backKing & Spalding represented BBVA Securities as Global Coordinator, Green Structuring Agent and Joint Bookrunner and Oppenheimer & Co. as Joint Bookrunner and Initial Purchasers in connection with the offering of U.S.$300,000,000 aggregate principal amount of 11.000% Senior Secured Notes due 2031 by a trust created under the laws of Mexico (the “Issuer Trust”) to hold the cash flows of two luxury hotel resorts in Cancun, Mexico (Hyatt Vivid and Dreams Grand Island I). The notes are guaranteed by Murano PV, S.A. de C.V., Operadora Hotelera G.I., S.A. de C.V., the Murano 2000 Trust and the Murano 3224 Trust, all Mexican entities. Murano Global Investments PLC (NYSE: MRNO) (“Murano”) acted as sponsor pursuant to a Sponsor Support and Indemnification Agreement.
Despite recent market volatility and U.S. - Mexico political tensions, the deal, which closed on September 12, 2024, was oversubscribed.
The transaction which took over 8 months to structure, diligence, negotiate and complete involves a first -of-a- kind, bespoke structure combining CMBS/project bond/and high yield features as well as a sponsor support package and tailor-made Servicer and Subordination and Non-Disturbance Agreements negotiated with CXC, the largest Mexican master servicer, and Hyatt, as operator of the hotels.
The notes were rated by BB and Ba1 by S&P and Moody’s, respectively.
The proceeds of the notes have been and will be used to (i) prepay the construction debt facilities, (ii) fund a debt service reserve account, (iii) pay transaction costs and expenses, and (iv) fund working capital and support hotel completion costs. The main expected source of repayment of the notes will be the cash flows of the Cancun hotels. The collateral securing the Issuer Trust’s obligations includes the collection rights and cash flows of the hotels, first beneficiary rights with respect to the Issuer Trust, the Murano 3224 Trust and the Murano 2000 Trust, rights under material contracts related to hotel operations, equity of the Murano hotel operator and mortgages over the real property where the hotels sit.
Murano is a real estate group that owns, develops and invests in hotel, resort and commercial properties throughout Mexico. Over the last 20+ years, Murano’s management team has deployed more than $2 billion in total capitalization for the acquisition, repositioning and development of transformational real estate projects. Murano’s portfolio includes the Hotel Andaz (operated by Hyatt) and Hotel Mondrian (operated by Accor) in Mexico City, the luxury resort projects in Cancun which were the subject of the transaction as well as projects in Baja California. Earlier this year, the Firm represented the SPAC company in the de-SPAC transaction that took Murano public.
The King & Spalding team, which included a cross-discipline project finance, capital markets and leveraged finance team, was led by Fradyn Suárez (MIA) and Jessica Mendoza (MIA) and included John Ryan (NYC), Jonathan Newton (HOU), Trevor Pinkerton (HOU), Rishika Sengupta (HOU), James Smith (HOU), Nick Markwordt (ATL), Tiffany Monzon (NYC), Pedro Claussen (HOU) and Will Carroll (HOU) with assistance from Craig Phillips (NYC), David Ridenour (DAL), George Williams (NYC), Brandt Leibe (HOU), Russell Sacks (NYC), Christine Savage (DC), Jennifer Neilsson (CHI), Craig Miles (MIA), Margaret Nettesheim (LON), Michelle Story (DC), Sean Kelly (NYC) and Gina Bunker (DC).