Blackstone cashes out through Motel 6 CMBS

New York

WHEN the final slug of a US$1.8 billion Motel 6 mortgage bond deal sold last Thursday, the Blackstone Group took its US$626 million equity in the low-cost lodging chain off the table.

Some take a dim view of such large cashouts, particularly on far- flung properties still recovering from the real estate crash. But with bond investors increasingly willing to finance big-name real estate operators at low costs, the lure of a cashout can be hard to resist.

"It's still a strong sponsor - and they got the deal done," said Jason O'Brien, a vice-president and portfolio manager focused on ABS (asset-backed securities), CMBS (commercial mortgage-backed securities) and MBS (mortgage-backed securities) at Nuveen Asset Management. "But last time…