With much of the hotel industry misfiring like Mark Sanchez under the Monday night lights, the Westin Copley Place’s relative financial strength is worth noting.
The hotel was highlighted in a recent Moody’s Investors Service report on a $1.9 billion portfolio of commercial mortgage-backed securities (CMBS) arranged by a Bear Stearns affiliate in 2005. As of Last month, the portfolio’s investors were expected to book a 6.1 percent loss — some $116 million — as the securities mature.
The debt portfolio backs all sorts of properties including office buildings, malls and hotels. In computing those loss projections, Moody’s said investors should brace for around $60 million in losses from the 49 loans that have been watrchlisted or shifted to special servicing.
The ratings firm said one in five loans in the Bear Stearns portfolio was watchlisted or in special servicing as of Nov. 12, adding that expected losses for that group range from 20 percent to 65 percent, on average.
The Westin Copley has proven among the portfolio’s more resilient properties, according to Moody’s. The property’s $105 million loan balance (half of the hotel’s $210 million in debt outstanding) is among the Bear Stearns portfolio’s best-performing assets. According to Bloomberg data, the 800-room hotel generated $84 million in revenue and threw off $20.7 million in net cash during the 12 months ended June 30.
Even when applying its worst stress-test scenarios, Moody’s said the Westin’s operating income would still be sufficient to cover its annual debt-service obligation of $11.2 million (that’s for it’s entire $210 million debt balance). LaSalle Hotel Properties (NYSE: LHO) acquired the Westin for around $324 million in 2005.
The hotel’s interest-only debt service period ends in 2015, at which point its loans balloon to maturity, according to data aggregated by Wells Fargo Bank, the CMBS portfolio’s master servicer.