Magenta 2020 PLC: 06 March 2020
The principal source of payment of interest on the Notes, and of repayment of principal on the Notes, will be a 95% share of all amounts received by the Issuer in respect of the Senior Loan (net of any senior fees and expenses payable by the Issuer) including interest, principal and prepayment fee amounts received by the Issuer under the Senior Loan. The Senior Loan was granted under the £274,749,064 senior facility agreement entered into by, among others, Goldman Sachs Bank USA (the Senior Loan Seller) and the Senior Borrower.
On 10 January 2020 £3,858,813 of the Senior Loan was prepaid, meaning the outstanding amount of the Senior Loan as at the date of the Offering Circular is £270,890,251. The Issuer will purchase the outstanding Senior Loan on the Closing Date pursuant to the Senior Loan Sale Agreement using the proceeds of the Notes and the Issuer Loan. £8,300,000 of the proceeds of issuance of the Class A Notes and a proportionate amount of the Issuer Loan will also be used to fund the Issuer Liquidity Reserve in an aggregate amount equal to £8,736,842.11.
The Senior Loan will be secured by, among other things, first fixed security over 17 hotels located in the United Kingdom, held by the Senior Obligors by way of leasehold and/or freehold/heritable interest. The 17 multi-branded hotels have a combined total of 3,383 rooms. The Properties are managed by Valor under the terms of the Valor Agreement. In the Initial Valuation, the market value of the Property Portfolio net of the purchaser’s costs of 1.7% is £435.55mln. The aggregate market value of the Property Portfolio averages to £128,747 per room.
The Hotels which are operated at the Properties are managed by the following Hotel Franchisors:
(a) the Hilton Hotel Franchisor: 1,410 rooms / 47.8% of the aggregate market value of the Property Portfolio / £147,695 per room;
(b) the IHG Hotel Franchisor – 1,741 rooms / 47.7% of the aggregate market value of the Property Portfolio / £119,213 per room;
(c) the Marriott Hotel Franchisor – 232 rooms / 4.5% of the aggregate market value of the Property Portfolio / £85,129 per room
The Property Portfolio generated £133,844,646 of total revenue (£39,564 per room) and Net Operating Income of £30,342,084 (£8,969 per room) in the trailing twelve month period (TTM) ending on 30 November 2019. The TTM average room occupancy for the Property Portfolio was 83.6% as at November 2019.
EU Risk Retention: Goldman Sachs Bank USA, as original lender in respect of the Senior Loan, will retain a material net economic interest in the securitisation of not less than 5% in accordance with the text of Article 6(1) of the Securitisation Regulation. As at the Closing Date, such retained material net economic interest will comprise not less than 5% of the nominal value of each of the tranches sold or transferred to investors in accordance with Article 6(3)(a) of the Securitisation Regulation, in the form of the Issuer Loan, the initial principal amount of which will equal at least 5% of the aggregate of (i) the principal amount of the Issuer Loan; and (ii) the Principal Amount Outstanding of each Class of Notes, in each case, in accordance with the EU Risk Retention Rules. As at the Closing Date, the Class X Certificates do not have an outstanding principal balance.
US Risk Retention: The securitisation transaction will be subject to the credit risk retention requirements of Section 15G of the Exchange Act, as added by Section 941 of the Dodd-Frank Act. Goldman Sachs Bank USA, as sponsor of the securitisation, is required to retain an economic interest in the "credit risk" of the "securitized assets" of not less than 5% under the U.S. Risk Retention Rules. Goldman Sachs Bank USA intends to satisfy the U.S. Risk Retention Rules by acquiring on the Closing Date and retaining an eligible vertical interest in the form of a single vertical security, in each case as defined under the U.S. Risk Retention Rules (the EVI). The EVI will comprise of 100% of the Issuer Loan, with an aggregate principal balance of approximately £13,981,368.42 as of the Closing Date.
Compare/contrast: European Loan Conduit No. 37 (Helios), Taurus 2019-3 UK DAC