Fitch: Hotels, M-F Leading CMBS NOI Growth

Fitch Ratings released a report revealing that NOI for multi-family properties continues to be stable, while hotels continue to recover, however, some regional hotel weakness my continue as the economy recovers.
Mary

Mary MacNeill, of Fitch Ratings

Fitch Ratings released a report in July revealing that net operating income (NOI) for multi-family properties continues to be stable, while hotels continue to recover, however, some regional hotel weakness my continue as the economy recovers.

According to Mary MacNeill, Fitch’s managing director, U.S. Structured Finance, Commercial Mortgage, NOI for Fitch-rated CMBS improved nearly 3 percent year over year, led by hotels and multi-family properties. Servicer-reported NOI improved by 2.7 percent year over year in 2012, compared with 0.8 percent in 2011 and a 0.9 percent decline in 2010.

According to the report, multi-family NOI growth was positive in nearly all states last year, with Colorado and Illinois seeing the biggest improvement with year-over-year NOI gains of more that 10 percent each.

The latter was helped by three notable Chicago properties: the $325 million Presidential Towers (up 30 percent); the $146 million Grand Plaza (up 12 percent); and the $123 million Hyde Park Apartment Portfolio (up 23 percent).

In the hotel sector, NOI growth saw an increase of 8.2 year over year, with Hawaiian hotels showing the largest gain with 30 percent growth for the six properties in Fitch’s portfolio. That included the original $425 million Four Seasons Resort Maui loan, which saw an increase by 13 percent, and the original $350 million senior loan on the Marriott Waikiki, with NOI growth of 32 percent.

MacNeill said that things weren’t so positive with hotels in Washington, D.C., where NOI decreased by more than 7 percent overall. Of Fitch’s 16 rated transactions with properties, a dozen saw no declines. The most notable was the $190 million Renaissance Mayflower Hotel loan, down 16 percent year over year and 50 percent below the issuer’s pro forma underwritten amount.