Summary
Marriott International, Inc. (MAR) reported on November 12, 2010, a securitization of approximately $229 million in timeshare mortgage loans. These loans were transferred to Marriott Vacation Club Owner Trust 2010-1, and investors purchased approximately $218 million in timeshare loan-backed notes in a private placement. This transaction provides the company with immediate cash proceeds and a residual interest in the trust, allowing for potential future value realization from the mortgage loans.
Key Highlights
- 1Securitization of approximately $229 million in timeshare mortgage loans.
- 2Transaction structured through Marriott Vacation Club Owner Trust 2010-1.
- 3Investors purchased approximately $218 million in Timeshare Loan Backed Notes (Class A and Class B).
- 4Class A Notes totaled ~$195 million at 3.54% interest.
- 5Class B Notes totaled ~$23 million at 4.52% interest.
- 6Marriott received initial cash proceeds of ~$218 million.
- 7Company retains a subordinated residual interest in the trust for future value.
- 8Transaction accounted for as a secured borrowing, with no gain or loss recognized in Q4 2010.
- 9Notes were offered in a private placement and are not registered under the Securities Act of 1933.
Frequently Asked Questions
The primary purpose was to report the securitization of a pool of timeshare mortgage loans, which involved selling these loans to a trust and issuing asset-backed notes to investors.
Marriott International received initial cash proceeds of approximately $218 million from the sale of the Timeshare Loan Backed Notes.
No, under current accounting rules, this securitization is treated as a secured borrowing. Therefore, Marriott will not recognize a gain or loss in the fourth quarter of 2010 from this transaction.
Marriott retains a subordinated residual interest in the trust. This means they will receive any remaining value from the mortgage loans after the notes are paid off, providing potential for future earnings.