ValueXpress has closed on approvals for over 40 performing loan requests from Master and Special servicers for its hotel clients since June. While each approval has been unique, each approval generally consisted of the following terms:
- 90-day temporary loan modification during which time Borrower is permitted to use FF&E, TI/LC or other reserve funds (except tax and/or insurance escrows) to keep principal and interest payments current;
- deferment of payments to any reserve accounts for a period of 90 days;
- 12-month waiver of DSCR covenant testing; and
- payment of fees of approximately $10,000.
The three-month deferment period is over for many clients. For some hotels, primarily drive-to-leisure hotel properties like beachfront hotels, the relief was sufficient. For others, including corporate, convention and airport hotels, the relief period was not adequate as property performance has not improved sufficiently to resume debt service and escrow payments.
Therefore, we at ValueXpress are preparing performing loan consent requests for an additional three-month period for many clients. The strategy is to keep the loan with the Master Servicer to avoid the high fees charged by Special Servicers.
Clients who have exhausted their FF&E and other reserve funds and who cannot pay debt service and escrow payments are being transferred to Special Servicing, and we are helping those clients negotiate complex and expensive Loan Modifications on a case-by-case basis.
We have limited openings for new clients. If you are having difficulty obtaining approval for loan payment relief, please contact Mike Sneden (email@example.com; 212-883-6447).