Five Mile completes Red Roof Inn acquisition

Barclays noted in their weekly today that it completed on August 25th via a $700mm debt acquisition. They are still forecasting a 50 (reported sales price) - 60% (Barclay's high end estimate) loss severity, to be reflected in September's remits.

Red Roof Inn - 48% Loss Severity

That could have been way worse.... Barclays reported today that this month's remit for CGCMT 2008-C7 reflected a 48% loss severity, hitting the J tranche on that deal.

See our prior thoughts here.




And, btw, I'm back - Apparently everything wasn't really 'better' in CRE-land like they told me...

CMBS spreads unchanged to slightly tighter on bad news

How can spreads be unchanged today! A ton of bad news comes out and spreads go down or sit tight - sounds like the equity market.

• ESH bankruptcy front page news - WSJ misrepresents the CMBS debt and quotes an idiotic lawyer who doesn't know who owns the bonds and apparently never used the PHDC function in Bloomberg or called the Trustee (who delivers coupon payments to the bondholders every single month).
• Red Roof Inn defaults - again WSJ reporting. It's in several CMBS deals as previously noted.
• Tishman defaulted on an $86mm (86, the same age as Alan Tishman when he passed on) land loan on 42 acres it purchased just 3 years ago.
  
• Worldwide Plaza can't close a deal.
• Naysayers of the current government "plans" are claiming to be in the Appalachian forests but are found to actually be cutting through the Argentinian bush.
• Six Flags - bankrupt. (Looked at a CMBS loan once - hah).
• Eddie Bauer - bankrupt. Whiskey Tango Foxtrot (WTF)?
• Reuhl (aka Abercrombie & Fitch subsidiary) - bankrupt.
• Even the Pink Elephant went bankrupt last week.
• Apartment rents in Manhattan dropped 12.3% - to JUST $3k or so for a 2 bedroom apartment without a bedroom. In the real world (outside of the city) that would buy you a far more than average house worth more than half a million (assuming T&I of $3.6k per year, a 20% downpayment, 30-yr mtg, and 5% or 6% interest). Not to mention that the median income of the entire country, including Manhattan, is just about $10k more a year than an 'average' apartment in NYC would cost you!
  

I guess news like BB&B earning money last quarter (mainly because its competitors are just empty store fronts now), ReREMIC deals, and hopes that TALF 2.1 works are carrying the market through. Spreads didn't move today.

Nothing to see here, move along.

Update: Ed McMahon was also 86 when he passed, on the 23rd! Further, Eddie Bauer (the human) died in 1986, the same year Billy Ocean and The Cure and even The Eurythmics put on shows at Six Flags, the number for the Chinese manufacturer that makes the clothes sold at Reuhl stores begins with 86 (China's country code), Governor Sanford 86'd his family this very week to get his jollys on with his latina lover, I once stayed very near the #86 Red Roof Inn (in Richmond, VA) at a much nicer establishment in town, I have driven by the #86 Extended Stay south of Charlotte within the last month, Maxwell Smart was Agent 86, the Sopranos had 86 series (so did Secret Agent Man), not to mention that the ship my grandfather served on in the war is docked at pier 86 in Manhattan at this very moment! There is definitely a pattern here - it involves Tishman, although it is unclear at this time what the precise connection is - stay tuned for further updates.

Just give me time - I'll tie McMahon to all this somehow - the Donald did bail him out of foreclosure... Check back for further updates...

Red Roof Inn Defaults

Accor (owner of Motel 6) sold RRI for $1.3 billion back in 2007 to Citigroup's Global Special Situations Group (GSSG), Westmont Hospitality Group ("Westmont"), and Westbridge Hospitality Fund, and partially financed that with 2 pari passu loans spread across 4 CMBS deals totaling $366 million. The rest of the senior mortgage ($655mm) didn't make it into a CMBS, and is likely on Citi or Bear's books, but it's not clear, and there is also some mezz debt ($164mm). That put's the new owners' equity at about 8 or 9 % of the purchase price. See the WSJ article for more.

The CMBS loans:
CGM RRI Hotel Portfolio - CD 2007-CD5 and CGCMT 2008-C7, 52 properties, $103mm

RRI Hotel Portfolio - BSCMS 2007-PW17 and BSCMS 2007-PW18, 79 properties, $263mm

UPDATE: Corrected the ownership structure.