Michael Bernath Explains Hotel Finance Trends & State of Debt MarketsWhen it comes to 2013 hotel financing and measurements of the economy, Hotel Assets Group (Hotel AG) Vice President/Partner Michael Bernath is a great person to consult. With concentrations in finance, market analysis and investment, Michael has assisted in the closing in excess of $350 million in select service hotel transactions.
We asked Michael to tell us a little bit about hotel financing trends he sees and the current economy to give us a snapshot of the market.
Over the past several months, we have seen the debt markets open up for hospitality projects. There have been multiple debt facilities available prior to this period, but the majority of deals that were getting financed were either smaller SBA loans, or large-scale CMBS transactions. There is still somewhat of a lag when it comes to conventional bank financing. This lending segment has been hesitant to fully get back into the market. We are starting to see some deals get done on a conventional basis. Strong projects, be it an acquisition or a straight refinance, are getting done on a fairly regular basis. Interest rates are at or near historic lows for healthy, cash-flowing projects. Additionally, we are starting to see development financing creep back into the market. The projects that are getting funded are in urban in-fill, or strong secondary locations. The sponsorship groups are well capitalized and have a strong development history.The health of Commercial Mortgage-Backed Securities (CMBS) debt markets and Small Business Administration (SBA) debt markets have served as a mirror telling us how the economy is performing and improving. We asked Michael to tell us more about the state of CMBS and SBA debt markets.
The CMBS debt markets seem to change regular basis. Right now, things seem to be healthy. Strong projects with good branding and good sponsorship, that meet the various banks’ internal underwriting standards are getting financed on a regular basis. SBA debt has been available throughout the recovery. Because of various legislation changes to the SBA 504 and 7A loan programs, SBA debt continues to be a very solid option for deals that are $5M and under.Contact Michael Bernath to learn more about this topic as well as learn what would be a good next move for you in this market (770) 692-1605 or [email protected].published: 03-09-2013