36% of all outstanding debts of the CMBS hotel are due next year


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Hotels in Trouble: The Hilton Houston Post Oak (left) has halved in value and is in closure, and the Residence Inn Arlington Pentagon City is set to be demolished and converted into part of Amazon headquarters.  (Photos via Hilton; Marriott; iStock)

Hotels in Trouble: The Hilton Houston Post Oak (left) has halved its value and is in closure, and the Residence Inn Arlington Pentagon City is set to be demolished and converted into part of Amazon headquarters. (Photos via Hilton; Marriott; iStock)

In 2021, nearly $ 31 billion will be repaid on CMBS ‘excellent hotel loans – more than a third of the total.

It follows from a new report from Stairs, which found that 3,100 hotel loans totaled $ 87 billion, which is approximately 16 percent of the total balance of all CMBS loans.

Accommodation was one of most affected types of real estate in addition to retail and although the latest news on vaccine development seems promising, a nationwide increase in coronavirus cases and the approaching winter months are still headwinds in the short term.

“Major players in the hotel segment have been forced to rethink the value of their properties and have shown a growing willingness to give up ownership,” says the Trepp report. Monty BennettAshford Hospitality Trust as an excellent example. Hotel REIT was sale of assets in recent months and expressed readiness to pass on delinquent properties back to his creditors.

The impact of Covid-19 on hotels was geographically uneven, as the following table shows. While major metropolitan areas such as New York, Los Angeles and Chicago have more than $ 1 billion in delinquent loans, Miami – with an outstanding hotel debt of more than $ 4.3 billion – it has only $ 363 million in repayments.

In proportion to the size of its hotel market, Houston is one of the most affected cities, with 76 percent of CMBS hotel loans facing crime due to the impact of the pandemic on the oil industry. The Trepp report states that the abolition of “major revenue-oriented energy conferences” has had a major impact on hotels in the city.

Hotels in Portland, Oregon, also face an unusually high default rate on CMBS hotel loans, representing 78 percent of the city’s total balance. At the height of the pandemic, the city fought with dangerous levels of fire smoke in late summer and gained nationwide notoriety for violent clashes as a result of the Black Lives Matter summer protests.

The pandemic also affected different types of hotels in different ways, with limited-service hotels facing higher crime rates than extended-stay and full-service hotels. AND CBRE research report cited by Trepp shows that rural hotels and middle- and lower-level hotels performed better on average than their urban or senior counterparts.

While the crime rate for hotels – and the CMBS sector in general – fell from its summer peak when relief agreements entered into force, the share of loans in special services remained above 25 percent. For hotels, which have been re-evaluated since March, their values ​​have fallen by an average of almost 30 percent.

“Liquidity pressures are at record highs and the recovery cannot come soon enough.” The values ​​have dropped and the effects of the pandemic are likely to be felt for future years“CBRE analysts write in their report, acknowledging the optimism that the sector will eventually bounce back, as has been the case many times in the past.


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