Though U.S. commercial mortgage-backed securities special servicers are making some progress in working out distressed loans, they still have a sizeable backlog awaiting them, according to Fitch Ratings. Servicers resolved about US$8.7 billion in 2009. But this number reflects only 11 percent of the amount in special servicing at the end of last year.
The balance of U.S. CMBS loans in specially servicing increased to US$74 billion by the end of last year from a trough of $4.4 billion at year-end 2007. Servicers continue to face an uphill battle, with more than half (52 percent) of the unpaid principal balance of specially serviced CMBS transferred due to imminent default.
Read Fitch's CMBS YE 2009 Servicing Update.
The primary general contractor for the recently opened CityCenter project in Las Vegas plans to sue the project's owners for US$492 million.
MGM Mirage, which owns the mixed-use, multi-tower site in a 50-50 joint venture with Infinity World, a subsidiary of Dubai World, disclosed the threatened mechanics’ lien in a Securities and Exchange Commission filing Friday.
MGM believes its actual obligation to the general contractor is substantially less than the amount claimed, and it will pursue all its rights and remedies, including arbitration, according to the filing.
A spokesperson for Perini declined to comment on the situation.
Read “CityCenter contractor to file suit.”
Top hotel executives provided their take on health-care reform during the American Hotel & Lodging Association’s Legislative Action Summit on Monday in Washington, D.C.
Chris Nassetta, president and CEO of Hilton Worldwide, said the House of Representatives’ version of health-care reform could add US$100 million in costs to the hotel industry. The Senate’s version, meanwhile, could add US$50 million.
President Obama has ordered Congress to pass a health-care reform measure this week, but Jim Abrahamson, president of the Americas for InterContinental Hotels Group, said he fears Congress could be moving too quickly.
Also during the discussion, the executives provided an update on the Employee Free Choice Act.
Read “CEOs wary of health-care reform.”
Hotel occupancy rates are forecast to rebound this year in the U.S. and Europe, and some luxury hotels already have been able to lift rates as demand for US$600 rooms, butler service and poolside cabanas recovers in cities such as Miami, New York and London, a BusinessWeek story reports.
“Luxury hotels, especially, have some ability to raise prices again because they were hit the most last year,” said Patrick Scholes at FBR Capital Markets & Company. “They are the ones that cut prices the most—as much as 25 percent.”
Shuua Capital's Saudi Arabian unit said its hospitality fund had bought land in Jeddah for a hotel development worth more than US$130 million, the first land acquisition by a hospitality fund in the kingdom, according to Reuters.
The fund, worth more than US$500 million, is tapping growing demand for hotels in the world's largest oil exporter and plans to build a luxury project in the Red Sea city worth 500 million riyals (US$133.3 million), Shuaa Capital Saudi Arabia said.
“The Kingdom of Saudi Arabia is experiencing a sustained boom in business and leisure travel and the Shuaa Saudi Hospitality Fund is in an excellent position to benefit from that,” said the firm's chief executive, Omar al-Jaroudi.
An increasing number of Gulf firms have recently announced funds to tap opportunities in the kingdom's property sector.
Compiled by Elaine Yetzer Simon.