ORLANDO, Fla. - Hilton Grand Vacations Inc . (NYSE:HGV) has successfully completed a significant securitization of timeshare loans, totaling $500 million, through its Hilton Grand Vacations Trust 2024-3. The transaction, which is the company's largest to date, involved the issuance of three classes of Notes: Class A, B, and C, with an overall advance rate of 98%.
Class A Notes, amounting to approximately $273 million, carry a coupon rate of 4.98%. Class B Notes, totaling about $147 million, have a coupon rate of 5.27%, while the approximately $80 million of Class C Notes come with a coupon rate of 5.71%. The combined weighted average coupon rate for this securitization stands at 5.18%.
Dan Mathewes, the president and CFO of Hilton Grand Vacations, emphasized the importance of this securitization, stating it underscores the company's market leadership and contributes to their goal of achieving synergy targets. He also highlighted the consolidation of legacy Bluegreen Vacations (NYSE:BXG) timeshare loans with HGV deed and trust loans into a single platform, which still managed to secure investment grade ratings and a high advance rate.
The proceeds from this issuance, after deducting fees, are earmarked for debt repayment and other general corporate purposes. This marks the company's 12th term securitization of timeshare loans and the first to include collateral from HGV, Diamond Resorts, and Bluegreen Vacations under the Hilton Grand Vacations Trust platform.
A consortium of banks, including Deutsche Bank (ETR:DBKGn) Securities, BofA Securities, Wells Fargo (NYSE:WFC) Securities, Barclays (LON:BARC), Goldman Sachs & Co. LLC, and MUFG, participated in the transaction, with Deutsche Bank Securities acting as the Structuring Lead Manager and Joint Bookrunner. Co-Managers included Citizens Capital Markets, Regions Securities LLC, Truist Securities, and Academy Securities, while Alston and Bird LLP represented HGV as issuer counsel.
The Notes were offered to qualified institutional buyers in the U.S. and to international investors under Regulation S of the Securities Act of 1933, as amended. The securitization received ratings from Standard & Poor's Financial Services LLC (S&P) and Fitch Ratings (Fitch).
This press release contains forward-looking statements and reflects the company's current expectations for its future performance. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially. Hilton Grand Vacations advises reviewing its most recent Annual Report on Form 10-K and subsequent SEC filings for a more detailed discussion of these factors.
Information for this article is based on a press release statement from Hilton Grand Vacations Inc.
In other recent news, Hilton Grand Vacations reported third-quarter earnings that did not meet analyst expectations. The company's adjusted earnings per share were $0.67, falling short of the consensus estimate of $0.76. However, Hilton Grand Vacations did report revenue of $1.31 billion, slightly surpassing the anticipated $1.29 billion.
Total (EPA:TTEF) contract sales for the company increased to $777 million in the third quarter, a rise from $603 million during the same period the previous year. Despite this, Hilton Grand Vacations' net income attributable to stockholders decreased to $29 million, a significant drop from $92 million in the third quarter of the preceding year.
In the midst of these developments, the company has held steady with its full-year 2024 guidance for adjusted EBITDA, excluding deferrals and recognitions, projecting between $1.075 billion to $1.135 billion. Hilton Grand Vacations ended the quarter with 722,000 members, marking a net owner growth of 1.2% for the legacy HGV-DRI business over the last 12 months.
InvestingPro Insights
To complement the recent securitization news from Hilton Grand Vacations Inc. (NYSE:HGV), InvestingPro data provides additional context on the company's financial health and market performance.
HGV's market capitalization stands at $4.16 billion, reflecting its significant presence in the timeshare industry. The company's revenue for the last twelve months as of Q2 2024 was $3.98 billion, with a notable revenue growth of 7.85% over the same period. This growth aligns with the company's ability to execute large-scale financial transactions like the recent $500 million securitization.
An InvestingPro Tip indicates that analysts anticipate sales growth in the current year, which could be partly driven by the company's strategic financial moves such as this securitization. Additionally, HGV's liquid assets exceed short-term obligations, suggesting a strong financial position that supports its ability to manage large debt issuances effectively.
The company's profitability is also noteworthy, with an adjusted operating income of $721 million and an operating income margin of 18.1% for the last twelve months as of Q2 2024. This profitability supports HGV's capacity to service the newly issued debt and potentially achieve the synergy targets mentioned by CFO Dan Mathewes.
Investors seeking more comprehensive analysis can find 9 additional InvestingPro Tips for HGV, offering deeper insights into the company's financial health and market position.
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