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Hotels Climbing Out of Funding Slump

NEW YORK CITY-Lenders here are eyeing new mortgages more closely than ever since September 11. But while many experts have predicted the hotel sector would be the New York real estate industry's hardest-hit market, a change of attitude among hotel lenders is leading to more creative funding.

By Glen Thompson | Updated on November 05, 2001

NEW YORK CITY-While money is tight and is likely to stay that way for a while, New York, unsurprisingly, is a tough market for lenders to predict. A top-tier city and a global financial center, New York also ranks as a major leisure destination. But while the events of September 11 delivered a devastating blow to an already hobbled economy, lenders have not yet cut off the purse strings, even for the tourism-driven hotel sector.

Peter Korpacz, director of the global strategic real estate research group at PricewaterhouseCoopers, tells GlobeSt.com that while lending “is going to mirror the expected performance trends for the various property types, hotels will be a little more difficult to fund.”

But according to Mark Gordon, a managing director at New York-based mortgage brokerage firm Sonnenblick-Goldman Co, the hotel market is already bouncing back. “There’s been a fundamental change in lender attitude,” Gordon tells GlobeSt.com. “For the first 30 days after September 11, lenders were not doing much for upscale, full-service hotels,” Gordon says. “Over the past three weeks, however, we’ve seen a fairly significant change.” Lenders are “coming back to see how hotels can be financed creatively.”

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