New company will offer turnkey services for stabilizing and selling distressed hotels.

An Oklahoma real estate developer and a Chicago hospitality analyst are
teaming up to help banks with problem hotel loans across the Midwest,
possibly including Minnesota.

Paul
Coury, a real estate developer in Tulsa, Okla., and Robin Hunden have
created a firm, HC Hospitality Asset Management, to capitalize on
growing hotel loan problems.

Their new company draws on Coury’s
28-year experience as a banker, property broker, hotel operator,
construction manager and court-appointed receiver. Hunden augments that
with extensive feasibility and performance research capabilities.

 “We’re
seeing this wave of foreclosures and distressed properties and trying
to offer assistance to many banks who really have no idea how to manage
these assets they’re taking on in record numbers,” said Hunden,
president of the research and advisory firm Hunden Strategic Partners.

 “We’re
combining his expertise on evaluating the market with mine on
renovating and managing the property,” said Coury, chairman of Coury
Properties and the Coury Collection of boutique hotels.

While
many national real estate companies offer asset-management services,
Hunden said they remain focused on major markets. Those first-tier
regions experienced far more problems than smaller Midwestern markets
over the last decade, although Coury expects more banks in the region
to face that challenge this year.

He
pointed to data suggesting 85 percent of hotels tied to commercial
mortgage-backed securities are now valued below their loans.

“We
think a lot of the hotels that have managed to hold on so far will have
trouble and they will be turned back into their lenders this year,”
said Hunden. “Things have not turned out as they expected. The
assumptions that many hotel properties undertook over the last two
years were unrealistic in any market. The assumptions never matched the
fundamentals.”

Possible boon for Minnesota

Since
many lenders would prefer to avoid foreclosure, Coury and Hunden have
started approaching regional Midwest bankers to introduce them to HC
Hospitality Asset Management.

Minnesota is one of the markets
in their sights, Hunden said. “Our focus is on the middle of the
country, and we know Minnesota well. We have relationships there – my
brother lives there – and we think we’ll find some banks we can help.” 

By tapping the capabilities of their affiliated companies, the
new joint venture will offer turnkey services for analyzing,
stabilizing, repositioning, and selling distressed hotels.

“The
right company should be able to do all those things for you,” said
Coury. “If they do that, they will bring you the value-added proposal
you need.”

Hunden said the duo would start small, building the company through relationships.

“We
have a business plan, but we’re not going to try and get out there and
do a dozen properties this year,” Hunden said. “Because we take the
individualized approach, we want to have one or two or three properties
and grow it from there. This is not a financial bonanza that we’re
looking for. We’re looking to grow a slow but sure business that has
long-term potential.”

By effectively serving lender needs, Coury expects bankers to bring other properties to HC as issues develop.

He
entered commercial real estate that way, starting Coury Properties in
1985 as a court-appointed receiver and asset manager during one of
Oklahoma’s deepest recessions. That gave him firsthand experience with
the Catch-22 problems of selling troubled assets in a bargain hunter’s
marketplace.

“It was like sharks marking blood,” Coury recalled of the Resolution Trust Corp. era.

“In the beginning they don’t want to sell below value,” Coury said of banks. “In the end they just want to get rid of it.”

Steve
Sherf, a longtime Minneapolis hotel consultant, targeted a similar
market when he relaunched his Hotel Consulting Group in July 2009.

But
he found few promising opportunities. Large hotel management companies
already had relationships with most big loan servicing companies, and
the servicers were also looking to their management partners as
probable buyers down the line.

Searching for small banks with one or two distressed hotel loans wasn’t paying off, either.

“It’s
a lot of footwork,” just to get in touch with those small lenders,
Sherf said. And at the time, few were interested in taking on an
adviser. “They were too busy dealing with all their daily fires, and it
was just hard to get their attention. But maybe now is the better
time,” he said.  

While Coury Properties now draws more
revenue from managing performing assets, it also serves as receiver for
two troubled properties. Coury has two others under discussion, along
with two hotels for the HC team.

“It has unlimited growth potential,” Coury said of the receivership market

by Kirby Lee Davis Dolan