As hotels plead for 'second' stimulus, Seattle stares down $1.6B in likely loan defaults
The hotel industry is warning it will default on at least $86 billion in collateralized loans within the next several months and deliver another financial shock to the U.S. economy without more intervention by the federal government, above and beyond the $2 trillion coronavirus bailout package just signed into law by President Donald Trump.
In a March 27 letter addressed to a host of federal regulators, the heads of the American Hotel and Lodging Association and Asian American Hotel Owners Association said the industry's "unprecedented cash flow crisis" brought on by the COVID-19 pandemic requires a separate financial lifeline, as well as special protections from the sector's legions of lenders and loan servicers.
The letter specifically seeks relief in the so-called non-agency collateralized mortgage-backed securities, or CMBS, market, a stamping ground for Wall Street's biggest lenders and a source for billions of loans to hotel owners throughout the United States.
"Many hotels are unable to pay operating costs and thus debt service," wrote AHLA President Chip Rogers and AAHOA President Cecil Staton in their letter to the U.S. Treasury, Federal Reserve and Securities and Exchange Commission. "This will cause a snowball effect of foreclosures followed by lenders taking ownership of severely distressed assets with no ability to operate them."
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