The Acquisition Opportunities Outside of the Gateway Markets panel discuss the current market challenges.

LOS ANGELES—“I think the peak was in the third quarter of 2014,” Teague Hunter said at ALIS this week. He was talking on the Acquisition Opportunities Outside of Gateway Markets panel, along with Colin Carroll, VP of investments at Ashford; Neil Freeman, chairman and CEO of Aries Capital; Akshay Goyal, VP at Starwood Capital; and Mark K. Owens, EVP and head of hospitality capital markets at CBRE. As Hunter explains, the floating rate market in 3Q14 shutdown and that is where he marks the peak. Today, he says, the spreads have widened, leaving a gap between buyers and sellers on pricing and that is also indicative of a post-peak market.

Owens disagreed, saying that the floating rate market is back today, and that there is plenty of debt available. “For the right borrower, I don't think this is as dismal of a market as everyone seems to think it is,” he said on the panel. Carroll also said that he isn't willing to say that the peak hit in 2014, but he did wonder what the major Blackstone acquisition deals completed that year would look like today. For the most part, a lot of the major REITs have shut down. While Goyal admitted, “For large deals, it is more difficult today than in 2014.”

Whether we have hit the peak or not, all of the panelist agreed that it has become more difficult to find opportunities in gateway markets. “Some investors began looking outside of gateway markets years ago, and created funds for mezzanine debt,” said Owens. The secondary markets with the best opportunities are Austin, Charleston and most importantly Nashville, which is on the rise to becoming gateway-like. The panelists referred to the market as an emerging gateway market.