The number of distressed hotels in N. CA is growing. In response, PKF Capital, the sister company of PKF Consulting, has launched its Distressed Hotel Solutions Program in response to the increasing number of financially troubled U.S. Hotels, whose owners, lenders and legal representatives may be entering a crisis mode.
PKF is prepared to help hotel owners who became over-leveraged with debt during the recent easy credit years and are now faced with declining revenues and repayment due dates on the horizon.
"Our research division has recently taken the unprecedented step of issuing a mid-quarter update underscoring the speed and severity of this current decline, and it points to the timeliness and importance of this DHSP to owners and lenders," says PKF Capital’s Executive Managing Director Bob Eaton.
The take away for owners/investors of hotel real estate is to analyze the current debt, take a hard look at your expenses. I would recommend connecting with a consultant and/or hotel broker who can explain your options and assist you in the process. Many times, the answer is not to sell the asset.
If the best option is to sell the asset, make sure the consultant/broker is using cap rates/discount rates that the market most likely trend to. Currently, I am seeing cap rates in the double digits in the Valley. It goes without saying that the seller cap rate is still in the 9's or even 8's; that is a no win situation. As a broker, that needs to be a deal breaker. The client needs to get to a 10 cap mentally prior to market launch.
Have any questions on the market or the metrics involved, give me a call at 916-830-2622.
Sunday, January 25, 2009
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