Pascale’s Perspective by David Pascale, SVP @ George Smith Partners
Read Date: 10/2020
- The hotel sector has been hardest hit by the pandemic.
- Permanent closures of high-profile hotels such as, The Luxe on Rodeo Drive in Beverly Hills and the “Crossroads of the World” Hilton on Times Square.
- Experts indicate that without significant aid from Congress the wave of closures is just beginning.
- CMBS has been the preferred loan execution for hotels for many years with $85 billion in outstanding hotel loans.
- Statistics from Trepp, loans delinquency are at 23.4%, highest on record (December 2019 it was 1.3%).
- Over 35% of CMBS loans are on servicer “watchlist” with 24% in special servicing now.
- The hardest hit MSA’s are New York/Newark, Houston, Chicago, Dallas, LA, Atlanta. All major convention and business travel hubs.
- Widespread distribution of an effective vaccine is estimated to occur in mid-2021 at best, so Congress must act or the industry will see waves of foreclosures over the next several months.