- Q1 hotel CMBS originations reached $1.7B, exceeding last year’s volume.
- Standout deals like Blackstone’s (BX) Great Wolf Lodge indicate investor confidence in the high-end hotel segment.
- So far, Q2 has also seen notable deals, like the Hilton Orlando transaction, signaling ongoing interest.
Recent quarterly data revealed hotel CMBS market growth, highlighting opportunities for investors in the sector, according to CoStar.
Steady Growth in Originations
The commercial mortgage-backed securities (CMBS) market has slowed down compared to pre-pandemic levels.
However, Q1 saw around $1.7B in hotel-related debt issuances, up 45% YoY. This indicates sustained interest from debt investors looking for higher coupon rates before potential Federal Reserve rate cuts.
And despite a 1.5% drop from last year, the total hotel-related CMBS debt volume stands at $90B, which is still up 8.1% from pre-pandemic levels in 2019.
Notable Deals
Notable Q1 originations included Blackstone’s (BX) $1B CMBS offering for Great Wolf Lodge and MCR Hotels’ $268M loan securitization of a 16-property portfolio, showcasing investor confidence in the high-end hotel market.
Notably, these transactions not only refinanced existing debt, but also generated substantial net proceeds, indicating a positive momentum shift.
So far, Q2 has shown investors more of the same, like the Hilton Orlando and Swan & Dolphin Resort deals.
What’s Next?
This year’s sustained growth in hotel CMBS originations, up 45% from last year, is a breath of fresh air for the hospitality industry. Industry experts anticipate more headline-making CMBS deals this year, fueled by potential rate cuts.
Not to mention more trophy asset transactions could lead to more securitizations, providing lucrative opportunities for borrowers and investors alike.
