The Hotel Times - March 2008 - (Page 36)

LENDING OUTLOOK » BY JIM BUTLER Jury still out on when tide will turn Traditional lenders will make a comeback J Jim Butler, chairman of JMBM’s Global Hospitality Group and author of HotelLawBlog.com, is one of the top hotel lawyers in the world. He represents developers, owners and lenders, and has helped clients as business and legal advisors on more than $50 billion of hotel transactions, involving more than 1,000 properties all over the world. Contact him at jbutler@jmbm.com or (310) 201-3526. MBM’s Global Hospitality Group is a gateway of hotel ﬁnance. We know the players, regularly represent both users and providers of every kind of capital and we understand their respective personalities, standards and needs. We facilitate the ﬂow of capital with our legal skill, hospitality industry knowledge and ability to ﬁnd the right ﬁt for all parts of the capital stack. We were pleased when Hotel & Motel Management asked us to identify the industry’s key lenders and the kinds of ﬁnancing they provide for The Advisor (Dec. 27, 2007). Those listed in that resource guide are the lenders that, day in and day out, year after year, provide the necessary fuel for the hospitality engine to keep running. What is happening to that fuel supply was the topic of much discussion and speculation at the Americas Lodging Investment Summit in January. The commercial mortgage-backed security and subprime messes seem to have clogged Wall Street’s channels, and now fear of a recession seems to grow daily. Are we in a rerun of the 1998 market? Or worse, 1991? But this is 2008, and some things are very different. For one, there is a significant shift taking place: The traditional lenders, such as local banks and life insurance companies, are making a comeback. These are the historical hotel lenders that were overshadowed and crowded out as the CMBS markets exploded. They now are looking at more attractive spreads, gauging opportunities and will start making loans again the old-fashioned way: with good underwriting, solid numbers and the intention of developing long-term relationships. Information for the survey of lenders was gathered in October and November 2007. While this was not the high water mark for hotel loans in the current cycle — that probably would have been June/ July 2007 — the survey reﬂects a strong sense of optimism that the CMBS channels would clear out and that underwriting would resume at levels reﬂecting historic norms. Clearly, that has not yet happened and lenders today are more reluctant to speculate on when and how the plugs get blown out. While the survey continues to be an excellent resource for borrowers, we also The survey reflects a strong sense of optimism that the CMBS channels would clear out and that underwriting would resume at levels reflecting historic norms. see it as a benchmark of sorts: it will be interesting to see how the year evolves at Meet the Money®, and how the survey will look next year. As for the CMBS scenario, the pipeline still is clogged with loans that no one can sell. When will this pig pass through the python? While the pundits all speculate, no one knows. It could be tomorrow, next month, after the presidential election or longer. The pessimists say it will be a couple of years. We all hope it is much sooner. hmm@questex.com 36 The Hotel Times March 2008 www.TheHotelTimes.com http://www.hotellawblog.com http://www.TheHotelTimes.com

Table of Contents Feed for the Digital Edition of The Hotel Times - March 2008

The Hotel Times - March 2008 Business Outlook Editorial Outlook Contents Conference Preview Capital Outlook What's Driving Growth? European Outlook Development Outlook Fractional Outlook Branding Source List Insurance Outlook Brokers Update Brokerage Outlook Lodging's Balancing Act Transactional Facts Lending Outlook Lenders Source List In Closing

The Hotel Times - March 2008

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.