AMERICAN LAWYER MEDIA
Commercial Real Estate Annual
It’s back to the ’90s for a growing number of troubled hotel properties.
Sale prices for some South Florida hotels have declined to levels not seen in 10 years.
Judging by two recent hotel deals, the hospitality industry could be the hardest hit of all commercial real estate sectors, experts say. A former Holiday Inn in Fort Lauderdale and the Doubletree Hotel Coconut Grove sold earlier this month at prices lower than their values in the 1990s.
With hotel property owners drowning in debt and a recession that has discouraged Americans from traveling, the hospitality industry will struggle for years, said real estate litigator Steve Silverman, a partner in Kluger Kaplan Silverman Katzen & Levine in Miami.
In South Florida alone there are $1.2 billion in distressed hotel loans, according to Real Capital Analytics.
“The hotel sector is driven by disposable income,” Silverman said. “Given the problems in the general economy, hotel stays are going to be considered a luxury item for several years. Business travel is down and will continue to be depressed for several years.”
Knowing some hotel owners basically have to sell off their properties, investors are becoming increasingly “vulturistic” in the hunt for bargains, said broker Jeff Cohen, head of the commercial real estate division of Esslinger Wooten Maxwell’s Miami Beach office.
“Those who are suffering need to dispose of their assets,” he said. “With the pressure on the whole industry on the liquidity side, buyers are scrutinizing every possible deal to get it as cheap as they can.”
