Dallas, however, lost a buyer for the Montgomery Ward building at Seventh and Carroll streets. Montgomery Park II LLC, led by Sam Himmelrich Jr. of Baltimore, had the estimated 500,000-sf complex under contract in a deal cut with the US Bankruptcy Court. The $15-million contract's expired and Himmelrich's team has not sought an extension to Loughry's knowledge. In more backpedaling, a Ft. Worth woman revoked a $25-million grant to the city to pay for reworking an Interstate 30 interchange to open up the cultural district. Her primary reason was the financial hit that she's taken since Sept. 11.

Still, says Loughry, there's a positive ring to the current situation. "There's a flight from the stock markets into sticks and bricks," he emphasizes.

A freshly completed Holliday Fenoglio Fowler LP paper by Pittsburgh senior director Mark Popovich shows just how deep the cut is for the hotel market. Austin is one of five cities experiencing tough times at the lending table whereas Houston is one of four cities that's "recovered quite nicely," says Popovich. "But, in the current lending environment, even good deals on top-performing properties are very difficult to finance." The least affected venue, of course, are economy and mid-scale chains. He says, without any hesitance, that the "intense operating pressure" will continue well into 2002.

According to Popovich, most life insurance companies have "suspended hotel lending at this time." Some are still considering low-leverage loans on a selective basis and many are taking hard looks at portfolio trouble spots. "Some lenders with hotel exposure," says Popovich, "are preparing for a significant amount of workouts and foreclosures over the next several months as are the CMBS master and special servicing sectors and the larger loan servicing companies."

The post-Sept. 11 environment brings new underwriting criteria. Popovich says CMBS hotel loans will now be evaluated with 1999 operating results, "setting aside the industry's 2000 performance as an unrealistic benchmark." The new standards require borrowers to carry a reserve fund equal to a 12-month debt service to be funded into an escrow account for the entire loan term. "The result is a reduction of loan proceeds and negative arbitrage on the escrowed funds," he explains...not just in Texas, but border to border and coast to coast.