Times Square Hotel Trust Certificates Outlook Revised To Negative; 'BBB' Rating Affirmed

  • We reviewed our rating on Times Square Hotel Trust, a U.S. credit tenant lease transaction. The collateral consists of a fully amortizing mortgage loan.
  • We revised our outlook on the mortgage and lease amortizing certificates from the transaction to negative from stable.
  • At the same time, we affirmed our 'BBB' rating on the certificates.
  • The rating actions follows the March 20, 2020, revision of the outlook and the affirmation of the rating on Starwood Hotels & Resorts Worldwide LLC.
NEW YORK (S&P Global Ratings) March 26, 2020--S&P Global Ratings today revised its outlook on the mortgage and lease amortizing certificates from Times Square Hotel Trust, a U.S. credit tenant lease (CTL) transaction, to negative from stable. At the same time, we affirmed our 'BBB' rating on the certificates.
The rating action follows the March 20, 2020, revision of the outlook and the affirmation of the rating on Starwood Hotels & Resorts Worldwide LLC (Starwood) to 'BBB/Negative' from 'BBB/Stable' (for more information, see "Various Ratings Actions Taken On 34 Companies In The Lodging And Leisure Sector," published March 20, 2020).
The trust certificates are backed by a fully amortizing CTL loan with a reported $80.6 million balance (according to the March 2, 2020, trustee remittance report), down from $168.9 million at issuance. The loan is secured by an assignment of a bondable net lease to Starwood and mortgages on the W New York – Times Square hotel property, a 53-story, 509-guestroom full-service hotel in midtown Manhattan. Starwood leases the hotel and is responsible, among other things, to pay all real estate taxes, operating costs, utility expenses, insurance premiums, maintenance and repairs, and condominium maintenance charges. The rental payments received from Starwood under the lease is used to pay all the interest and principal on the loan.
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