APF closes on the acquisition of two controlling tranches worth
$90 million in Citibank's $631M CMBS refinance of MCR portfolio.
ATLANTA — Access Point Financial (APF) has closed
on a $90 million investment in Citibank's recent $631.5M CMBS SASB hotel
portfolio refinance for 53 hotels owned by MCR Hotels and Building and Land
Technology.
APF’s piece in its first SASB deal is the last two bond tranches
of the capital stack for the limited-service and select-service portfolio that
included 33 Marriotts and 20 Hilton hotels. The properties are located in 14
states, primarily in the Sunbelt region.
APF CEO and Chairman of the Board Michael Lipson told Hotel
Investment Today that they started talking to Citibank in January, and after
going back and forth the deal came together quickly for them. Lipson followed
up by suggesting similar deals could be on the horizon for APF. “We will
continue to work with the different participants on the Street. We’re talking
to several others right now,” he said. “Loans that fit our criteria are more of
the limited-service and extended-stay portfolios. While we would do a one-off
large transaction for a resort or the like, that’s not really our strike zone
profile of what properties we like. So, we think there’s a couple of potential
deals out there that we definitely have an interest in.”
Lipson added that this refinance had the right flags and
right sponsor in MCR. “It’s a well-balanced portfolio and has the right flags,
even though it may have a little more leverage than you typically might see,”
he said. “We got comfortable with that and are being properly compensated for
the risks involved in the transaction.”
All that said, APF is expected to be a more active player in
deals like the Citibank-MCR opportunity with the capability to go up and down
the debt stack. “Our ownership structure gives us a lot of flexibility and we
have a lot of capacity,” Lipson said. “So, I think from the standpoint that we
had a couple deals show up on our radar screen, we could execute more. There is
no issue with the funding… We continue to do what I would call more traditional
one-off type deals that we fund through our other facilities.”
I think the economy is very strong and if you take that to the logical conclusion, I don’t see the Fed cutting rates significantly... If we get lucky, we get one or two [cuts], and I’m going to stick with that.
Michael Lipson
Looking bigger picture, Lipson said he is very bullish about
hospitality and hotel assets in general as the segment continues to outperform.
When asked if the increasing number of recent CMBS deals
signals that the loan class is all the way back to 2019 levels, Lipson hedged a
bit and said it’s slowly coming back. “I think you’re starting to see a lot
more transactions get done – five-year transactions, fixed-rate, across the
board,” Lipson said. “Is CMBS fully back? I’m not so sure. But it is coming
back.”
Lipson is also seeing more industry players look at
different structures with preferred equity, mezzanine structures and, again,
you’ll see APF play in that space as well. “Clearly, with where interest rates
are today, a lot of loans that are coming to maturity may not be refinanced in
the most traditional way,” he said. “So, there may be in these room for
preferred or mezzanine.”
As for his take on The Fed’s positioning, Lipson said he has
been a contrarian from the start, predicting nowhere near the five, six or even
seven interest rate cuts some have been expecting. “I think the economy is very
strong and if you take that to the logical conclusion, I don’t see the Fed
cutting rates significantly... If we get lucky, we get one or two [cuts], and I’m
going to stick with that.”