ATLANTA — While the hotel transactions environment in the United States faces plenty of challenges, there is opportunity for people and companies choosing to enter the acquisitions market.
“There have been a lot more acquisitions for sure than I think anyone anticipated,” said Peter Berk, president of PMZ Realty Capital, in a video interview with Hotel News Now during the Hunter Hotel Investment Conference.
Berk said approximately 25% of the deals his firm is working on now are acquisition loans, and while lack of product certainly affects the pace of deals, hotels are out there for those willing to take the plunge.
“Whether we do a 70% loan or a 75% loan, somebody is writing a big check — a multimillion-dollar check, voluntarily — which means that they believe in an asset,” he said.
PMZ also is doing commercial mortgage-backed securities loans for stabilized assets, and he noted the availability of bridge loan financing.
The same can’t necessarily be said for construction financing, Berk said. Most national lenders have pulled back over the last year as demand retreated and lenders and owners instead have focused on their existing portfolios.
So much of hotel transactions recovery remains a waiting game, Berk said, dependent on factors like business travel picking up and vaccine rollout, but he said in general “people see the light at the end of the tunnel,” and transactions will pick up, as they always do.
“A lot of lenders, whether balance-sheet lenders or CMBS lenders, allowed people to use their [furniture, fixtures and equipment reserves] for deferment and to pay their debt services … so people are going to either have to refinance and pull out some FF&E, or sell the hotel,” he said. “From a transactions standpoint, it’s going to be busy.”
For more from Berk, including his thoughts on activity around converting hotels to other asset classes, watch the video above.
This video was recorded on May 12, 2021, by HNN’s Stephanie Ricca.