Hotel Transaction Outlook…
Hotel business magazine recently published an article interviewing some of the leading players within the hotel transaction arena to get their thoughts on what lies ahead. Among those interviewed was Sanjay Mundra, CEO / Chairman of SVN Hotels. The report looks at the current state of the industry, with it’s robust transaction activity and strong equity and debt capital markets, and explores what is driving the positive track and in which directions the industry is moving. We thought the following points were interesting to note:
- Investors are being cautious in their underwriting given that we are nine years deep in the cycle, but virtually everything that we’ve been marketing for sale is trading (Arthur Adler, JLL)
- Investors continue to seek out hotels due to the fact that hotels generate significantly better risk adjusted returns than any other type of real estate. Cap rates are higher, financing is readily available, and you can achieve strong leveraged cash-on-cash returns. Hotels are a very strong asset class and can be purchased on more-favorable terms than any other type of asset. (Arther Alder, JLL)
- Certain markets are seeing organic growth, and the activity also is driven by new brand availability. (Sanjay Mundra, SVN Hotels)
- I think the seller still has the upper hand for now. Things may change as the large pipeline of new hotels comes into play in the next three years. (Sanjay Mundra, SVN Hotels)
- The limited-service segment is seeing a tremendous amount of activity right now. The limited-service REITs are very active, and there is a field of relatively low-cost, institutional capital that is making a strategic push to aggregate limited-service hotels. (Tony Malk, HHF)
For more info, read the full article here..