Search
 

Debt Funds Increase Liquidity for Hotel Product

This year, hotel investors expect transaction volume to remain flat and a reduction in loan-to-value, but capital sources remain enthusiastic on the market, according to experts at ALIS.

By Kelsi Maree Borland | Updated on January 24, 2018

“I wish I could tell you that there was going to be a huge increases in transactions in 2018, but we don’t think that is going to be the case,” Mark Wynne Smith, global CEO of JLL-Hotels, said at ALIS The Numbers: What We Are Dealing With and Where Are We Headed panel. Smith gave forecast of hotel transaction volume this year, and why he expects transactions to remain flat. He also gave some insight into capital markets activity this year for hotels. “We think there is going to be roughly the same as what we saw in 2017, which is about $24 billion of hotels transacted. This year, we had about 40% single assets. We will probably see about 30% this year. We just have less portfolios coming through.”

As a result, many buyers are seeking capital markets solutions rather than trading into other asset classes. “Our clients are now seeking capital solutions rather than pure exits,” said Smith. “We are having increased conversations around recaps and changing of partners. The traditional exit and buy into the next product is going to be reducing significantly.”

Smith says that difficulty reinvesting is one of the reasons transaction volume is going to remain low. “If you sell an asset today, the cost of going back in is highly likely to be getting a lower return on equity invested. There is generally less product around for that reason, so that is going to hold back the total volume,” he said.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.