U.S. Select-Service Investors To Focus On Distressed Assets
Jones Lang LaSalle Hotels Reports
Survey respondents also indicated a notable increase in ‘buy’ sentiment, up six percentage points to 44 percent, making it the dominant investor intention. “The ‘hold’ sentiment, which was the dominant sentiment in the last survey, has now declined, indicating that buyers and sellers increasingly intend to transact over the next six months,” said Calhoun.
“Applying the decline in trailing 12-month revenue per available room (RevPAR) to the average GRRM suggests that values for properties in the mid-scale without food and beverage segment have declined by 26 percent since the June 2008 survey,” said Mark Fair, managing director of Jones Lang LaSalle Hotels’ select service division.
“Local banks remain the most common source of acquisition financing, with 36 percent of respondents seeking funding from this source,” said Bill Grice, vice president for select service financing for Jones Lang LaSalle Hotels. Many smaller owner/operators are tapping into their existing local banking relationships and utilizing Small Business administration (SBA) funding for their acquisitions.
According to the survey, private equity capital marginally surpassed national banks as the second most popular source of financing, with 23 percent of respondents turning to this capital source, up eight percentage points from one year ago.
Performance outlookSixty-four percent of select service investors anticipate further revenue per available room (RevPAR) declines over the next six months. But investors see the RevPAR turning point approaching. “Within the next year, 26 percent of respondents anticipate further RevPAR declines, while an increased 74 percent expect flat or improving RevPAR, indicative of investors’ confidence in the medium term RevPAR growth potential for the select service hotel market,” said Fair.
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