Author of www.HotelLawBlog.com
13 April 2008
Where have all the hotel lenders gone? You will find them at Meet the Money®, May 6-8, 2008 in Las Vegas.
Q: Why go to another hotel conference?
A: It’s the money, silly.
Q: Where do I get more information or register?
A: www.jmbm.com/mtm
How bad is the “Crunch”?
Last week, the Wall Street Journal provided some data to quantify the change in credit markets, saying that since July 2007, global debt underwriting volume has plummeted by $2.2 trillion. To put that number in perspective, it is almost the size of the United Kingdom’s entire gross domestic product ($2.3 trillion in 2006). And most of that decline, or $1.3 trillion, occurred in the U.S. debt markets.
In case you and Rip Van Winkle just woke up, it is clear that the past 9 months have witnessed a major sea change in capital availability. The past nine months of continued monthly declines in debt issuance is the longest downturn in the credit markets since 1990. Debt issuance last month (March 2008) was down 71% from March 2007.
I have seen my own microcosm of this phenomenon in assembling our Meet the Money® panels for May 2008. In 18 years of presenting Meet the Money®, I have rarely had more than 2 or 3 capital sources who, in any given year, have virtually “left the market.” This year, there were more than two dozen (possibly three dozen if a number of suspicious declines for “schedule conflict” are included).
So that leaves one big question . . .
Is there still capital available for hotels? Here’s what some Meet the Money® 2008 conference speakers say . . .
Given the sea change in capital availability, I asked the capital providers speaking at Meet the Money® a “tough question” recently: “Are you actually still approving hotel loans or equity investments, and funding now . . . or just standing by waiting for the credit crunch to pass?”
While current market volatility makes any financing uncertain until the deal has funded, here are some representative quotes from our Meet the Money® panelists just a couple weeks ago in response to my “tough question” about actually funding now:
“We are absolutely still funding — a little more expensive than 8 months ago, and a little less leverage (70-75% LTV), but still lending.”
“Closed one yesterday, and signed 3 term sheets this week.”
“I’ve got a large union fund pulling its money out of stocks and wants to redeploy $60 to $80 million in equity for to-be-built hotel development that is fully entitled and ready to go. I’ve already placed about a $140 million. ”
“I am currently involved in several deals north of $50 million where we will be financing the whole loan (not subject to participation).”“We have lots of money to invest and the banks love us – especially right now. Oh, yes. We also have the largest comingled union real estate investment fund in the country.”
“We are seeing a lot of capital coming from off-shore right now.”
“I plan to declare that we are open for business and explain why. I will discuss our capabilities including geographic reach, loan size, syndication capabilities, etc. I will go over the parameters required for us to do a loan.”
Do you want to meet the “real players” in today’s market?
A year ago, a good hotel investment would attract up to a couple-dozen capital sources who bid against one another to do the deal. Today, a lot of hotel finance inquiries are turned down, go unanswered or trigger a lot fast talk and excuses.
My team and I have been at this for a long time. We have worked very hard to assemble one of the most promising programs filled with the “real players” in today’s game. If you are involved with hotels, it would be a serious mistake to miss this important event.
Our capital providers will be gathering in Las Vegas on May 6-8, 2008 to spend two full days telling hotel owners and developers exactly what they are seeking in hotel investment. And the people who are doing deals will explain how they are getting them done.
On top of that, it looks like there are some “interesting” opportunities in troubled assets, so we will be looking at those, as well.
This is going to be a very popular event! Don’t miss out. You can join us by registering now for the 18th annual Meet the Money® conference — the Gateway to Hotel Finance — where value gets created, deals are struck, and solutions are uncovered.
Here are just some of the panels you won’t want to miss:
• Who’s Funding Now? WHY, WHEN & HOW?
• Reshuffling the Capital Stack
• Capitalizing and Re-Capitalizing Solutions in Today’s Market
• What does Equity Look for Today? (Equity investor guide, operating partners and JVs)• Filling the Void: Innovative Approaches to the Capital Stack
• Construction Finance: Is anybody there?• Alternate Strategies for Troubled Times: Survival Strategies, Workouts & Opportunistic Investments
Where have all the lenders gone?
Find them at Meet the Money®!
For conference and registration information: www.MeetTheMoney.com
For hotel information and reservations: Green Valley Ranch Resort, 866-782-9487
For questions: <a href="mailto
:klubecki@jmbm.com”>klubecki@jmbm.com
This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer, signing off. We’ve done more than $87 billion of hotel transactions and more than 100 hotel mixed-used deals in the last 5 years alone. Who’s your hotel lawyer?
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Our Perspective. We represent developers, owners and lenders. We have helped our clients as business and legal advisors on more than $125 billion of hotel transactions, involving more than 4,700 properties all over the world. For more information, please contact Jim Butler at jbutler@jmbm.com or 310.201.3526.
Jim Butler is one of the top hotel lawyers in the world. GOOGLE “hotel lawyer” or “hotel mixed-use” or “condo hotel lawyer” and you will see why.
Jim devotes 100% of his practice to hospitality, representing hotel owners, developers and lenders. Jim leads JMBM’s Global Hospitality Group® — a team of 50 seasoned professionals with more than $87 billion of hotel transactional experience, involving more than 3,900 properties located around the globe. In the last 5 years alone, Jim and his team have assisted clients with more than 100 hotel mixed-use projects, all of which have involved at least some residential, and many have also involved significant spa, restaurant, retail, office, sports, and entertainment components — frequently integrated with energizing lifestyle elements.
Jim and his team are more than “just” great hotel lawyers. They are also hospitality consultants and business advisors. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them. They are a major gateway of hotel finance, facilitating the flow of capital with their legal skill, hospitality industry knowledge and ability to find the right “fit” for all parts of the capital stack. Because they are part of the very fabric of the hotel industry, they are able to help clients identify key business goals, assemble the right team, strategize the approach to optimize value and then get the deal done.
Jim is frequently quoted as an expert on hotel issues by national and industry publications such as The New York Times, The Wall Street Journal, Los Angeles Times, Forbes, BusinessWeek, and Hotel Business. A frequent author and speaker, Jim’s books, articles and many expert panel presentations cover topics reflecting his practice, including hotel and hotel-mixed-use investment and development, negotiating, re-negotiating or terminating hotel management agreements, acquisition and sale of hospitality properties, hotel finance, complex joint venture and entity structure matters, workouts, as well as many operating and strategic issues.
Jim Butler is a Founding Partner of Jeffer, Mangels, Butler & Marmaro LLP and he is Chairman of the firm’s Global Hospitality Group®. If you would like to discuss any hospitality or condo hotel matters, Jim would like to hear from you. Contact him at jbutler@jmbm.com or 310.201.3526. For his views on current industry issues, visit www.HotelLawBlog.com.