Recap of Hotel Receivers Views on Lodging Real Estate Foreclosures
Posted by Dennis Gemberling on Fri, Mar 09, 2012 @ 03:43 PM
There is certainly a good deal more news suggesting hotel receivers and property managers will be dealing with many hotel foreclosures this year. However, some of that activity appears to be focused in those parts of the country that are east of the Mississippi, at least so far.
The bigger question that remains unanswered is whether banks and lenders will reach another solution. Back in 2009, when the same kind of activity was beginning to rise in part to a large proportion of loans coming due, instead of mass foreclosures starting and receiverships as a result, auctions and back room sales deals seem to prevail. There were also a lot of hotel workouts which helped coin the phrase ?extend and pretend.?
In?the following?key excerpts from an article in Bloomberg,?it suggests to us?as hotel receivers that many lenders will try to shun foreclosures and opt for more workouts, with the possible exception of smaller single hotel assets:
- ?Workout agreements have been reached on 53 percent of distressed hotel loans since the start of 2008, the highest among six commercial-property categories?
- ?Having some type of extension on an existing loan already in place, rather than a foreclosure or REO situation, is more likely in hospitality than in other commercial sectors?
- ?Foreclosures are most likely outside of major metropolitan areas, where smaller loans often are backed by family-owned hotels.?
In California, and one of the largest hotel markets, the news is mixed. A recent Altas Hospitality report says that distressed hotels with subsequent foreclosures have risen but loan defaults are actually leveling off.
Will 2012 be a repeat of three years ago or will hotel receiverships and subsequent foreclosures really rise as predicted by several experts in the lodging industry?
If you are a bank or lender working with a hotel default, have you talked with hotel receivers in preparation for a foreclosure? Or, or is a workout still more probable right now? Please?post your comments to this blog below.
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About the Author: Dennis Gemberling is President of Perry Group International with over 35 years of lodging and foodservice industry expertise.?He?is also?an experienced Hotel Asset Manager, Court Appointed Receiver, Interim Property Manager, Restaurant Consultant and Hospitality Expert?specializing in hotels, resorts, restaurants, bars, nightclubs, casinos, gaming and mixed-use real estate. Mr. Gemberling can be reached at dpg@perrygroup.com?or by phone at 1.800.580.3950 ext 1.
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