Hotel Asset Managers Provide Strategies
As the number of distressed hotel assets continues to rise, many with foreclosure eminent, an increasing number of hotel lenders will be transitioning to a much more active ownership role within an extremely stressed environment.
Capital Hotel Management here says it expects to see an exponential leap in demand for hotel asset management services from lenders as they look for qualified hotel receivers. “The lending community has reached the stage where they no longer can delay foreclosure issues,” said Chad Crandell, president of CHM.
“We certainly will see more foreclosures in 2010 than any year since the RTC days of the early nineties.”
The current lack of available financing, coupled with a continued decline in performance projected for at least the first half of 2010, could likely push the transaction window well into 2011 or 2012, according to the company.
CHM is actively engaged in providing lender services both pre- and post-foreclosure, including asset managing a luxury, mixed-use destination resort property, a mixed-use luxury urban hotel, as well as serving as the court-appointed receiver and lender advisor for several branded city-center properties. Experienced hotel asset managers are accustomed to stepping in and deploying strategies to quickly stabilize an operation, while unraveling the myriad of issues that may be impacting performance and developing an investment strategy to optimize asset value. “It is not surprising that we are seeing an uptick in demand for asset management services, for all property types but particularly within the mixed-use segment. These assets are extremely complex and involve many stakeholders that need to be managed in addition to the core hotel operation. From a hotel asset management perspective, this is exactly what we do and have been doing for over a decade,” added Mr. Crandell.
Ken Wilson, CEO of CHM, said lenders are weighing their options carefully to understand the value of a qualified, independent asset management firm and “the transferability of skills and services asset managers bring to the receivership role.”
Mr. Wilson said the pressing decision for lenders will be to sell short or commit to a potentially longer hold period. “In either case, special servicers and lending groups are increasingly enlisting the expertise of hotel-specific experts, of which hotel asset managers are top of the list.”
While the outlook for 2010 is still a topic of debate, the company says it will be a long road ahead for lenders taking back hotels.
“The good news is there is help and the modern-day receiver, the hotel asset manager, is well-equipped to advise lenders as many of the core principles of asset management apply regardless of the ownership — the focus being minimizing risk, stabilizing the asset and implementing strategies to optimize asset value.”