This week's column examines the threat of default hanging over a loan backing 22 Starwood Capital Group hotels, the prospects for President Donald Trump's proposed ban on institutional single-family home investments and a New Jersey mall that's lost 71% of its value. Read the entire piece by clicking "read more" below.
Starwood hotel loans show distress: A 22-property hotel portfolio serving as collateral for $265 million in commercial mortgage-backed securities debt moved to special servicing in January.
The case stands out because it exposes the limits of the post-pandemic hotel recovery narrative. The portfolio, comprising full-service, select-service, extended-stay and limited-service hotels, has yet to return to pre-crisis performance — despite carrying three of the industry's most recognized brands.
The Starwood Capital Group-owned portfolio includes 2,943 keys across 17 cities and operates under the Marriott, Hilton and IHG flags. It transferred to a special servicer effective Jan. 28 after the loan was flagged for imminent default, according to commentary reviewed by Morningstar Credit. The borrower had paid the loan through Jan. 11.
Starwood Capital declined to comment to CoStar News.
Net operating income in 2024 sat 57% below 2019 levels and 31% below the income level Fitch Ratings used at loan issuance, according to the bond rating firm's rating action in July. The portfolio's debt service coverage ratio — a key measure of a property's ability to service its debt — stood at just 64 cents per $1 owed for the trailing 12 months ended June 30, according to Morningstar DBRS. Weighted average occupancy fell from 72.5% when the debt was issued to 63.1%, while revenue per available room dropped from $84.80 to $78.90.
The portfolio's last formal appraisal, conducted at issuance, valued the collateral at $401 million. Both Morningstar DBRS and Fitch flagged that figure as likely overstated given the cash flow erosion, but neither agency published an updated valuation.
The loan does not mature until September 2028, giving the special servicer and borrower a window to negotiate. But with interest rates remaining elevated and hotel cash flows under pressure, analysts see limited options for a clean exit.
Assessing the Trump single-family investor ban: President Donald Trump's sweeping executive order in January seeking to curb large institutional investors from buying single-family houses is likely to make only a small impact, for now, on asset-backed securities, according to Fitch Ratings.
The executive order "will have limited near-term effect" on single-family rental securitizations, Fitch said on Feb. 19. The ratings firm noted the order does not require institutional owners to sell existing portfolios, and that assets backing securitized single-family rentals "continue to perform well." Institutional investors own roughly 2% to 3% of the nation's single-family housing stock — a share Fitch described as too small to broadly reshape the U.S. housing market.
Fitch did note, however, that there could be pockets of significant exposure. Institutional investors hold outsized shares in several Sun Belt markets, including Atlanta, Georgia; Phoenix, Arizona; Charlotte, North Carolina; and Tampa and Orlando in Florida, where housing prices have already declined over the past year.
Trump's order faces steep legislative hurdles, including pushback from Republicans wary of reopening bipartisan housing bills already moving forward.
Larger institutional operators are already pivoting. The order excludes build-to-rent properties in planned rental communities — a category that has become a "significant driver of growth" for large institutional single-family rental owners, Fitch said. That carve-out gives well-capitalized players room to adapt, while smaller operators without the scale to shift toward build-to-rent face greater exposure.
Meanwhile, single-family rental securitization issuance has dropped from $1.6 billion in 2025 to under $900 million so far in 2026, according to CoStar data. That could be a sign that uncertainty has set in before the order gains legal teeth.
New Jersey mall loses 71% of value: Paramus Park, a roughly 700,000-square-foot mall in Paramus, New Jersey, has lost nearly three-quarters of its value in less than a decade, underscoring the distress gripping some regional malls across the country.
A new third-party appraisal cut Paramus Park's value to $61.4 million — less than half the $120 million CMBS debt it secures and a 71% drop from the $210 million valuation assigned at loan origination in 2015, according to loan servicer commentary supplied to CoStar.
The loan transferred to special servicer Greystone in September after the borrower failed to pay off on the due date. Greystone issued a formal notice of default Oct. 15. The special servicer is "pursuing noteholder's rights and remedies," it said in its Feb. 6 commentary, signaling that a negotiated resolution has not materialized.
Mall owner GGP, a Brookfield subsidiary, declined to comment.
Net cash flow has also deteriorated sharply. Unaudited net operating income ran $4.8 million for the first nine months of 2025, while full-year 2024 net operating income totaled just under $7 million — roughly half of what underwriters projected when the loan closed a decade ago, according to Securities and Exchange Commission filings.
Occupancy at the mall held at about 82%-83% through mid-2025, a figure the servicer described as "in line with historical" performance.