WILLIAMS: We’ve looked at a few debt
acquisition deals, but we haven’t pulled
the trigger on anything. But if we were
going to do it, we’d look for a loan-to-own
deal. It’s also a much better path to the
asset than it was in the ’90s, when you’d
end up in bankruptcy and it could be two
or three years before you would possibly
get to the asset itself.
SALUSTRI: What about opportunities
in distress? Has the great flood of
opportunities become a myth?
NG: Most people around this table would
agree that we haven’t seen the magnitude
of distress everyone anticipated. Lenders
are bending over backwards to make a
deal and possibly extend a maturity. Now
that they’re seeing the industry turning
the corner, there’s more reason to work
with borrowers. We will, however, come
across some situations where a lender has
taken back an asset and may be willing to
sell during the pending upturn. It may
now be time to move it off the books. But
you’re not going to get the steep discounts
that people were once anticipating.
WILLIAMS: It’s incredible how many
deals have gone into special servicing,
yet they’ve been worked out. But they
really couldn’t be worked out in many
cases without the help of the brand.
With the brands working in conjunction
with the lenders and the owners, they
can make sure the owners hang onto
SALUSTRI: Let’s talk a little bit about
terms. What can buyers and sellers
expect from the capital markets today?
FISHBIN: We’re starting to see the re-emer-gence of a lending market. We’re seeing it,
not in hospitality per se yet, but in other
commercial asset classes—65% leverage,
with maybe one tranche of mezz. We’re also
expecting in the second half to see some
securitization, and that should be very helpful for the transaction environment in general. For hospitality, that’s a 2011 discussion.
NG: We did a loan about six months ago,
in a refi, and the best we could do was an
offshore bank who lent at 50% LTV, with a
1: 4 coverage. That was the best we could
do back then, but things are coming back
today. I’ve heard that lenders want to go
up to 65%.
SHANER: We’ve done a few refinancings
lately, and there’s a very narrow range of
lenders that are willing to step up with
us—all banks we’ve been with for years.
But they’ve stiffened the terms. They want
a 55% or 60% leveraged loan; they want
guarantees and lots of equity, which has
never happened before.
FIELDS: I think hospitality lending will
be back once we see the first hotel securitization. But I couldn’t tell you when
that would be.
So You Still Want to Play in Distress?
GlobeSt.com presents WEBINAR SERIES
Available On-Demand Through October 22, 2010
Registration Cost: $85
With so many players out there raising capital for distress, and the dearth of those opportunities, many funds have started to give money back to their investors or alter their strategies. But there are still ways to play in
the sector—moving away from trophy assets to more repositioning/value add buys, for instance, or investing in debt.
; What’s the majority of the product out there now?
; When will viable investment product become available?
; Who will be the sellers?
; Who are emerging as major buyers?
; What role do lenders, servicers and the government
; What impact are modifications/restructurings having?
REGISTER TODAY AT:
Real Estate Forum
Stacey M. Berger
Executive Vice President
Midland Loan Services, Inc.
Senior Managing Director
and Portfolio Manager
- Real Estate Group
Director, Asset Repositioning
and Turnaround Strategies
University of Texas
John E. D’Amico
Commercial Real Estate