Trepp, LLC, the leading provider of information, analytics, and technology to the CMBS, commercial real estate, and banking markets, has published new research on the commercial real estate lodging property sector that highlights valid concerns for the industry based on occupancy levels, low RevPAR growth, and rising influence of the sharing economy. Trepp’s report provides supplementary data from their product that speaks to the sensitivity of hotel performance. The delinquency rate for CMBS loans behind lodging properties, which had been fluctuating between 2-3% in the past year, was 3.08% for the month of June. That number comes in above the overall average for the past 12 months, which was 2.82%.
“Lodging is historically cyclical,” said Joe McBride, Research Associate at Trepp. “Like most other property types right now, hotel performance and pricing may be at a peak judging by recent performance data. Luckily, the current stock of lodging loans in CMBS are performing well and the outlook is stable.”
Trepp does provide plenty of encouraging statistics for the lodging space. Cumulative losses for all lodging CMBS loans during the first half of 2016 has decreased substantially to below 2%, down from 4.38% for the same period in 2015 and 19.46% in 2014. Additionally, cap rates have generally fallen in the past few quarters, which could be attributed to the general strength of lodging property values.
For the $193 billion in CMBS loans that mature between now and 2017, the lodging sector remains a crucial piece of the puzzle. Loans backed by lodging properties comprise 16.05% of the “wall of maturities” and those with a vested interest in CMBS hope that strong property values and continued low loss severity will spur payoffs and refinancings.
A complimentary copy of the report can be downloaded at http://info.trepp.com/lodgingrecovery-2016-pressrelease. For daily CMBS and commercial real estate commentary, follow @TreppWire on Twitter.