Despite reports from Smith Travel Research indicating hotel occupancy rose more than two percentage points this year compared to the same period last year, up to 54.7%, many commercial hotel properties remain deeply in debt - threatening to undo any recovery the hotel industry is beginning to make. Guardian Solutions, a Florida based commercial loan restructuring firm concentrating in several sectors within commercial real estate, is helping some hotel property owners survive in spite of the still weak economy.
“Eventually, the hotel industry will come back, but if a hotel owner is straddled with an untenable balloon payment, or is in default because of the current economic situation, it is imperative that the commercial property owner act aggressively now to keep his property,” said Ira J. Friedman President for Guardian Solutions.
Returning to the hotel industry's boom-time highs may take several years or longer:
• PKF Consulting Inc., a hotel-industry analysis company, predicts U.S. average rates and REVPAR (revenue per available room) will return to their recent peaks by 2013, but occupancy won't do so until after 2014.
• As for property values, U.S. hotels should regain their 2006 values by 2013, reported by HVS, Hotel and Leisure Research Company.
• Distressed hotel owner face looming statistics of about $5.6 billion in securitized mortgages tied to hotels coming due in 2010 and 2011, with approximately 28% cover properties now estimated to be worth less than their mortgage balances, published by Trepp LLC Research Firm.
Freidman goes onto say that some hotel owners may focus on the slightly-improved occupancy rates as “hope,” but long-term survival is better forecasted for those that take advantage of this uptick and use it to help restructure their mortgage.
One group of hotel owners who were not waiting to see if things got better on their own was AllStar Investments, LLC. AllStar was able to renegotiate terms for mortgages for two of their hotel properties with the help of Guardian Solutions.
Guardian took a “seemingly hopeless situation” and negotiated a discounted buy-out of the notes at approximately .60 cents on the dollar per an AllStar Representative
The situation may even be worse for commercial property owners with hotel loans that are coming due in 2012, many of which were originated when hotel values (commercial real estate values) were much higher than today. Of the $5.1 billion in securitized mortgages coming due in 2012, 64.5% currently are underwater, according to Foresight Analytics. Those not generating enough cash to cover their interest payments represent 42.2% of that balance due in 2012.
“A restructuring plan put in place early usually contains the most favorable terms and achieves the best results,” said Jeramie P. Concklin, CEO of Guardian Solutions.
About Guardian Solutions
Guardian Solutions is the one of nation’s largest commercial loan restructuring companies and is committed to helping commercial property owners save their properties. The company’s knowledgeable mitigators are experienced in a variety of disciplines to provide customized restructuring solutions. For more information, visit www.GuardianSolutions.org
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