by Calculated Risk on 6/27/2009 05:51:00 PM

From HotelNewsNow.com: California to see record number of hotel foreclosures

The number of California hotels in default or foreclosed on jumped 125% in the last 60 days. The state now has 31 hotels that have been foreclosed on and 175 in default, according to California-based Atlas Hospitality.

With 19.6% of the total, San Bernardino County leads the state in foreclosed hotels. Riverside County follows with 16.1% and San Diego County has 12.9%. Los Angeles County, with 12% of the total, has the most hotels in default. San Bernardino County is next with 9.7% and San Diego County follows with 8.0%.
...
No market or brand is immune in this downturn. In reviewing the hotels in default or foreclosed on, we found that over 75% of the loans originated from 2005 to 2007. During this period, over 2,500 California hotels either refinanced or obtained new purchase loan financing. Unfortunately, based on today’s market values, we estimate that none of these hotels have any equity remaining. The unprecedented decline in room revenues (California is down 21.5% year-to-date) combined with the jump in cap rates has resulted in a massive loss in values. We estimate that values are currently 50-80% lower than at the market’s peak in 2006-2007.
emphasis added

Moody’s/REAL Commercial Property Price Indices showed CRE prices off almost 30% from the peak, but that was for office, industrial, apartments and retail. Hotels are even worse off, and a decline of 50% or more in appraised value from the peak seems possible with RevPAR off 20% and rising cap rates.

Once again the California's Inland Empire is getting crushed. (San Bernardino and Riverside counties in the article above)