. , $ 1 million; $ 374 million in “Junior B Notes” and $ 561.4 million in “Aggregate C Notes”.

The remaining US $ 968.4 million that has not yet been securitized consists entirely of A Notes and will be included in various conduit transactions, Moody’s said.

The latest “VIVA” transaction came ahead of an expected US $ 3 billion CMBS backed by a loan related to MGM’s US $ 3.9 billion sale and leaseback agreement with Blackstone on its Aria Resort & Casino and Vdara Hotel and Spa. JP Morgan, Morgan stanley, Citigroup and Wells fargo are expected to announce the offer in October, according to a source close to the deal.

Another CMBS mega-casino could arrive by the end of the year to fund the $ 5.65 billion sale of The Cosmopolitan, which a real estate arm of Blackstone has sold to a group consisting of Blackstone’s REIT, the private equity firm Stonepeak Partners and the Cherng Family Trust – the family office of Andrew Cherng who co-founded the Panda Express restaurant chain. MGM is expected to sign an operating agreement to manage the casino.

Blackstone declined to comment on its CMBS funding strategy for its casino offerings.


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