He is starting to see signs of that now. "Lenders see signs of stabilization [in these markets] so they feel they can underwrite and be comfortable that the fundamentals won't deteriorate in the short run."
Right now refinancing is the easiest financing to be had for hotels in these markets, he says. Sonnabend recently helped the Hilton Hotel in Downtown Silver Spring secure a $23-million nonrecourse refinancing from a publicly-traded mortgage REIT.
A year ago such a deal would have been impossible--not only because of the nonrecourse component but also because it is a hotel transaction.
However, increasingly, nonrecourse money is being made available to hotel transactions that have good cash flows.Lenders are also starting to provide acquisition financing--but only in cases where borrowers kick in equity as well, he also notes.Construction financing, as it is for other asset classes, remains all but closed to hotels still--especially in the suburbs. That too may change, he predicts. "As we get into the second half of this year it will start to trickle in."
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
