Hotel owners and investors will likely face a more challenging environment for financing debt as 2016 goes on, with lenders responding to increased risk in debt capital markets as well as new regulations. No where is this more apparent than in the commercial mortgage backed securities space where the current sell off of CMBS loans is the longest on record. Wall Street firms are readying themselves for a new regulation that kicks in at the end of 2016 forcing banks to keep a stake in the CRE loans that they package into securities. The new requirement, dubbed risk retention, applies to all types of securitization, the process by which debt is pooled together and sliced into bonds of varying risk and reward. The end result of this new risk retention requirement might be lenders that become more selective about CRE loans as the year progresses, as fewer loans get packaged for securitization. This could make it harder for property owners to refinance just as a wave of loans made during the peak of the last cycle come due this year and next. Read more here.
