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Latest things lenders say about hotel industry

  • Source:hotelnewsnow.com
  • Release on :2017-07-27


In 26th July 2017, a panel of three lenders shared five ideas on the industry's lending outlook at the recent Americas  Investment Summit Summer Update event in Boston.

First:Markets help determine what lenders might bite
“I like secondary markets, candidly” said Dana Tsakanikas, EVP for Stonehill Strategic Capital. Jeff Frank, a VP at Goldman Sachs, said “There’s a continued appetite, but there is more caution in certain markets, with supply being a top concern”.

Second: Relationships are key
Tsakanikas said those relationships help color his outlook on a deal and can bolster his interest in deals in secondary markets. “You might consider Charleston, South Carolina, as secondary, but I’d do deals there all day long,”  he said. “I’d be comfortable going up in the capital stack on (those deals), and if you’ve got relationships with a local or regional bank with aggressive financings, we could layer in a preference piece.”

Third:Construction money still difficult
Tsakanikas said“ For a lot of construction deals, the pricing is changing as the deal goes along.” Frank said his company has done some development “in the past,” but doesn’t have the appetite for it today.“We really don’t have the capacity for any development,” he said.

Fourth:Impacts from other real estate sectors 
Haynes noted that concerns in other sectors seem to be spilling over to the world of hotels.
“We’ve seen two things happening in the market,” he said. “Banks and funds are pulling back on hospitality lending and becoming more selective, and in retail, more insurance companies are being much more conservative. … They’re more concerned about the cycle than anything else, and because of that, hospitality and retail have been the most difficult (sectors).”

Fifth:Worries linger over disrupd;">Third:Construction money still difficult
Tsakanikas said“ For a lot of construction deals, the pricing is changing as the deal goes along.” Frank said his company has done some development “in the past,” but doesn’t have the appetite for it today.“We really don’t have the capacity for any development,” he said.

Fourth:Impacts from other real estate sectors 
Haynes noted that concerns in other sectors seem to be spilling over to the world of hotels.
“We’ve seen two things happening in the market,” he said. “Banks and funds are pulling back on hospitality lending and becoming more selective, and in retail, more insurance companies are being much more conservative. … They’re more concerned about the cycle than anything else, and because of that, hospitality and retail have been the most difficult (sectors).”

Fifth:Worries linger over disruption
Haynes said “Lenders are really focused on new supply.”  Tsakanikas said “There could be disruption from a group like Google that we don’t see coming.” Frank said “From a capital markets perspective, the biggest thing would be in a market with a lot of supply where there’d be a big default. "nobody saw coming,” he said. “Particularly if it was in New York, where investors are centralized. That could scare many off from the asset. class.”