Two loans to be originated next month on Tishman Hotel & Realty's three adjacent Walt Disney World hotels in Orlando, Florida, are already heading to the commercial mortgage-backed securities market.
Wells Fargo Bank, Bank of America, and Goldman Sachs are expected to originate two loans totaling $735 million on or about May 9 with Wells Fargo then rolling the loans into a new CMBS offering, according to analysis by KBRA and Fitch Ratings.
The loan and bond offering advance the lending thaw underway in the U.S. lodging sector. More than $4.6 billion in securitized lodging loans have been offered or are in various stages of being offered so far this year, according to CoStar data. That compares to just $1.7 billion in the same time frame last year.
Leisure demand, which drove the lodging industry’s outperformance since the pandemic, remains strong, according to KBRA. Orlando has been one of the fastest major markets to recover due to its weather, outdoor attractions, and limited governmental restrictions.
Although the market has benefitted from strong leisure demand that is now normalizing, the positive trend should continue given the slow recovery in group business, which has begun more recently, the credit-rating firm noted. In addition, international arrivals have not yet returned to pre-pandemic levels, which will further benefit Orlando.
The two loans will be on Tishman’s Walt Disney World Dolphin, Walt Disney World Swan, and Walt Disney World Swan Reserve. Tishman owns the three hotels totaling 2,619 rooms in a joint venture with Metropolitan Life.
Tishman did not respond to a request for additional information on the pending refinance.
Although non-Disney-owned properties, the three hotels are allowed to use Walt Disney World as part of their official hotel names. Only the Four Seasons Resort Orlando, another non-Disney-owned hotel, also has this ability, according to KBRA. In addition, the properties benefit from being listed on the Walt Disney World website and are part of the Walt Disney World central reservation system.
Tishman is planning to invest about $180 million in renovations and other initiatives over the next five years, including a $64.4 million 150,000-square-foot expansion of meeting space at the Dolphin hotel, repurposing existing space at the Dolphin into a 13,000-square-foot entertainment venue, according to KBRA. These projects are expected to be funded by a $97 million value enhancement reserve and the $2 million pre-development reserve that are to be funded at loan closing.