Chinese Investor Buys LA Hotel at Serious Discount
- Mar 26, 2010
March 26, 2010
By Dees Stribling, Contributing Editor
Some real estate investors still seem to believe in the future of the United States — and the U.S. hotel market in particular, which has taken more of a drubbing than other properties types since the recession began. Who would that be? Shenzhen New World Group Co. Ltd. (USA), the U.S. arm of a Chinese real estate developer, which is buying the 469-room Los Angeles Marriott Downtown for a reported $60 million from GE Capital.
The last time the hotel traded hands, Los Angeles investment firm Namco Capital Group paid about $115 million for the 1980s-vintage Marriott. That was in 2007. By the summer of 2009, lender GE Capital had foreclosed on the property.
According to Shenzhen, it plans to renovate the hotel to the tune of $12 million to $13 million. Included in the renovation plans are energy-efficiency upgrades to LEED standards, though the company declined to say whether the property would actually apply for LEED certification.
Government to Press for More Mortgage Modifications
Effective June 1, the Obama administration is going to require companies servicing mortgages to determine whether a borrower who has missed two or more payments is eligible for the Home Affordable Modification Program, rather than waiting for the borrower to come forward. If the borrower is qualified, the servicer must “must proactively solicit those borrowers” to join the program, and presumably try not to lose their paperwork.
The administration also plans to oblige lenders to temporary cut (or even eliminate) mortgage payments for unemployed borrowers, down to no more than about a third of the borrower’s monthly income, for three to six months.
The administration has been catching a lot of flak about the sluggish pace of mortgage modifications since the program began. This week, Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, took the program to task in a report.
“The program risks helping few, and for the rest, merely spreading out the foreclosure crisis over the course of several years, at significant taxpayer expense and even at the expense of those borrowers who continued to struggle to make modified, but still unaffordable, mortgage payments… before succumbing to foreclosure anyway,” the report said.
U.S. Budget a Little “Dark”: Bernanke
Federal Reserve chairman Ben Bernanke, part of whose job description is to say things to Congress, told the House Financial Services Committee on Thursday that the future of the U.S. government’s budget is looking “somewhat dark over the medium term.”
That doesn’t mean it’s time for the government or the Fed to cut and run from supporting the economy, however. “The economy continues to require the support of accommodative monetary policies,” Bernanke said. Including low, low interest rates.
He did change tack a little regarding the Fed’s sale of mortgage-backed securities. “I anticipate that at some point we will in fact have a gradual sales process,” he noted, which is different from his assertion in February that selling off MBS would have to wait until interest rates were on their way up. The Fed has virtually completed its acquisition of $1.25 trillion in housing debt, a process it began in early 2009, and now wants to start unwinding it to get its balance sheet down to under $1 trillion, where it was before the recession.
After a down day on Wednesday, Wall Street spent most of Thursday up, only to end almost where it started. The Dow Jones Industrial Average gained 5.06 points, or 0.05 percent. The S&P 500, on the other hand, lost 0.17 percent, and the Nasdaq was down 0.06 percent.