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In the midst of the worst market decline in history of the two inextricably intertwined U.S. market sectors of travel and hospitality, hotel owners, operators, lenders and investors struggle during the ongoing surge and wane of COVID-19 pandemic to keep their properties and loans from defaulting by additional financing, loan modifications, use of existing reserves, forbearances, moratoriums, reducing staff and other expenses, and additional equity infusions from existing or new investors.
Depending on the lender – bank, insurance company, non-bank lender or securitization trust – the possible approach and response for, as well as constraints of regulatory or contractual limitations on financial relief may be significantly different to extent, duration and conditions. A balance sheet lender will have more flexibility than a lender that has syndicated or financed its loan or loan portfolio, while a servicer of a securitized loan may have considerably less flexibility. Whether a hotel property was underperforming or a hotel loan in default prior to the onset of the pandemic may be the key determinants to any grant of relief. However, all of the regarding covenant breaches as well as economic metric thresholds and tests regarding the future viability of operation of a hotel property, retention of its brand franchise, or performance of its loan are further complicated by the inability obtain an accurate appraisal or otherwise determine a realistic market value of properties during the continuance of the pandemic.
During their conversation, the participants will discuss:
- the robust hotel market pre-COVID and the finance market structures and players (15 minutes)
- the impact of COVID on owners, operators and lenders – closures and other limitations (10 minutes)
- loan modifications and moratoriums – contractual and regulatory hurdles (20 minutes)
- post-COVID obstacles to recovery of the hotel market and its participants (15 minutes)
Joseph Philip Forte
AmTrust Title Insurance Company/First Nationwide Title Agency
Stacy G. Ackermann
K&L Gates LLP
Jonathan E. Martin
Jeffrey W. O’Neale
Mayer Brown LLP