Magnitude of Lodging Distress May Be Overstated
More hotels than any other property type are in the distress pipeline, through a transfer to special servicers. Yet lodging industry experts quoted in the newest LightBox Investor Sentiment Report say the magnitude of hotel distress may be overstated.
Michael C. Shindler, president, Four Corners Advisors, Inc., attributed the lack of distressed activity to generosity on the part of the lending community and the fact that the CMBS market has been very slow to take action.
“I expect we’ll start to see more,” he added. “But the feeling is that we are in recovery now.”
Investors interviewed for the report noted confidence that hotel investment would spread from safe, top-tier leisure destination properties to a broader base of properties, as industry experts expect to see a rebound in business travel and continued progress in pandemic mitigation efforts.
Longer term, Kevin Davis, senior managing director at JLL, suggested that over the next several years, only 10% to 15% of the lodging assets sold will be distressed. “It will be in the minority, and it will not drive the market,” he said.
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