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LOS ANGELES-For now, hospitality lending remains a relatively smaller piece of the overall lending pie for such major players as GE Real Estate, Capmark Finance Inc. and Countrywide Commercial Real Estate Finance. Don’t be surprised, however, if loans that are earmarked for hotel deals grow and begin taking on a bigger part of lenders’ business. At least that was the word yesterday at the Americas Lodging Investment conference held at Hyatt Regency Century Plaza during a panel discussion titled: “Capital Markets–The Lenders Outlook.”

Moderated by W. Michael Murphy, executive vice president of First Fidelity Cos., the panel included: Joseph Asciolla, managing director and head of US Lodging Group, Caylon; Wayne M. Brandt, managing director, RBS Greenwich Capital; Warren R. de Hahn, managing director, Countrywide; Gregory I. Forester, senior director, GE Real Estate; and Bruce C. Lowry, SVP, Capmark.

As for allocations, both Countywide and RBS count roughly 25% of their lending towards the hospitality sector. While GE does not approach those numbers Forester said the company is planning on changing that. “Right now, we’re doing about $500 million of hospitality business per year,” he said. “But we’re eager to expand our hospitality platform and would like to be doing $1.7 billion in hospitality business moving forward.”

Countrywide’s de Hahn said his company is also in a growth pattern. “We expect to grow 50% this year.” That number would bring the company’s annual hospitality business somewhere in the $2-billion to $3-billion range.

Those positive growth results go beyond just the lenders at the conference. According to a recent International Lodging Finance Council survey of 40 leading lenders, 94% say they expect their lodging debt to increase or stay the same over the next year. Also, those respondents say, barring external factors, they plan to grow their hospitality allocations over the short term, which was defined as one to three years.

That idea of external factors versus market dynamics held sway during yesterday’s discussion as well. Panelists agreed that hospitality, even more so than other commercial real estate product types, falls privy to economic cycles, which prompted Capmark’s Lowry to say: “External events that drive capital markets are just as important as a shift in actual market dynamics.” He pointed to 1998 as an example when “the capital markets dried up and no one wanted to buy paper.”

The subject of overpaying for properties came up, and, when asked about market discipline, GE’s Forester responded with a contrarian answer. He wondered if his company was being too disciplined in its hospitality business. “Right now we’re at one half of one percent defaults with our hospitality deals,” Forester said. “We wonder if we’re being too conservative as maybe that number should be in more the 2% range.”

The sixth annual meeting of ALIS will conclude today. According to officials, more than 2,400 attendees traveled to Century City for the three-day event.

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