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.

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