Hotel Loan Defaults Double in U.S. as Recession Curbs Travel
Bloomberg reports: As many as one in five U.S. hotel loans may default through 2010 as the recession means companies are spending less on travel and perks, according to University of California economist Kenneth Rosen.
"Hotels without question will have the highest foreclosure rate of any commercial real estate sector," said Rosen, who runs a real estate hedge fund with $310 million in assets and is chairman of the University of California’s Fisher Center for Real Estate and Urban Economics in Berkeley.
The value of hotel properties in default or foreclosure almost doubled to $17.3 billion in the second quarter through June 24 from $9 billion at the end of the first quarter, data compiled by Real Capital Analytics show. The New York-based research firm, which began tracking distressed commercial property in November, expects hotel defaults to increase by as much as $2 billion next quarter, said analyst Jessica Ruderman.
Owners of the 250-room Watergate Hotel, part of the DC complex made famous by the bungled 1972 burglary that led to President Richard Nixon’s resignation, defaulted on a $69.8 million loan held by PB Capital Corp. this month, Real Capital Analytics said.
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Posted by: Matthew Stone