by Wolf Richter, Wolf Street:

CMBS holders are on the hook, not banks. Investors in hotel REITs have gotten totally crushed.

The financialization of everything has let to a convoluted setup for hotels and their beaten-up investors at all levels. It goes something like this: The hotel properties are held by a publicly traded hotel REIT that leveraged them up with variable-rate interest-only mortgages during the era of ultra-low interest rates, that were then securitized into commercial mortgage-backed securities (CMBS) and, backed by overinflated property valuations, sold to institutional investors, such as pension funds and bond funds. The hotels themselves are operated by other companies, usually partnering in some way with a hotel brand, such as Marriott.