Not only do receivers have some pretty harrowing stories of taking over hotels in bad situations, but the fact most are gearing up for more business is a pretty good clue of what's coming: More foreclosures.
Lenders are becoming more aggressive in taking back assets as results and values have improved. The FDIC still has plenty of troubled loans to work through from banks it's taken over and the first real wave of CMBS maturities hit this year, five years after many owners refinanced, bought or built at the near peak of the cycle.
So as peachy as operating results, forecasts and even some big-ticket transactions have been, there is still plenty of heartache left for lots of owners. As distress grows, so do the number of consultants, property managers and asset managers who are accepting hotel receivership assignments. Despite the usual short-term nature of the role, not to mention the challenges of stepping into often deteriorating properties, it's good business. It's an opportunity to maintain and improve relationships with lenders who might later return a favor, and the assignment could turn into a long-term contract when the lender or new owner takes over the property.
Steve Van, CEO of Prism Hotels & Resorts, has added staff throughout the past year and expects to double his receivership workload this year. Last year his company added 23 court-appointed receivership assignments and he expects that number to double this year. More are entering the field and as Tom Morone, a partner with Warnick + Co., says, “you've got to go where the fish are.”
The tidal wave of distressed assets coming to market and the resulting buying opportunities we've heard about for two years may finally be arriving.