HNN Compiling List of Funds Targeting Hotels
November 19, 2009
HNN has begun to compile a list of funds seeking to invest in hospitality assets. The list compiled so far indicates that there is about $38B out there chasing hotels, though some $20B of that comes out of of Blackstone and Lone Star. Click the link before to go to the list.
Given that hotels have been in a multi-year slump, and prospects are not looking that great for the next 12 months, we should begin to see a lot of ownership changes. Citigroup for instance reportedly has a buyer for the 400-key St. Regis Monarch Beach in Dana Point. The price is $20M for the mezzanine plus assumption of a $230M senior facility. Seems pretty rich to at $625K per key and not as drastic of a discount as one would expect, but we’ll take that to be a good sign.
In other news, JLL is anticipating that hospitality is going to lead the CRE rebound, which would line up with Sam Zell’s position on where the opportunities will surface first.
Demand is expected to increase by 1.1 percent in 2010, which eventually will lead to compression in average daily rates. Revenue-per-available-room declines will decelerate greatly in 2010, though it’s still forecast to be down from 2009 levels as a whole. By mid-2010, however, the metric is expected to flatten out and record positive growth in year-over-year comparisons, according to the report.
“The latter part of 2010 will mark the start of a new lodging cycle, a period when the investment community will start to transition from the year of realization (2009) to the year of increasing opportunities,” according to the report.
Jones Lang LaSalle’s hotel division is expecting a significant increase in U.S. hotel transaction activity next year compared to 2009, and 2011 will bring further increased activity on a more robust scale, said Thomas Fisher, managing director for Jones Lang LaSalle Hotels, in an e-mail.
[via HNN]
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Tags: Blackstone, Commercial Real Estate, Dana Point, Hospitality, Hotel, JLL, Lone Star, Sam Zell, St. Regis Monarch Beach
thats a 38% haircut, is it not? not exactly the "average" decrease but st regis monarch beach is no average location. that is one place that can not be recreated. it should prove to be very well worth when the market for luxury hotels returns.
Might be a haircut, but the WSJ article indicated occupancy was only at 15% at certain times this year. On top of that, the article also mentioned that…."several parcels vital to the resort — including its employee parking, access to a large lawn used for weddings and several maintenance facilities for its Robert Trent Jones-designed golf course — sit on land owned by Makar and Farallon that isn't covered by the mortgage"
Perhaps the incidental revenue off golf and events (AIG notwithstanding) warrant such a high price per key, who knows.
oh, yes, that would make things a lot different. the weddings/golf/corporate events where what that hotel is about. the occupancy this year was slaughtered due to every corporation in the world refusing to deal with monarch beach after the AIG "scandal". its unfortunate cause the place is amazing.