With the ratio of buyers to sellers at nearly 5:1, this remains an opportunistic time for sellers. Buyers are seeing some relief in the steady pricing increases for hotels, following four years of unprecedented, record setting sales volume, while sellers still enjoy an active bidding process among multiple buyers.
“Prior to the credit crunch, buyers were aggressively bidding up hotel acquisitions due to their ability to obtain low debt rates at historically high leverage levels,” said Al Calhoun, managing director for Jones Lang LaSalle Hotels’ Select Service Division. “As debt returns to more normalized terms, sellers are likely to re-evaluate their portfolios to maximize operations revenue, while buyers will initiate a flight to quality.”
Interestingly, 36% of investors indicated that they plan to construct a new property in the next 12 months, while 48% of investors intend to acquire existing assets. The construction lending market remains active due to a number of large balance sheet lenders with capacity to fund new development. In general, the lenders with the capacity to fund such transactions are quickly filling their pipeline for Q1 2008 and continue to be selective on which products to back.
The Southeastern U.S. region remains the most sought after region for select service investment, with 35% of investors expressing an intention to buy and/or develop in this region within the next six months. The Southwest and Mid-Atlantic regions are equally popular among investors with 15% targeting each region respectively.
Rania Deimezi - Thursday, February 07, 2008