REITs, Banks, Auctions slow lodging distress say Hotel Asset Manager
Posted by Dennis Gemberling on Fri, Sep 17, 2010 @ 01:45 PM
Several articles published recently highlight the movement of distressed hotel real estate and what could accelerate hospitality sector investment according to Perry Group's Hotel Asset Manager and Hospitality Asset Management specialist. This is being defined by major potential sources of hotel acquisitions and dispositions including Real Estate Investment Trusts (REITs), Banks non-performing loans and hotel sales through an Auction.
The first - REITs - are beginning to enter the hotel investment market again. According to Patrick Ford, president of Lodging Econometrics, “There have been 42 REIT transactions since the beginning of year,” Ford said at press time. “The profile of the properties has been mostly upscale, strong-branded properties. They’re not small properties but they’re not supersized price tags either. The overwhelming majority have fewer than 200 rooms and eight-figure price tags.” Many a Hotel Asset Manager for a company with large amounts of cash to deploy, such as a REIT, will follow their peers and actively pursue acquisitions in distressed hotel markets where capital is scarce. Read more... REIT activity revives distressed market
The second are the long awaited Bank loan sell offs that were anticipated in 2009 and early 2010 but never really materialized in the so-called commercial real estate tsunami that was supposed to have started by now. "If you’re an investor with money to invest or access to funding, sound out your local banker or their advisor with troubled properties in your selected submarket and preferred property type. For the right selling bank and the right loan, there are deals to be cut," says Brian Olasov with McKenna Long & Aldridge LLP. Read more... Time for Banks to Sell Nonperforming Loans?
Lastly, more hotel real estate, particularly the luxury and trophy properties, are being disposed of through non-traditional means such as Auctions, rather than brokered real estate transactions, closed door bank sales or in a hotel receivership. According to STR Analytics, “Dollar volume through August totaled US$555 million for auctions/distressed sales, more than double the volume of US$263 million during the same period a year ago. The figure also easily trumps the total volume of 2009.” Still, and for the best return-on-investment based on an investors hold period, a Hotel Asset Manager must clearly analyze other sources of hotel real estate deals, not just the Auction arena. Read more... More high-end hotel properties are being auctioned, data show
About the Author: Dennis Gemberling is President of Perry Group International with over 35 years of lodging and foodservice industry expertise. He is also an experienced Hotel Asset Manager, Court Appointed Receiver, Interim Property Manager, Restaurant Consultant and Hospitality Expert specializing in hotels, resorts, restaurants, bars, nightclubs, casinos, gaming and mixed-use real estate. Mr. Gemberling can be reached at dpg@perrygroup.com and by phone at 1.800.580.3950 ext 1 or learn more about the firm at www.perrygroup.com.