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While staying at a Holiday Inn Express makes you feel smarter, according to the hotel chain's commercials, owning one isn't a foolproof investment.
A $31M loan on the Holiday Inn Express Brooklyn was the second-largest commercial mortgage-backed securities loan in the country to become delinquent last month. Hospitality equity and debt investment group Three Wall Capital owns the Gowanus hotel, which has 115 rooms, according to its website.
The group paid $33M in 2013 for the property and secured a CMBS loan through Bancorp Bank in 2016, property records show. The $30.5M loan on the Holiday Inn Express, at 625 Union St., was marked as non-performing beyond maturity last month.
In August, the delinquency rate for commercial real estate loans in CMBS hit 3.64%, a drop of 17 basis points from the month before, California-based CRE analytics company Trepp reports. Just over $847M in CMBS debt was delinquent during August.
The InterContinental Hotels group has instructed Three Wall to remove the Holiday Inn branding because of low customer satisfaction survey results, according to Trepp. In 2013, the New York Attorney General found the hotel's then-owners, Magna Hospitality Group, had pushed up prices in the wake of Hurricane Sandy, the New York Daily News reported. They had to pay $15K in restitution to 38 guests as well as a $25K penalty.
Hotel commercial mortgage-backed securities experienced the lowest delinquency rate of the five core CRE sectors in July, removing multifamily from the top spot for the first time since 2012.
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