281 | Rescue Capital: Hotel financiers seek opportunities to invest in distressed assets
In June, Watermark Lodging Trust, a Chicago REIT, sold its Hutton Hotel in Nashville for $70 million. The price is $7 million less than what the REIT said it paid to acquire and upgrade the hotel seven years ago.
A month later, Watermark said it signed a deal in which it sold shares worth $200 million to a joint venture between Ascendant Capital Partners and Oaktree Capital Management.
The influx of cash will be used to keep Watermark in business and give Ascendant and Oaktree preferred equity positions. Watermark will pay the JV a 12 percent annual dividend rate.
The activity is a harbinger of what’s to come as hotel owners struggling to stay afloat amid the economic downturn caused by the coronavirus pandemic may soon be forced to sell their assets at a discount or borrow money to keep paying their mortgages.
In this episode of Lodging Leaders podcast, we explore what opportunistic investors might have in store as the lodging industry faces the possibility of mortgage defaults.
We talk to financiers who are stepping up with what they call “rescue capital” to help owners get to the other side with their businesses intact or be among the first to reap a return if an asset is forced to go to market. And we talk to asset managers who advise on how to position your hotel to either survive the crisis or go to market.
Our report features Amanda Chivers, managing principal at Crown Hospitality Consulting in Atlanta; Evens Charles, president and CEO of Frontier Development & Hospitality Group in Washington, D.C.; David Turley, principal at Cronheim Hotel Capital in New York City; and Brian Waldman, executive vice president of investments at Peachtree Hotel Group in Atlanta.
Resources and Links
- 278 | CMBS Distress: Thousands of hotel owners seek relief from billions of dollars in debt
- Daniel Lesser’s full presentation
- Amanda Chivers of Crown Hospitality Consulting
- Evens Charles of Frontier Development & Hospitality Group
- David Turley of Cronheim Hotel Capital
- Brian Waldman of Peachtree Hotel Group