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Lenders Still Cool to Lodging Properties

But there are indications they are warming up to some deals—but only if those hotels are throwing off a hefty cash flow.

By Maria Wood | Updated on June 18, 2009

NEW YORK CITY-Lenders remain hesitant about making loans on lodging properties. But there are indications they are willing to refinance hotels that have a healthy cash flow and solid sponsorship.

That was one of the trends Jones Lang LaSalle Hotels uncovered while speaking to lenders at the recent New York University International Hospitality Industry Investment Conference held at the Waldorf-Astoria here. In a “Debt Capital Markets Bi-Monthly Update,” JLL found that several prominent lenders have halted their hotel origination programs. However, others were actively seeking to lend on hospitality. “Their mantra, of course, is strong cash flow and excellent sponsorship,” wrote JLL researchers.

“We are not seeing many transactions, so anything that is getting underwritten today is probably on a refinance basis for existing hotels that are cash flowing,” Jeffrey Davis, executive vice president, Jones Lang LaSalle Hotels.

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