LOS ANGELES — The state of the financial markets and lending have been hot-button topics in the hospitality industry after three regional U.S. banks collapsed over the past three months.
Lenders and hospitality executives at the 2023 Meet the Money national hotel finance and investment conference commented on the current state of the banking crisis:
Ash Patel, president and CEO, Commercial Bank of California
This current crisis has nothing to do with the credit crisis yet. And I use the word yet because this current crisis is a crisis of confidence. … None of our pencils are up because we’re not facing one of the previous crises that we went through. This is a very unique crisis. This crisis only happened in 1907 when [banks] went bankrupt, and since then, and through the last 50 years, we have not heard of a bank that failed because there was a bankruptcy, meaning the depositor lost confidence in the viability of a particular bank. That’s why all of us on the table here are still continuing to lend.
Alan Reay, president, Atlas Hospitality Group
Depending on what the regulators do with the banks — again, during COVID, they gave them a wide berth in terms of not [adding] pressure to do anything with their roles. But I think as we've seen with First Republic, Silicon Valley Bank, Signature Bank and Silvergate Bank, the regulators are probably going to be even more aggressive than they would normally be. And if they start to write down or make the banks write down their loans to lock to market, we're going to see a huge amount of loans covering the market for sale.
Matt Mitchell, vice president, Hall Structured Finance
I’m certainly concerned about it. … We have a capital markets business and we're a big borrower ourselves from large institutions, but a lot of regional banks as well. Anecdotally, our company CEO basically said, “Normally, you're reaching out to your bankers in difficult times and saying, ‘Hey, we're doing well, don't worry about us.’ Here in the last few months, the opposite is happening. Our bankers are calling us saying, ‘Hey, we're doing OK, don't worry about us.’” It's a strange time from that perspective, but I too am optimistic. I think it will pass as well, and I'm hopeful, but I'm also a little nervous about it.
Bruce Lowrey, managing director of investments, CIM Group
The Wells Fargo team moved to Signature Bank and Signature Bank, now Flagstar, was pretty much the dominant manager of these accounts. So that market has been turned upside down. It does appear to be stabilizing. My fingers are crossed. … It’s just another thing we have to live with.
Matt Bailly, vice president of real estate, Prospera Hotels
We’re traditionally a borrower from bank lending, and they’re not out there right now. We had some regional players, but obviously they’re also not out there right now with everything that’s going on.
Keegan Bisch, vice president of originations, Stonehill
There are some opportunities. I think today with PACE [Property Assessed Clean Energy] in the current environment, we'll see where things go with the regional banks, but some of them are local banks [that] may have caps. They may like the deal, but they have caps as far as how big they go on a loan. And some of them are willing to look at PACE as like a participant bank. So some of those opportunities I think are there for PACE.