INVESTMENT

exceptional rate , or both .

Debt availability is also helping facilitate acquisitions with many lenders returning to the capital markets for the right hotel . JLL released a Hospitality Debt Market Commentary in March 2021 which highlighted the rapid recovery of the debt markets , with debt funds being the most active lender profile , followed by banks , insurance companies and CMBS . Lenders view spreads for hospitality assets favorably compared to other asset classes like industrial or multi-housing , which are pricing extremely low for some opportunities . Overall , the rapid hotel lending recovery is helping to boost investment activity and is expected to continue throughout 2021 .

One arena that has not seen as much activity as anticipated in 2020 is the ability to place rescue capital . Many investors raised certain funds with the expectation that hotel owners would experience a cash crunch and be unable to fund operational losses or pay debt service . These investors would then offer “ rescue capital ” as either debt or preferred equity to provide a cash lifeline . In turn , the rescue capital provider would receive an attractive interest rate or buy into ownership of the asset .

For the same reason that we have not experienced a wave of distressed sales yet , this space has been quiet , except for few notable transactions like the recapitalizations of the Watermark or AJ Capital portfolios . Depending on the trajectory of the recovery in many markets and lenders ’ willingness to continue to work with borrowers , this space could become more active in coming months . If so , we would expect investors to gravitate towards these investments quickly .

The good news for buyers is a more robust hotel transaction market now than at any time since the onset of the pandemic , and the volume of sales is expected to remain brisk throughout 2021 . Compared to 2020 and earlier in 2021 when owners feared the stigma of distress if they took an asset to market , we expect to see more broadly marketed sale processes in the second half of this year . This will provide investors ample opportunities to capitalize on the recovery in hotel fundamentals .

• Permanent Loans

• Cash Out Loans

• Bridge Loans

• Construction Loans

PETER BERK 212.277.8265 berk @ pmzcapital . com

MICHAEL SONNABEND 212.277.8252 sonnabend @ pmzcapital . com

IRA URY 847.977.1260 ury @ pmzcapital . com

200 West 41st Street | Suite 602 | New York , NY 10036 | www . pmzcapital . com

54 hotelsmag . com September / October 2021