The Hotel Industry Is A Worsening Disaster, But Uber-Cheap Money Is Keeping It On Life Support

Here’s the latest on the sector from Fitch:

Loan  defaults  for  U.S.  hotel CMBS show no signs of slowing down as a
  large  concentration of loans come due next year and in 2012 , according
  to   Fitch  Ratings  in  its  latest  weekly  U.S.  CMBS  market  trends

  Despite  20%  hotel revenue declines since the peak in 2008 (the largest
  decline  among  the  major CMBS property types), Fitch’s Outlook for the
  hotel  sector  remains  Negative. Delinquencies for hotel CMBS currently
  stand  at  16.6%, representing approximately $8.4 billion in total hotel
  loan balance. Fitch projects delinquencies to double from current levels
  and  hit  25-30%  by  2012  even  as  operating  performance  begins  to

  ‘Hotel  property  values  are  off  as  much as 50% from 2007 peaks, but
  borrowers  by  and  large  have  been  able  to keep their loans current
  because  of  historically low Libor rates,’ said Senior Director Jeffrey
  Watzke.   However,  ‘Over  three-quarters  of  floating-rate hotel loans
  originated  during  2006-2007  mature  in 2011 and 2012 into much higher
  fixed rates,’ said Watzke.

  Additional  information  is  available  in  Fitch’s weekly e-newsletter,
  ‘U.S. CMBS Market Trends’. The link below enables access to Fitch’s U.S.
  CMBS Market Trends weekly updates:


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