Lending - with careful underwriting - is back
By Joel Ross , President at Citadel Realty Advisors
While there has been a new start to CMBS lending and hotel lending in general, do not get lulled into believing it is all sunny and you can easily refinance at 5% or less. There are only a few lenders who are active. Besides capacity issues, as rates have begun to rise, rates for borrowing are rising as well. The CMBS lenders all have capacity issues right now since there still is very limited bond issuance and hotels are only 10% or so of a given pool. Underwriting is still what it should be: tight. Lenders are seeking debt yields of 14%, although there are some deals being done at 12% where the borrower is very strong and the property is very good.
Joel Ross is principal of Citadel Realty Advisors, successor to Ross Properties, the investment banking and real estate financing firm he launched in 1981. A Wharton School graduate, Ross began his career on Wall Street as an investment banker in 1965. A pioneer in commercial mortgage-backed securities, Ross, along with Lexington Mortgage, and in conjunction with Nomura, effectively reopened Wall Street to the hotel industry.More from Joel Ross