Published on:

Hotel Lawyer: Live, love and know your CMBS Special Servicer. Why no one may be more important for you to know all about right now — in survival or “treasure hunting”

16 April 2009

Please see “troubled hotel loans – workouts, bankruptcies & receiverships” for the latest articles on troubled hotels.
Hotel Lawyer with the latest data on commercial real estate loan maturities and some important implications — Why you need to know all about CMBS Special Servicers and how to meet them!

My friend, Michael Murray at MBA Newslink, published a story this morning with some startling numbers. According to the Mortgage Bankers Association (or MBA), $90.5 billion of CMBS debt comes due this year! And that is only part of the story.


The Mortgage Bankers Association assessment

The MBA says that approximately $218 billion of commercial real estate mortgages mature in 2009. With no solution to the liquidity crisis in sight to allow refinancing, the MBA says that the second half of 2009 will see “seller capitulation.” Many lenders and Special Servicers will no longer find the current fall-back position of “loan extension” to be a viable alternative.

The $90 billion of maturing CMBS debt is massive. While CMBS loans originated in 2007 topped out at $270 billion for that year, they plummeted to $18 billion for 2008, and virtually none since the second half of 2008.

I like to believe that CMBS will come back in a reincarnation where the originating lenders keep enough “skin in the game” to keep everyone honest and make sure that due diligence and underwriting is done prudently, but that is not going to happen until the financial mess we have now gets cleaned up.

So what does all this mean to hotel owners and investors who have hotels with debt coming due, and to opportunistic investors or treasure hunters looking for deep discounts?

Here is why CMBS is important to you — particularly “special servicing”:

  • $90 billion of CMBS debt comes due in 2009, and much more in 2010
  • Record defaults are projected to start in the second half of 2009
  • “Special Servicers” deal with all troubled CMBS loans
  • A handful of CMBS Special Servicers handle 90% of all the CMBS debt
  • The basic rules and approaches of the Special Servicers will determine what happens to those with maturing debt on their hotels, and what may be available for “treasure hunters”

That is why this year’s Meet the Money® features the top Special Servicers in the United States.

Meet the Money® panels featuring CMBS Special Servicer leaders

What is happening in the CMBS world is so important for our hospitality industry that we will feature at the Meet the Money® Conference, senior representatives from the major Special Servicers (along with leaders from other facets of the industry) giving their perspectives on critical issues, including the following:

  • CMBS Special Servicing 101: What you need to know and why they are so important
  • The Note is coming due: Strategies and approaches for value enhancement . . . and other options
  • What’s happening in capital markets? Are any deals getting done? Where and How?
  • Finding the Pony – Bankruptcy, Receiverships & Restructurings
  • Treasurer Hunter’s Guide to the Gold. How the veterans did it the last time and what they think will be different this time

Sign up now to attend Meet the Money® (May 5-7, 2009)!

You should not miss the incredible program and speakers we have lined up this year. It is hard to meet the Special Servicers because they usually seem to be working long hours, hiring new asset managers, meeting with rating agencies, and dealing with note holders and other “constituents.”

It would be a shame to miss them at Meet the Money®’s two receptions and other conference events. Their insights will be invaluable.

This year more than ever you will need a competitive advantage to succeed — you want all the knowledge that you can gather from the pros. They will be at Meet the Money®, and you should be too.

Get more information and register at www.MeetTheMoney.com. The discounted conference rate at the Sheraton LAX is only available for a few more days.

This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer, signing off. We’ve done more than $60 billion of hotel transactions and have developed innovative solutions to unlock value from troubled hotel transactions. Who’s your hotel lawyer?

________________________
Our Perspective. We represent hotel lenders, owners and investors. We have helped our clients find business and legal solutions for more than $60 billion of hotel transactions, involving more than 1,000 properties all over the world. For more information, please contact Jim Butler at jbutler@jmbm.com or 310.201.3526.

Jim Butler is a founding partner of JMBM and Chairman of its Global Hospitality Group®. Jim is one of the top hospitality attorneys in the world. GOOGLE “hotel lawyer” and you will see why.

JMBM’s troubled asset team has handled more than 1,000 receiverships and many complex insolvency issues. But Jim and his team are more than “just” great hotel lawyers. They are also hospitality consultants and business advisors. For example, they have developed some unique proprietary approaches to unlock value in underwater hotels that can benefit lenders, borrowers and investors. (GOOGLE JMBM’s SAVE® program.)

Whether it is a troubled investment or new transaction, JMBM’s Global Hospitality Group® creates legal and business solutions for hotel owners and lenders. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them.