Park Hotels Stops Payment on Loans for Two San Francisco Hotels(pkhotelsandresorts.com)
pkhotelsandresorts.com
Park Hotels Stops Payment on Loans for Two San Francisco Hotels
https://www.pkhotelsandresorts.com/investors/news-and-events/press-releases/2023/06-05-2023-113043391
3 comments
Do you usually come for major conventions like Dreamforce or WWDC? Rates and occupancy in SF swing pretty wildly.
I avoid conference times (I used to live in SF, so I know the hell of those weeks).
Maybe the rates swing from outrageous to "maybe I'd be willing to pay that", but in comparison to cities like NYC, Tokyo, New Orleans, etc, both the availability and price are completely out of line. Even 2-3 star hotels in SF are expensive and hard to book. Most of them tend to be in the tenderloin as well.
Maybe the rates swing from outrageous to "maybe I'd be willing to pay that", but in comparison to cities like NYC, Tokyo, New Orleans, etc, both the availability and price are completely out of line. Even 2-3 star hotels in SF are expensive and hard to book. Most of them tend to be in the tenderloin as well.
Which is the bank or insurance company on the other side of this transaction?
CMBS (commercial mortgage-backed securities) are usually structured by banks, but held by:
- Insurance Companies
- Pension Funds
- Mutual Funds
- Hedge Funds
- Real Estate Investment Trusts (REITs)
- Sovereign Wealth Funds
As the servicer, Wells Fargo will be figuring out how to repossess or whatever.
CMBS are usually (always?) non-recourse, i.e. they're secured only on the property. So if the property is worth less than the amount of the loan, the owner is not on the hook for the shortfall.
- Insurance Companies
- Pension Funds
- Mutual Funds
- Hedge Funds
- Real Estate Investment Trusts (REITs)
- Sovereign Wealth Funds
As the servicer, Wells Fargo will be figuring out how to repossess or whatever.
CMBS are usually (always?) non-recourse, i.e. they're secured only on the property. So if the property is worth less than the amount of the loan, the owner is not on the hook for the shortfall.
The process of packaging the loans together is always the part that I don't understand.
Better yet, I understand why one would do it but the process of how it happens, what are the criterias and finally how would the original underwriter go about selling the now packaged loans is still something I don't understand.
Also what are the data that investors look at when they trade such instruments. For example with stocks one looks at earnings, balance sheets, moats etc. But with MBS what are the parameters? You can only know for sure by exploding the MBS and analyze the underlying loans one by one like that guy did in 2007/2008.
Better yet, I understand why one would do it but the process of how it happens, what are the criterias and finally how would the original underwriter go about selling the now packaged loans is still something I don't understand.
Also what are the data that investors look at when they trade such instruments. For example with stocks one looks at earnings, balance sheets, moats etc. But with MBS what are the parameters? You can only know for sure by exploding the MBS and analyze the underlying loans one by one like that guy did in 2007/2008.
Disclaimer: my understanding below, but I don't work in the industry and haven't looked at this for a long time, so things might be wrong or have changed.
SPV is created which owns the loans and issues the securities. Securities are issued with varying degrees of seniority. Each tranche is rates by a ratings agency (Fitch or whoever). SPV may enter into derivatives contracts to reduce some tail risks, because these allow more of the tranches to have higher ratings.
Buyers are often restricted to buying above a certain rating. I don't think they do their own modelling of individual MBS.
SPV is created which owns the loans and issues the securities. Securities are issued with varying degrees of seniority. Each tranche is rates by a ratings agency (Fitch or whoever). SPV may enter into derivatives contracts to reduce some tail risks, because these allow more of the tranches to have higher ratings.
Buyers are often restricted to buying above a certain rating. I don't think they do their own modelling of individual MBS.
> Pension Funds
This very often ends up being taxpayer funded defined benefit pensions, so at the end of the day, the loss is with future taxpayers.
This very often ends up being taxpayer funded defined benefit pensions, so at the end of the day, the loss is with future taxpayers.
I went into a restaurant the other day and it wasn't empty. Absolutely no way SF is having issues.
How are these hotels not succeeding?