Any BUY/SELL Transaction was likely STALLED by Banks/Buyers
During the outbreak local, regional, state, and national governments conflicted wildly in assessing the science of the virus which put buyers and banks into a no-confidence mode. Now that initial steps of opening areas to visitors and tourism are beginning, more hope is seen that summer business could be salvaged.
Devastating in 2020 for Banks, Owners Stimulus, forbearance, loan restructuring
During the outbreak with total lockdown in many cases, at no fault of their own, owners had no means of doing business while expenses, taxes, employees still needed partial or full compensation. Government aid, banks forbearance on payments are helping bridge some of the gaps.
Many Sellers who were beginning to offer properties were caught up in a maelstrom of an unanticipated pandemic and the confused response of mandated government rules.
Statisticians in this business sector indicate they are at a loss to implement any former methodology for pandemic property losses.
3.Long Term Valuations
Valuations are changing to emphasize Replacement Value
Could this be “the pandemic year that went away?”
The only consistent evaluation that remains is the value of land and buildings and FF&E. The business side of hospitality will always have a value but it will be difficult to include a pandemic year for an accurate forecast.
The coveted properties will always find buyers and won’t be required to offer deep discounts. Many properties will need to motivate Buyers with better pricing to account for building the business back to former performance.
Many Sellers will be unwilling to lower the asking price in preference to waiting and working to retrieve their former business back.
For properties with low equity and unfortunate timing the decisions may be made by the banks and owners may decide to walk away. Banks will need to put these properties in receiverships and go through the complicated steps of managing them until they sell.
–Jan Vaughn Chargois, principal broker
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