Few Things about Hotel Industry

Fitch expects the number of delinquent loans to increase and reach 5 percent by year end given the recent increase of US$2 billion in delinquencies and higher rollover rate of 30-day delinquencies to 60-day. Commercial property fundamentals continue to be under stress due to economic factors such as rising unemployment and lack of consumer spending as well as loans with low debt-service coverages that are close to depleting their reserves.

The hotel real-estate class is prominently featured in the report, which details the 10 largest delinquent specially serviced loans, the 10 largest performing specially serviced loans (which were with the special servicer but were either reported 30 days delinquent or were paying debt service), and the 10 largest Fitch loans of concern that were with the master servicer as of 31 July 2009.

Among the 10 Fitch loans of concern that are current but have shown decline in performance or are unlikely to meet stabilization expectations at issuance, four are hotel loans:

LXR Hospitality Pool—a US$1.07-billion loan secured by 12 hotels in Puerto Rico, Florida, Arizona, California, New York and Jamaica.

Kyo-ya Hotel Portfolio—the US$1.05-billion loan is secured by six full-service hotels with 6,127 rooms. All but one of the hotels is located in Hawaii, which has a negative outlook on hospitality performance for the coming years.

Kerzner International Portfolio—the US$669-million loan consists of a diverse portfolio of real estate, including resort casinos, golf courses, timeshares, vacant waterfront land and ongoing construction projects.

Planet Hollywood Resort and Casino—the US$460-million loan is secured by a recently renovated hotel and casino in Las Vegas.

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