WASHINGTON, DC-Marshall Hotels & Resorts Inc., a locally-based hotel management and services company, has been appointed the receiver for the Four Points by Sheraton Hotel & Suites Allentown Airport in Pennsylvania and the Holiday Inn Danbury in Connecticut and as operator for the Holiday Inn Buffalo Amherst Hotel in New York, which is in receivership.
Such moves are increasing in the hotel industry, said CEO Mike Marshall in a prepared statement, as lenders are becoming more aggressive in taking back struggling assets. Marshall was unable to return a call to GlobeSt.com in time for publication.
Lenders are indeed becoming more aggressive nationwide with underwater hotels, bringing them back onto their balance sheets, Marc Magazine, principal of Humboldt Hospitality Advisors, tells GlobeSt.com. “You can expect to see more of that in 2011 as lenders decide they have pushed pretend and extend as far as they can.” Lenders will pace themselves, he predicts, not wanting to take these losses all in one quarter.
The DC area will be an exception, Magazine says--not because lenders will give borrowers a pass but because there are so few hotels underwater here. His best guess: “It can’t be more than a handful inside the beltway.”
Such borrowers, Magazine says are struggling because they took on far too many loans or acquired properties at the height of the market. Claret Capital is one example--the Dublin-based private equity firm acquired the St. Regis hotel in Downtown DC in 2007 for $170 million. There is now a $101.6-million note on the property. In October, Barclays Capital postponed the hotel’s foreclosure auction.
An improving hotel industry is one reason why lenders may be more confident in stepping up their seizure of assets. The sense is that there is less downside by taking control of the asset, R. Mark Woodworth, president of PKF-HR, tells GlobeSt.com. The company just released its December 2010 edition of Hotel Horizons, which forecasts that lodging demand will grow 7.8% in 2010--nearly four times greater than the 2% increase in hotel supply, for a record 5.7% rise in occupancy.
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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.
