LOS ANGELES-These are some of the most interesting times in many, many years for the hotel investment market, lodging analyst John Arabia of Green Street Advisors told an audience of hotel industry professionals Wednesday. "But there is a fair amount of risk," Arabia added.
Arabia served on a panel titled: "Game Changers-Investment Strategies Past and Present" at the Meet the Money conference in Los Angeles. The event, as GlobeSt.com previously reported, was held Tuesday and Wednesday and drew just under 400 attendees. Moderating the panel was Guy Maisnik, a partner at JMBM. Other panelists included: Jonathan Roth, a principal at Canyon Partners; Rick Kleeman, a managing partner of Wheelock Street Capital; Patrick Deming, a managing director with Eastdil Secured; and Dana Ciraldo, president and CEO of Lodgian Inc.
Patrick Deming, managing director with Eastdil Secured, pointed out that this is an exciting time for his company. "We are in the initial stages of the next investment cycle," he said. According to Deming, it feels like the worst is over. "We have suffered through a hard 24 months, and I think that in the last 90 days, we have seen fairly remarkable progress in the debt market in terms of fundamentals."
Deming explained that now that the worst is over from a macro standpoint, he is seeing "people out there with the desire to do something." He continued that he can now actually go out and have productive discussions with clients "because there are ways to execute in this market."
He is telling his clients that if they want to get refinanced now, there is more capital out there than there is product. "If you have a strategy you need to execute, the market is there to be able to execute that," he said.
During a presentation called "Hotel Values & Cap Rates," Suzanne Mellen, a senior managing director of HVS, agreed that "lending is starting to resume." She pointed out that there are numerous equity capital sources on the sidelines waiting for opportunities.
Roth explained that, in terms of headline news, the worst headlines are behind us. But he warned that there are still a tremendous number of issues ahead, such as unemployment. "We really need to create millions of jobs for everything to correct itself," he said. A number of opportunities will present themselves on the investment front, he said, "but there is still a cleansing that needs to occur. The tough stuff is still ahead."
There will be a return to fundamentals and a return to quality, Roth predicted. "Values got driven because of cheap debt," he said. "There are lots of opportunities to go into the mine and collect the individual pieces, but I am not sitting here with all the optimism in the world."
Following the investment panel, president Alan Reay of Irvine, CA-based Atlas Hospitality Group delivered a presentation called "California Markets-Defaults and Transactions." As he also recently pointed out to GlobeSt.com, he noted that lenders will finally realize that "extend and pretend" is not working. He also predicted that sales volume will jump 50% to 70% in 2010 and that there will be tremendous buyer demand for quality assets and "A" locations.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
