As $17.5 billion in securitized loans backed by U.S. lodging properties mature in the next 18 months, lenders are quickly making agreements on distressed loans, working harder to avoid foreclosure on hotel properties than on any other commercial assets, Bloomberg News reported.
Data from Real Capital Analytics shows that workout agreements have been reached on 53 percent of distressed hotel loans since the beginning of 2008, more than on any other type of property. The reason, some experts speculate, may be that hotels are effectively rented by the night, and contracts with hotel operators may be terminated if a property is foreclosed on, making it harder to run or sell.
Hotels are “operating assets where income goes up and down overnight,” said Rick Kirkbride of Los Angeles-based law firm Paul, Hastings, Janofsky & Walker in Los Angeles. “Servicers do drag their feet with them a lot more because they aren’t sure what to do.” [Bloomberg]