Tantleff’s financing themes for 2014 | Articles on FTI Consulting

Tantleff’s financing themes for 2014

Hospitality, Gaming & Leisure | Jeff Weinstein (HOTELSMag.com)

October 29, 2013

Alan Tantleff, senior managing director in the New York City office of FTI’s Corporate Finance/Restructuring practice and leader of its Hospitality, Gaming and Leisure practice, has identified four finance themes, which he thinks will impact the U.S. hotel and gaming segments in 2014.

Tantleff, with 25 years of diverse, hands-on experience in lodging real estate investment and development, shared his thoughts exclusively with HOTELS Magazine.

The end of pretend. Despite looming maturities in 2014-16, there will be fewer distressed opportunities for investors, at least in the United States. An environment coupling low interest rates, looser underwriting standards and improving fundamentals will allow owners to refinance or sell. Already, the percentage of CMBS loans secured by hotels in special servicing has declined steadily these past three years with delinquency rates declining to about 7.1% in August (source: Morningstar September Delinquency Report). Although damning with faint praise, hotels are no longer the worst performing asset class today – that distinction goes to industrial at 11.3%.

Stress in public-private partnerships. Municipal finances have been “taxed” in this cycle. The bankruptcy filings of Stockton, California, Harrisburg, Pennsylvania, and Jefferson County/Birmingham, Alabama, were all big news until the City of Detroit filed its unprecedented bankruptcy on July 18, 2013. The pressures faced by municipalities are putting further strain on public-private partnerships. That was the situation faced by non-profit agency, Lafayette Yard Community Development Corp., the owner of the city-financed former Trenton Marriott, which filed for bankruptcy protection in September. Several other large public-private partnership hotels and convention centers will likely follow suit as interest reserves run out and government officials focus on essential services.

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