Hotel Owner Seeking Mortgage Relief? Not if Wall Street Owns Your Loan


Source: The Wall Street Journal
by Ben Eisen
June 4, 2020

The coronavirus shutdown has spared few companies in the travel business, but times are especially tough for hotel owners whose mortgages are owned by Wall Street investors.

When they need relief, these borrowers go to so-called special servicers that negotiate on behalf of bondholders. Hotel owners seeking a break on their monthly payments say they haven’t had much success negotiating with these firms, which have an obligation to recover as much money as possible for investors.

Just 20% of hotel owners whose loans had been packaged and sold to investors have been able to adjust payments in some form during the pandemic, versus 91% of hotel owners who borrowed from banks, according to a survey by the American Hotel and Lodging Association.

“We just don’t know what is going to happen,” said Mr. Patel, who owns and operates nine hotels and serves as treasurer of the Asian American Hotel Owners Association, a trade group.

A KeyCorp spokeswoman said the bank can’t comment on the specifics in loan portfolios, but added that it “continues to work in good faith with the borrowers.”

The roughly $550 billion market for commercial-mortgage-backed securities includes loans to shopping centers, self-storage facilities and industrial parks. Hotels account for an $86 billion chunk of the debt, and they have been hit especially hard by the travel restrictions put in place to curb the spread of coronavirus.

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