There has been a consensus among many of us that the use of a court appointed hotel receiver would rise significantly given the anticipated tsunami of defaults and foreclosures in the commercial real estate sector. However, this thinking started almost two years ago by our estimates and we have yet to see the proportion of receiverships rise amidst all the chatter otherwise. This is not to say that we have not had a fair share of calls from banks and lenders in the last 12 to 24 months who are considering this remedy to their loan defaults. There have also been a number of recent reports showing that distressed hotel assets continue to rise. For example, Atlas Hospitality Group recently reported “that hotel foreclosures in California have doubled to 138 properties in 2010.” In another article published in National Real Estate Investor… “The controversial practice of “extend and pretend,” in which regulators grant banks and other lenders wide latitude to extend performing loans while avoiding sharp write-downs in value that could otherwise result from marking performing loans to market, is on its way out, according to a new analysis by CB Richard Ellis Econometric Advisors.”Added to this, Michael T. Sullivan, Managing Director of HVS Capital Corporation, talks about the “alarming number of hotel defaults and workouts.” View the full articles here: http://www.hotel-online.com/News/PR2011_1st/Jan11_CAForeclosures.html http://nreionline.com/news/cbre_extend_pretend_0120/ http://www.hvs.com/article/5017/the-alarming-tidal-wave-of-hotel-mortgage-loan Hotel Receiver, Dennis GemberlingSince California in our experience is a good barometer of the national trend, the above report suggests hotel loans pending foreclosure are about to rise elsewhere as well. Add to this a new mind set on behalf of banks and lenders unwilling to forgive any further non-payment along with the growing number of loan portfolios in default or workout, and the use of a court appointed hotel receiver may start to make sense so as to gain control of the assets while initiating the foreclosures. Are you a bank, lender or special servicer considering a hotel foreclosure? If so, is this something you anticipate doing in 2011?? Lastly, what factors will determine if you decide to use a court appointed hotel receiver to take control of the asset??? Please share your comments…
