Finance & DevelopmentFinanceDebt Markets Continue to Recover

Debt Markets Continue to Recover

With the hotel industry’s recovery from the recession steadily picking up speed, values coming back to pre-downturn levels, and RevPAR growth remaining consistent, the debt markets are returning to normal. And as lenders get more interested and competitive, they’re supplying better terms. “They are significantly better than where they were 18 months ago,” says Angelo Stambules, SVP of Hunter Capital Markets. “The first thing to come back was CMBS—it started significantly improving in 2012. Year over year we’ve seen consistent improvement in CMBS markets since then.” He notes that this gives balance sheet lenders comfort that there will be a takeout for the loans that they put out.

Greg Morris, managing director of Premier Capital Associates, agrees, adding that his firm has seen CMBS 2.0 loans come full circle to where CMBS 1.0 was before the downturn. “When CMBS 1.0 blew up there were some serious concerns, and many of them were addressed by all the bells and whistles built into CMBS 2.0,” Morris says. A lot of the structures were recourse instead of non-recourse types of loan and there were a lot more triggers and criteria built into the loans. Now CMBS underwriting to larger loan amounts and debt yields are much higher.”

More important, Morris says that lenders are now doing smaller deals, “$5 million or $6 million on an asset—and they’re underwriting to as low as 10 percent debt yields. Since the assets are performing well, investors are comfortable investing in that space, and they’re realizing that they have to be competitive.”

Photo Credit: Balance Sheet via Bigstock

RELATED ARTICLES

New Pyramid Global Hospitality COO Continues Focus on Big Data to Benefit Owners

Pyramid Global Hospitality Chief Operating Officer Eric Habermann retired in April following seven years with the company and a nearly 40-year career in hospitality....

Grand Hyatt Kauai Resort & Spa Launches Scholarship Program

Grand Hyatt Kauai Resort & Spa, a 605-room resort, announced the launch of a scholarship program to support the continued education of its colleagues...

Hilton Surpasses 500 Hotels in Florida

MCLEAN, Virginia, and MIAMI, Florida—Hilton announced a major milestone as the company surpassed 500 open hotels across Florida. This growth was fueled in part...

Hunter Hotel Advisors Brokers Sale of Residence Inn Detroit Novi

ATLANTA, Georgia—Hunter Hotel Advisors (Hunter) announced the successful sale of the 107-key Residence Inn Detroit Novi. Spark GHC purchased the property from an institutional...

PMZ Realty Capital Arranges Loan for Hampton Inn Marysville

PMZ Realty Capital LLC announced that it has secured a $5.3 million loan for the Hampton Inn Marysville, located in Marysville, Ohio. The loan...

LivAway Suites Breaks Ground on New Property in Tucson, Arizona

SALT LAKE CITY, Utah—LivAway Suites announced the groundbreaking of its newest property in Tucson, Arizona, which marks its fourth in the state over the...