on transactions this year.
CHICAGO-Since the summer setback for trusts, private equity and institutions have taken the place of REITs in hotel investment in North and South America. Transactions hit $15.2 billion in 2011, an increase of 24% over 2010. Like many of the property sectors, however, the market should remain flat this year, according to the Jones Lang LaSalle Hotel Investment Outlook Report.
Transaction volume will at least match 2011 levels, as fundamentals such as room rates improve and there’s an abundance of capital, according to Arthur Adler, managing director and CEO of the Americas for JLL Hotels. He said in a statement that the gates are opening for private equity and institutional buyers willing to take calculated risks in primary and secondary markets.
“REITs are likely to be less active buyers as their share prices are still well below the highs of the summer of 2011, although they may make a comeback in the second half,” Adler said. “We expect that quality hotels with positive current yield will be the best positioned assets for investment. Additionally, lenders, banks and special servicers will be more motivated to sell assets.”
Rates have improved in part because of the peak was hit for new development in the past two years, with not much more planned, Lauro Ferroni, a VP for JLL Hotels, tells GlobeSt.com. “A lot of that supply has come online already,” he says. “That’s good news for existing properties. There’s not a single luxury hotel now under construction, that’s a key difference from earlier years.”