Hotel Activity Under $10M Picks Up

Cahill tells GlobeSt.com that the sales indicate that activity in the $10 million and under category continues to increase steadily "as additional buyers perceive that market fundamentals are at or near bottom." Concurrently, he says, HREC anticipates seeing similar activity pick-up in sales over $10 million in the last half of 2010. "We currently have exclusive hotel listing on over 45 hotels throughout North America and believe that closing activity in the last half of the year will exceed expectations."

The recent closing of the 119-room Hotel Highland was handled by Bill Murney, SVP in HREC's Phoenix office. Stoneridge Capital Partners acquired the Hotel Highland and marks their entry into the hospitality sector. "The buyer decided to pursue the acquisition after touring the newly renovated property and the high end market demand area in which the hotel is located. Stoneridge aggressively pounced on the opportunity, and closed the transaction early, which allows them to achieve the balance of the high season revenue from the property," says Murney.

[IMGCAP(4)]Larry Kaplan, SVP in HREC's Denver office handled the sale of the Holiday Inn Express in Onalaska. "This sale is further proof that hotels with desirable brand affiliations, priced appropriately for the current economic environment, can be both financed and sold in today's challenging investment environment. We continue to witness increased interest throughout the country among hotel investors for high quality hotel product," says Kaplan.

[IMGCAP(3)]The recent sale of the Best Western Lacrosse was handled by Mark Darrington, VP in HREC's Denver office. "Due to a land lease, this was a complex transaction, involving multiple stakeholders. Stable cash flow and a unique riverfront location contributed to a high level of interest in this property from multiple buyer groups, which helped us drive value for ownership. This was the fourth hotel we have sold for the owner and we are currently working on the disposition of a fifth hotel," states Darrington.

[IMGCAP(2)]The sale of the 122-room Best Western in Columbia, MO was handled by Jeff Preston, VP in HREC Investment Advisors' Chicago office. The Best Western will benefit from an onsite management team that knows the local market well, owning two other hotels in Columbia. "Home to the University of Missouri, Columbia is a stable market, but the purchase of the property represents upside potential for the new owner who has first-hand knowledge of the local lodging market. The property was purchased at 2.65 times revenue," says Preston. "The new owner plans to realize the property's upside potential through an extensive renovation and upgrade of the public areas."

According to a recent GlobeSt.com hotel webinar, the hardest hit of the five major food groups by the downturn is the hotel sector, but it is showing signs of rebounding. The investment opportunities that emerge amid the recovery will need to be approached from a different perspective than before, said panelists during the webinar.

For one thing, a great many of those opportunities have been coming via off-market transactions, said Jon Bortz, chairman and CEO of Pebblebrook Hotel Trust, during the webinar, adding that he's seen an increase in deal flow since late last year. He predicted that we'll see more opportunities from lenders selling their positions "as they can afford or need to take writedowns." Kennedy Associates EVP Jack Van Hartesvelt concurred that most of the action is off-market, noting that when foreign banks indicate that they want to get out of their US real estate exposure, it's a good time to be in contact with them.