Summary
The residential real estate market cratered some months ago and now the other show has dropped. The commercial real estate market is seeing loan defaults skyrocket and that means targeted investment in distressed hospitatality assets will provide superlative opportunities. In the next 18 months, smart cash-rich investors will be able to cherry pick hotel assets that traded at the very top of the market in an environment when leverage was king. The deals will not be clean and not be easy, but with a savvy approach investors should be able to make some spectacular deals if they have the wherewithall and perserverence to ride an asset to better days.
Analysis
The pendulum has swung back to the other extreme, from 90%+ leverage on hotel assets with miraculous valuations to a "cash is king" relationship banking environment where only established sponsors and investors are going to be able to tap the capital markets to get deals done.
It will take some time or the marketplace to be established and for deal volume to increase, but for now cash rich investors should be able to make spectacular deals at less than replacement cost pricing.
