Today's Hotelier - September 2016 - 64

FInAnCE q&A 4.5-Minute readinG tiMe refinancinG Pre-payment strategies can bridge the gap between flexibility and predictability by RUSHI SHAH 2 TYPES There are two types of prepayment structures I NVESToRS BuyING CoMMER‑ cial mortgage-backed securities (CMBS) bonds pay for predictability of interest income. Commercial real estate borrowers, on the other hand, want the benefit of low-priced, fixed-rate, long-term non-recourse money, but with the flexibility to refinance or sell the property when their business goals or the market changes. yIELD MAINTENANCE Commercial real estate lenders are able to serve both masters by baking prepayment mechanisms into CMBS loan docs that can release the borrower from the mortgage lien before maturity, while still delivering the same expected yield to investors for the term of the bonds. There are two types of prepayment structures: Yield maintenance where borrowers pay a penalty, and defeasance, where the property is substituted 6 4  | SEpTEMbER 2016 | TODAYSHOTELIER.COM where borrowers pay a penalty, and DEfEASANCE, where the property is substituted with equitable collateral. http://www.TODAYSHOTELIER.COM

Table of Contents for the Digital Edition of Today's Hotelier - September 2016

Letter From the Chairman
Letter From the President & Ceo
News Bytes
AAHOA Spotlight
Government Affairs
5 Easy Ways to Become a Health‑Conscious Hotelier
4 Points of the Traveler's Journey
Navigating to Healthful
The Latest Strategies in Achieving Sustainability Savings
Employee Training
Sales & Marketing
Finance Q&A
AAHOA Founding Members
AAHOA Event Shots
Advertiser Index

Today's Hotelier - September 2016