SKN | Bank of America Completes €100 Million Hospitality Real Estate Securitisation

Key Takeaways

• Bank of America has completed a €100 million hospitality real estate financing using an A/B securitisation structure.

• The transaction used an Italian special purpose vehicle under Law 130/99, allowing part of the financing to be placed with third-party investors.

• The deal highlights how structured finance continues to provide banks with greater flexibility in funding commercial real estate while managing investment risk.

Bank of America has completed a €100 million hospitality real estate financing through a structured securitisation transaction, demonstrating the continued use of capital markets to support commercial property lending. The transaction combines traditional real estate financing with a securitisation framework, allowing risk to be shared among multiple investors while providing funding for hospitality assets.

The transaction reflects the growing role of structured finance solutions as banks seek to diversify funding sources, optimize capital allocation, and support large-scale commercial lending.

Understanding the A/B Securitisation Structure

The financing was executed through a special purpose vehicle (SPV) established under Italy’s Law 130/99, a legal framework widely used for securitisation transactions. The financing was divided into A and B notes, with a portion of the securities purchased by third-party investors.

In an A/B financing structure, different classes of notes typically carry different levels of risk and return. Senior A notes generally receive repayment priority and lower risk exposure, while B notes often provide higher potential returns in exchange for assuming greater investment risk. This structure allows lenders to attract a broader range of institutional investors while distributing credit risk more efficiently.

Benefits for Banks and Investors

For banks, securitisation provides an effective way to manage balance sheet exposure while continuing to support commercial lending. By transferring part of the financing to outside investors, financial institutions can improve capital efficiency, diversify funding sources, and free up capacity for future lending opportunities.

Institutional investors benefit by gaining access to structured credit investments backed by commercial real estate assets. Hospitality properties can offer attractive long-term income potential, although they also require careful assessment of market conditions, occupancy trends, and broader economic factors.

Governance of the financing was established through securitisation documentation based on intercreditor principles commonly used in A/B financing transactions. These agreements define the rights and responsibilities of each investor class and provide a framework for managing repayments, credit events, and decision-making throughout the life of the investment.

Structured Finance Continues to Support Commercial Lending

Commercial real estate financing has become increasingly sophisticated as banks adapt to changing interest rate environments, regulatory capital requirements, and evolving investor demand. Securitisation remains an important financing tool because it helps institutions balance risk management with continued credit availability for large-scale property projects.

As hospitality markets continue recovering across Europe, structured financing solutions such as A/B securitisations may become increasingly attractive for banks seeking efficient ways to finance hotels and other commercial assets while maintaining prudent capital management.

For financial institutions and investors alike, transactions like this demonstrate how structured finance can expand lending capacity while distributing risk across multiple market participants. As commercial real estate markets evolve, securitisation is expected to remain a valuable tool for supporting investment, liquidity, and long-term credit growth.

For a confidential discussion on securitisation, structured credit, commercial real estate finance, banking capital strategies, or institutional financing solutions, contact the senior advisory team at SKN CBBA for professional insights into today’s evolving banking and capital markets.