Moody’s rates Motel 6, loan B2

Moody's Investors Service said it assigned first time ratings to BRE/Everbright M6 Borrower LLC (Motel 6), including a B2 corporate family rating, a B2-PD probability of default rating and a B2 rating on its expected $300 million senior secured term loan.

“The B2 CFR assignment reflects that while we expect significant improvement in Motel 6's operating performance and credit metrics as it recovers from the global coronavirus pandemic, pro forma consolidated financial leverage will remain high over the next year as it will take time to fully recover from the coronavirus related downturn. The rating also incorporates governance considerations given the company's private equity ownership, as private equity owners tend to have more aggressive financial strategies,” Moody’s said in a press release.

Loan proceeds along with $685 million of new commercial mortgage-backed securities will be used to refinance debt, pay transaction fees and expenses and fund a CMBS reserve account.

The outlook is stable.

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