Horwath Hospitality Unveils Capital Idea For Hotel Owners, Buyers

NEW YORK— Demonstrating that the best way to overcome the business problems of today may well be to focus on the business solutions of tomorrow, San Francisco, CA-based Horwath Hospitality Investment Advisors (HHIA) is marking its first year of service to the lodging industry with a determination to bring a new-and-improved financing product to market. Joel Hiser, lodging industry veteran and president of the new full-service adjunct to Horwath International, said HHIA has drawn on the experience of its executive staff and the firm’s facility with the investment-sales and mortgage-financing arenas to recognize— and work to satisfy— a real need among shorter-term investment-minded borrowers. To this end, Hiser noted HHIA is currently working with City Bank of Hawaii to offer a five- to seven-year floating-rate instrument, which can easily be converted to a fixed-rate loan if the need or desire arises. Additionally, because the loan reportedly carries no pre-payment penalty (after the first two years of its life), the HHIA president contended this product could well prove to be an “ideal [vehicle]for those whose loans are coming due and want to refinance.” According to Hiser, this particular loan program— geared toward outlays of $10 million or less— has been devised with major, well-recognized franchise locations in mind. He further explained that, at this time, the new funding product is generally targeting properties and their proprietors in the western U.S. However, expectations are that it will ultimately sport a considerably wider geographic spread. “Under the terms of this [type of loan]arrangement,” Hiser told HOTEL BUSINESS®, “owners thinking about selling their hotels could be more apt to do so,” given they don’t stand to suffer what could easily be an unconscionable pre-payment bite. “It should also prove attractive to those potential property-purchasers thinking of just a three-year to five-year hold.” That’s not to say Hiser believes the introduction of— and ultimate industry reception to— this new product is all that’s necessary to spur hotel-transaction activity back to levels of some two years ago. “While securitized debt may be having some impact on property-sales levels, it has been the relatively poor performance of the lodging sector over the course of the past year or so that has had the biggest impact on acquisitions/dispositions. “Let’s face it,” Hiser maintained, “nobody wants to sell at what are currently below-market prices. They’d rather hold out and wait for a turnaround… and they can do so because [owners]have largely been able to meet their debt-service obligations, thanks to low leverage and even lower interest rates.” As for when such an industry turnaround might become evident, Hiser suggested such a scenario is still a ways off, “perhaps as far away as late 2003, or beyond.”