(Disclosure: Rose Law Group represents Virtua Partners.)
By Sebastian Obando | National Real Estate Investor
The implications of the coronavirus pandemic are putting a dent in some developers’ hotel construction plans, as more of them begin to question whether some projects are even worth finishing in today’s environment.
For example, Quinn Palomino, CEO of Virtua Partners, a global private equity firm specializing in commercial real estate, says the company has about half a dozen hospitality projects in “broken construction” that it’s trying to provide funding for. “Our first analysis, most of these projects, they need more equity. [Second], we’re looking at ‘can this property produce a return and how quickly?’ We have to calculate that with post-coronavirus adjusted numbers,” she says.
For hotel renovation projects, the impact of COVID-19 has been a “double hit,” according to Doug Mills, senior managing director at the Plasencia Group, a national hospitality sales and investment consulting firm. These projects have both operational and loan servicing costs that need to be paid, with renovation costs on top of that. It ultimately depends on the specific projects’ financials for the owner to make the decision on whether to move forward with construction, defer the work, or take some other measure, he says. For most construction projects, Mills notes “I imagine, even if [projects] are paused, the financing support is in place, and there may just be a short impact.”
