Booming Hotel Sector Spurs High-Stakes CMBS Deals

Law360, New York (September 23, 2014, 5:07 PM EDT) -- An increasingly hotel-friendly commercial mortgage-backed securities market has begun embracing riskier mezzanine debt and even floating-rate deals as investors bet on the booming lodging sector’s long-term prospects, experts say.

The lodging sector is one of the healthiest of CMBS asset classes, with demand continuing to outpace supply and revenue per available room on a steady path upward. In this encouraging environment, investors are increasingly welcoming hotel-backed subordinated debt in CMBS pools, and floating-rate transactions are also coming into play with hotel owners looking to make a strategic gamble, experts note.

“There's a high percentage that’s fixed-rate conduit, but we are seeing...

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