Hotel foreclosures doubled in last year
TEXT OF STORY
Steve Chiotakis: Finally, a little piece of history goes on the auction block today.
D.C.’s Watergate Hotel will be sold. It’s the complex of course made famous by the 1972 burglary, which led to Richard Nixon’s resignation. It’s an all too common scenario today: the hotel owner defaulted on its loan. And thousands of commercial properties across the country are facing bankruptcy or foreclosure — more than double the number from last year. As Danielle Karson reports, hotels are the hardest hit of all.
Danielle Karson: Even trophy properties like the Watergate Hotel aren’t immune to the effects of the recession and credit crunch. As many as 1 in 5 hotels in the U.S. may default over the next year. The reason:
Brian Dawson: Business expenses have been cut dramatically; vacations have been cut dramatically as well. You put those two together, it’s not a very good outlook for hotels across the country.
Brian Dawson is with the real estate firm Cushman and Wakefield. Overall, commercial real estate foreclosures have shot up across the country. In New Jersey, they’re triple what they were last year.
Lawrence Yun, chief economist with the National Association of Realtors, says a jittery lending market is making things tough:
Lawrence Yun: Because of the credit crunch, there are very few buyers showing up, and has many of the distressed properties defaulting.
Analysts say it’s going to get worse for the commercial real estate sector, when nearly $1.5 trillion of debt comes due in the next few years — especially if lenders aren’t willing to re-finance the loans.
In Washington, I’m Danielle Karson for Marketplace.
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