Atlas Hospitality Group reports that 529 California hotels were in default or had been foreclosed by the end of the third quarter – a nearly 11% increase from the second quarter of the year and a 71.2% increase over the same quarter last year.
The number of foreclosed hotels grew from 100 in the second quarter to 119 in the third quarter and is up nearly 92% from the beginning of the year. Independent hotels make up three-quarters of the hotels in foreclosure.
Of the 119 hotel foreclosures, only 20 have been re-sold to new buyers, Atlas says. Although the re-sales represent less than 17% of the foreclosed inventory, the company notes that the figure is an improvement over the second quarter, when only 12% of foreclosed hotels had been sold.
Atlas attributes the growth in foreclosed hotel sales to two causes: lenders, realizing the operational difficulties involved in running hotels, are increasingly deciding to sell versus hold; and buyer price expectations have risen.
Atlas cautions that California's hotel market still has a huge shadow inventory of distressed properties that are operating under forbearance agreements. The firm estimates the shadow inventory to include as many as 1,000 hotels.
SOURCE: Atlas Hospitality Group