Fitch U.S Says CMBS Newsletter: Hotel Defaults May Hit 30% By 2012

NEW YORK, NY--Loan defaults for U.S. hotel CMBS show no signs of slowing down as a large concentration of loans come due next year and in 2012 , according to Fitch Ratings in its latest weekly U.S. CMBS market trends newsletter.

Despite 20% hotel revenue declines since the peak in 2008 (the largest decline among the major CMBS property types), Fitch’s Outlook for the hotel sector remains Negative. Delinquencies for hotel CMBS currently stand at 16.6%, representing approximately $8.4 billion in total hotel loan balance. Fitch projects delinquencies to double from current levels and hit 25-30% by 2012 even as operating performance begins to
stabilize.

‘Hotel property values are off as much as 50% from 2007 peaks, but borrowers by and large have been able to keep their loans current because of historically low Libor rates,’ said Senior Director Jeffrey Watzke. However, ‘Over three-quarters of floating-rate hotel loans originated during 2006-2007 mature in 2011 and 2012 into much higher fixed rates,’ said Watzke.

Additional information is available in Fitch's weekly e-newsletter, 'U.S. CMBS Market Trends'. The link below enables access to Fitch's U.S. CMBS Market Trends weekly updates:

Contact:
 Jeffrey Watzke +1-312-606-2358, Chicago or Eric Rothfeld, +1-212-908-0761, New York.
Media Relations: Sandro Scenga, New York, Tel: +1 212-908-0278: sandro.scenga@fitchratings.com.
Additional information is available at http://www.fitchratings.com/