Between 15 and 17 May, more than 2,500 senior representatives from across the hospitality industry will head to Berlin for the International Hospitality Investment Forum (IHIF) 2023.
This year’s speakers include: the CEOs of IHG and Accor as well as senior representatives from Blackstone, Brookfield Asset Management, Goldman Sachs, and more.
The following interview is part of a series aimed at bringing you a flavour of the conversations you can expect on stage, highlighting some of the big-picture trends and themes ahead of the event.
In a time of rising interest rates and macroeconomic uncertainty, how and where to source finance has never been more important. In a session entitled Finding Finance: Securing the Best Term Sheet (Wednesday 17 May, 9:35am), Stephen Morita, managing director at Eastdil Secured will moderate a discussion looking at how banks and alternative lenders are looking at the health of loan books and how borrowers can increase the appeal of their project to potential lenders and offset increasing margins.
We recently caught up with Morita to discuss the changing landscape.
Hospitality Investor: Your session is all about finding finance. How can borrowers increase the appeal of their project to potential lenders and offset increasing margins?
Stephen Morita: In today’s environment, banks are focused on ICR and future cash flows as opposed to the LTV and valuation trajectory. To help offset lower advance rates and higher borrowing costs, we are advising borrowers on forming creative loan structures and pricing out multiple leverage options in order to create the most efficient capital stack while also fitting within lender’s risk metrics in today’s market.
Hospitality Investor: What is the debt landscape looking like as we make our way through Q2?
Stephen Morita: The market is more active than the fourth quarter of 2022 as borrowers are looking to manage upcoming debt maturities while lenders are able to deploy into a market with lower LTVs and higher coupon rates. Banks are generally focused on core financings while debt funds are continuing to lend and increasing their market share, while we have seen a group of new lenders join the market and price competitively. In the near term, we expect the environment to remain challenging as more existing financings mature and borrowers will need to navigate a less liquid environment while banks will face potential defaults in the property sector.
Hospitality Investor: The theme of this year’s conference is Fortune Favours the Bold. Have you seen any examples of a company or individual using this approach in the hospitality investment space?
Stephen Morita: Yes, we’ve seen a number of investors invest into on significant capex repositioning plays to deliver best-in-class assets in gateway markets (London, Rome, Copenhagen) over the past 6-12 months. It speaks to investor’s long term confidence in the underlying performance of the European hospitality sector, a view which we strongly share.
Stay tuned for more preview interviews and if you still haven’t registered yet, you can do so here. You can also view the latest programme, here.