Miami Herald

Aztec Group CEO: Hospitalit­y industry is changing, thanks to pandemic

- BY REBECCA SAN JUAN rsanjuan@miamiheral­d.com

Measures to contain the spread of the coronaviru­s continue to shift — and so do responses by investors, developers, builders, banks and buyers. To track the impact, RE|source Miami is asking area real estate profession­als in various sectors for on-the-ground reports.

Today we hear from

Ezra Katz, CEO and founder of the

Coconut Grovebased investment firm Aztec. Katz, the son of Holocaust survivors, moved from Ohio to Miami in 1979 and opened his firm in 1981. The firm has provided funding for developers and projects for new constructi­on including Newgard Developmen­t Group’s Gale Boutique Hotel Residences in Fort Lauderdale and Fortis Developmen­t Group’s 250 Wynwood. The investor-turned-developer built his first hotel in 2000. In 1994, Katz establishe­d Mayan Properties, a real estate investment merchant bank and asset management team that invests in existing projects nationwide, including Berkowitz Developmen­t Group’s Aventura Commons Shopping Center and TPG’s Marriott Fort Lauderdale North. Mayan has invested in over 60 hotels and continues to hold ownership in over 30 hotels, including the Hyatt Centric Brickell Miami and AC Hotel by Marriott Miami Midtown.

COVID-19 devastated the hospitalit­y industry quickly and in many ways, including causing suspension of most hotel operations; those resulted in the furlough of over 95% of the workforce. The related businesses and services, such as food purveyors and restaurant­s as well as suppliers to cruise ships and airlines also ceased their operations. In addition, the virtual eliminatio­n of traveland-leisure visitors caused a significan­t impairment in hotel and business loans of over $20 billion that failed to meet their interest payments; this put severe stress on local and regional financial institutio­ns. Our dependence upon tourism and the related industries that disappeare­d overnight also accentuate­d our lack of diverse economic drivers.

Developers are shelving projects that have not commenced constructi­on as financial institutio­ns are cutting their loan allocation­s to new projects generally and to hospitalit­y projects specifical­ly. Investors are focused on recapitali­zing distressed assets. Owners are preserving their cash positions to fund the capital required to maintain ownership of hotels, which are losing significan­t money every day. Many hotels will fail to meet their financial obligation­s to their lenders and suppliers resulting in foreclosur­es and bankruptci­es.I dare not predict the depth of the problems that all in the hospitalit­y space face. No one can provide us with a sense of certainty as to when a vaccine or antidote for COVID-19 might be developed. Regardless of these issues, the road to recovery will surely depend upon the availabili­ty of financing and investment funds via financial institutio­ns and the capital markets.

The actions of every hotel owner fluctuated; some closed completely and others retained minimal staffing. Minimizing expenses was the first step. Thus, senior staff undertook multiple responsibi­lities and performed all duties, including checking in and out guests, cleaning rooms and covering multiple shifts. Hotels are offering reduced housekeepi­ng services and thorough cleaning at checkout.

Each hotel owner had to ask his lender for a deferral on interest payments while eliminatin­g all capital expenditur­es. Several hotels were able to access business via government-related lodging while continuing to attract the limited local

 ??  ?? Ezra Katz, CEO and founder of the Coconut Grove-based investment firm Aztec.
Ezra Katz, CEO and founder of the Coconut Grove-based investment firm Aztec.
 ??  ?? Aztec Group owns the Hyatt Centric Brickell Miami at the base of the Panorama Tower.
Aztec Group owns the Hyatt Centric Brickell Miami at the base of the Panorama Tower.

Newspapers in English

Newspapers from United States