MTP Hotel Portfolio, N.J. & PA
ABOUT
MTP Hotel Portfolio, N.J. & PA
Linden Lane Structured Capital (LLSC) purchased at a discount a $14.6 senior mezzanine loan (last dollar – 68% of cost) on an 8-property, 932-key hotel portfolio. The loan was repaid in full within 15 months. The face yield on the note was a single digit yield. Due to the discount and quick payoff, investors received a 22% IRR. At the time of payoff, a recapitalization (at a greater loan amount and risk level was completed by the Sponsor. LLSC was requested but declined to participate in that refinance. This proved fortuitous as the Sponsor subsequently defaulted and gave the keys to the subsequent mezzanine lender. LLSC’s disciplined approach to investing secured not only a great return but avoided a significant loss of time and money.
lender. LLSC’s disciplined approach to investing secured not only a great return but avoided a significant loss of time and money.
lender. LLSC’s disciplined approach to investing secured not only a great return but avoided a significant loss of time and money.
Situation
Purchased a mezzanine note at a discount from a major money center bank’s trading desk.
Strategy
LLSC knew that the loan was likely to go into default due to construction completion delays. Overall collateral value was strong.
Results – Loan was repaid in full with a 21%+ IRR returned to investors. LLSC had an opportunity to refinance the loan again at a higher basis and choose not to participate. That subsequent loan defaulted and ended up being owned by the next mezzanine lender.
GALLERY
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