Jones Lang LaSalle Hotels

Known as Magic City, Miami's sugar-sand beaches, glistening waters and world-class attractions are casting spells and captivating the hotel investment community. With more than $600 million of investment in the Miami hotel market in 2012, investors are definitely taking notice of the Sunshine State's burgeoning tourism corridor's strong returns. This week Jones Lang LaSalle's hotel experts attended the Caribbean Hotel & Resort Investment Summit (CHRIS) and Hotel Opportunities Latin America(HOLA) conferences in Miami, and are expecting investors to place nearly $750 million of capital into the global hub in 2013, a moderate 12 percent increase over 2012. The first quarter of 2013 already outpaced 2012 levels, with an increase of lodging demand by nearly five percent.

"During the last decade Miami has expanded its infrastructure, built strong ties to international trade and positioned itself as an international tourist destination. The market roared back from the downturn reeling in the investment community with it," said Gregory Rumpel, Managing Director and leader of the Jones Lang LaSalle's Hotels & Hospitality Group in Miami. "Miami's positioned itself as the 'Gateway to the Americas,' and since 2010 we've seen REITs, private equity and institutional investors pump $1.6 billion of capital into the market. In the year ahead, we'll likely see more hotels trade hands than last year, but the lack of big-box hotel sales opportunities will keep Miami's transaction volume in check."

"The Miami brand is stronger than ever reporting records on records in 2012, including 13.9 million overnight visitors," said Greater Miami Convention & Visitors Bureau President & CEO William D. Talbert, III, CDME. "The destination has evolved into a world-class sophisticated cosmopolitan destination with almost 50 percent of overnight visitors international. Miami International Airport (MIA), which now has direct rail service into the heart of Downtown Miami's flourishing waterfront core, offers hundreds of flights daily from around the world and continues to add new routes and international service. A year-round calendar of events that includes Art Basel and Design Miami, the Sony Open, the World Golf Championship-Cadillac Championship at Doral, the Orange Bowl and more continue to attract a growing number of visitors every year."

Miami market conditions show positive growth Miami's metro area is among the highest performing U.S. hotel markets, achieving recording occupancy and ADR in 2012, and ranking fourth in terms of RevPAR performance. Since 2000, Miami has experienced a compound annual RevPAR growth rate (CAGR) of four percent, significantly higher than the top 25 U.S. markets with the exception of San Francisco. The market outranks the United States as a whole, which registered a CAGR of less than two percent over the same period. Through the first quarter of 2013, Miami fundamentals have continued to follow this positive growth trend witnessing a RevPAR increase of 16.7 percent to $192, driven by 12.2 percent growth in ADR and four percent growth in occupancy during the first quarter of 2012.

"The year is off to a great start with $200 million of hotels traded right out of the gate in the first quarter, which is a traditionally slower quarter," added Andrew Dickey, Vice President of Jones Lang LaSalle's Hotels & Hospitality Group in Miami. "The market is positioned to continue to outperform national averages, further solidifying its position as one of the top investment and hospitality markets."

Miami Beach attracts institutional investment The submarket of Miami Beach has demonstrated strong performance primarily due to the oceanfront location and number of high-end properties. More than 70 percent of the upper-tier room stock in Miami Beach is operated independently of a brand. The transaction volume within the submarket made up more than 71 percent of the total Miami area transaction volume in 2012, and is likely to see the same trend in 2013.

"Miami Beach continues to see strong momentum on a transactions front, particularly in Mid-Beach which stretches from 23rd to 63rd Street, where large institutional investors have been able to acquire big box assets during the last 12 months like the Gansevoort, Miami Beach Resort & Spa, Hilton Cabana and The Crown Miami Beach. When looking at the total number of transactions in Miami, a majority occurred in South Beach with independent boutique assets," added Dickey. "On the performance front, Miami's RevPAR growth continues to be spurred by strong domestic and international demand, with international travel anticipated to reach 50 percent of total overnight visitation. We expect that further compression in the market that will allow operators to boost ADR, and capitalize on their investments as much of the new supply is not anticipated until 2014."

The Gateway to the Americas Miami draws in a massive influx of tourists from around the globe, and during the past 20 years the market has emerged as a crucial commercial hub linking the United States to Latin America, and eventually Asia with the imminent expansion of the Panama Canal. Miami's transportation infrastructure, namely Miami International Airport as well as the Port of Miami, have been instrumental in providing the city with a true competitive advantage over other urban centers in the South. Additionally, Miami's favorable business climate, with no local or state personal income tax, coupled with its skilled multilingual and multicultural workforce, has attracted numerous international firms, including many Fortune 500 companies that have established Latin America offices and headquarters in the region. Miami was one of the last markets to fall in the downturn as a result of a strong Euro and stable Latin American economies, and it was one of the quickest to return with 2011 RevPAR outperforming the previous 2007 peak.

"Miami's economic momentum continues to catch the eye of the investment community, who are hungry for strong yields. We expect that private equity funds will be the big buyers in the year ahead in an effort to put capital to work to work in this growing market," concluded Rumpel. "As a major tourist, economic and cultural hot spot, Miami is stretching its wings further each and every year, supported by the public and private sectors investing in major projects like the Marlin Stadium, airport and port expansion's and two new museums. We expect tourism to continue propelling the market to new heights in 2013. It's not going to slow down anytime soon."

Jones Lang LaSalle's Hotels & Hospitality Miami Investment Sales Group has sold nearly 4,300 keys totaling approximately $1 billion in sales in Miami alone during the past 36 months, not including $500M in UCC foreclosures or $152M in financing. The team comprises four experienced real estate professionals who specialize in the sale and financing of hotel property throughout the state of Florida. In addition, the team works closely with the firm's Real Estate Investment Banking experts to source both debt and equity.

Jones Lang LaSalle's Hotels & Hospitality Group serves as the hospitality industry's global leader in real estate services for luxury, upscale, select service and budget hotels; timeshare and fractional ownership properties; convention centers; mixed-use developments and other hospitality properties. The firm's more than 265 dedicated hotel and hospitality experts partner with investors and owner/operators around the globe to support and shape investment strategies that deliver maximum value throughout the entire lifecycle of an asset. In the last five years, the team completed more transactions than any other hotels and hospitality real estate advisor in the world totaling nearly US$25 billion, while also completing approximately 4,000 advisory and valuation assignments. The group's hotels and hospitality specialists provide independent and expert advice to clients, backed by industry-leading research.

For more news, videos and research from Jones Lang LaSalle's Hotels & Hospitality Group, please visit: www.jll.com/hospitality

About JLL

For over 200 years, JLL (NYSE: JLL), a leading global commercial real estate and investment management company, has helped clients buy, build, occupy, manage and invest in a variety of commercial, industrial, hotel, residential and retail properties. A Fortune 500® company with annual revenue of $20.9 billion and operations in over 80 countries around the world, our more than 103,000 employees bring the power of a global platform combined with local expertise. Driven by our purpose to shape the future of real estate for a better world, we help our clients, people and communities SEE A BRIGHTER WAYSM. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com. 

Katie Sershon
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