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Developer, analyst target problem hotel loans (1:46 p.m. 3/2/10)

By Kirby Lee Davis
Dolan Media Newswires

Minneapolis — An Oklahoma real estate developer and a Chicago hospitality analyst are teaming up to help banks with problem hotel loans across the Midwest.

Paul Coury, a real estate developer in Tulsa, Okla., and Robin Hunden have created a firm, HC Hospitality Asset Management, to capitalize on growing hotel loan problems.

Their new company draws on Coury’s 28-year experience as a banker, property broker, hotel operator, construction manager and court-appointed receiver. Hunden augments that with feasibility and performance research capabilities.

“We’re seeing this wave of foreclosures and distressed properties and trying to offer assistance to many banks who really have no idea how to manage these assets they’re taking on in record numbers,” said Hunden, president of the research and advisory firm Hunden Strategic Partners.

“We’re combining his expertise on evaluating the market with mine on renovating and managing the property,” said Coury, chairman of Coury Properties and the Coury Collection of boutique hotels.

While many national real estate companies offer asset-management services, Hunden said they remain focused on major markets. Those large markets experienced far more problems than smaller Midwestern markets over the past decade, although Coury said he expects more banks in the region to face that challenge this year.

He pointed to data suggesting 85 percent of hotels tied to commercial mortgage-backed securities are now valued below their loans.

“We think a lot of the hotels that have managed to hold on so far will have trouble and they will be turned back into their lenders this year,” said Hunden. “Things have not turned out as they expected. The assumptions that many hotel properties undertook over the last two years were unrealistic in any market. The assumptions never matched the fundamentals.”

Because many lenders would prefer to avoid foreclosure, Coury and Hunden have started approaching regional Midwest bankers to introduce them to HC Hospitality Asset Management.

The new joint venture will offer services for analyzing, stabilizing, repositioning and selling distressed hotels.

Hunden said the duo would start small, building the company through relationships.

“We have a business plan, but we’re not going to try and get out there and do a dozen properties this year,” Hunden said. “Because we take the individualized approach, we want to have one or two or three properties and grow it from there. This is not a financial bonanza that we’re looking for. We’re looking to grow a slow but sure business that has long-term potential.”

Steve Sherf, a longtime Minneapolis hotel consultant, targeted a similar market when he relaunched his Hotel Consulting Group in July 2009.

But he found few promising opportunities. Large hotel management companies already had relationships with most big loan servicing companies, and the servicers were also looking to their management partners as probable buyers down the line.

Searching for small banks with one or two distressed hotel loans wasn’t paying off, either.

“It’s a lot of footwork,” just to get in touch with those small lenders, Sherf said. And at the time, few were interested in taking on an adviser. “They were too busy dealing with all their daily fires, and it was just hard to get their attention,” he said. “But maybe now is the better time.”

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