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US Hotels Present Investment Opportunity

NEW YORK CITY-With the market rough for current owners, there will be 'once in a lifetime' investment opportunities for knowledgeable 'value investors' in the short term.

By Daniel H. Lesser, Daniel Lesser | Updated on October 05, 2009

NEW YORK CITY-The US lodging industry is currently operating in unprecedented economic and capital market environments. While it appears that the bottom of the worldwide economic reseat that began two years ago may have been reached, the damage done to US lodging investments has yet to be fully absorbed by the market.

The dearth of transaction data in the CB Richard Ellis YTD Q3 2009 Major US Hotel Sales Survey reflects the near frozen state of the national hotel investment market. A mere 21 sales, totaling roughly $1.6 billion for 7,600 rooms–on average $210,000 per room–were transacted in the US through the first three quarters of 2009. Excluding the $775-million trade of the Treasure Island Hotel & Casino in Las Vegas, there have only been:

  • Three US hotel trades greater than $100 million;
  • Two US hotel sales between $50 million and $100 million;
  • Three trades of US hotels between $20 million and $50 million;
  • Twelve US hotel sale transactions under $20 million.

It is significant to note that excluding the Treasure Island Hotel & Casino transaction, the four largest US hotel trades–totaling approximately $475 million–were all reportedly negotiated in 2008, and closed in 2009 for myriad reasons.

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