LOS ANGELES—Hotel values are heading down, according tothe Wall Street executives at ALIS this week, who saythat the public sector is pulling back and that the private sectorwill follow. The Wall Street Outlook panel includedMichael Bluhm, managing director at Morgan Stanley;Jeffrey D. Horowitz, global head of real estate at Bankof America; Christopher J. Jordan, EVP at WellsFargo; Lawrence Y. Kwon, managing director at Moelis& Co.; and Ben Leahy, managing director atGoldman Sachs.

“One of the things that has us scratching our head is that ifthe outlook is so great, why is the stock market heading down,”Bluhm questioned on the panel. “Values are coming down. Publicinvestors lead first and private markets tend to follow. REITs areconcerned about values compressing, and we are starting to see pullback from investors to wait and see what is going to happen withvalues.” Leahy added that REITs are short-term focused, and inmarkets like New York, where the supply has been completelyoverrun, no one has a catalyst to get in.