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Scarcity of Capital Causes Debt Disconnect

NEW YORK CITY-Insiders agree that spreads have widened and although there has been a shift in the industry in the past year, 'we are back to the basics.'

By Natalie Dolce | Updated on April 17, 2008

NEW YORK CITY-There is a scarcity of capital out there and Wall Street investment banks have a limited appetite for hotel debt, agreed sources at Real Estate Media’s RealShare Hotel Investment & Finance Summit earlier this week. The “Town Hall Meeting,” moderated by Scott Stephens, principal of HREC Investment Advisors took the audience of more than 350 on an in-depth look at the debt and equity capital markets and helped shed some light on how the credit crunch is affecting the hotel investment and development market.

Greg O’Stean, EVP and managing director at GE Real Estate, told the audience that underwriting hasn’t really changed that much. “The market has changed, but we have kept our basic standards.” He continued that there has been a bit of a shift from last year. “Today we have a mixture of center cut deals.”

Angelo Stambulus, VP of hospitality at Capmark Finance, agreed with O’Stean’s comments, noting that the market has definitely changed, however he said that spreads have widened. “There is a scarcity of capital out there. Wall Street investment banks have a limited appetite for hotel debt.”

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