Hotel industry is in trouble and more lenders want out

Half of CMBS loans seeking forbearance tied to hotels, totaling $23B

TRD NATIONAL /
Sep.September 23, 2020 11:00 AM
With about $23 billion of hotel-related CMBS loans in forbearance, more lenders are looking to offload those mortgages. (iStock)

With about $23 billion of hotel-related CMBS loans in forbearance, more lenders are looking to offload those mortgages. (iStock)

As hotels across the U.S. continue to suffer — average occupancy is just under 50 percent — an increasing number of lenders are scrambling to sell their mortgages.

Mack Real Estate Credit Strategies has hired Cushman & Wakefield to sell mortgages totalling $500 million tied to the Times Square Hotel in Manhattan and two St. Regis hotels in Washington, D.C. and Miami, according to Business Insider.

In July, Wells Fargo hired Newmark Knight Frank to sell a $56 million senior mortgage against a controlling interest in Marriott’s Fairfield Inn & Suites on West 33rd Street in Manhattan.

And Barings, an investment-management arm of the life insurance company MassMutual, also hired Newmark to sell a $52 million loan tied to a Courtyard by Marriott hotel on West 37th Street.

The moves come as nearly half of all CMBS loans in forbearance are tied to hotels. An increasing number of hotels face foreclosure, with occupancy rates and tourism still low amid Covid-related shutdowns.

In New York City hotels, the average occupancy rate stood at 37 percent, according to the latest report from hospitality industry tracker STR. That was a 58 percent decline from the same period last year.

Of all the CMBS loans whose borrowers are requesting forbearance, about 44 percent are tied to hotels, totaling $23 billion, according to S&P Global Ratings, more than any property type.

“There’s a little bit of reality setting in for hotel owners and lenders who were saying earlier in the crisis that things will get better,” Adam Etra, who co-heads Newmark’s lodging group, told Business Insider. “Things didn’t get better, they’re actually worse.” [BI] — Sasha Jones


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