Hotel Investors Turning to Distressed Assets
Press Democrat reports: As fundamentals improve and buyers’ access to credit improves, the prospect for troubled assets – particularly distressed hotel assets – is brightening. With their shorter-term tenants, hospitality properties are typically faster to respond to ups and downs in the broader market. According to Dan Fasulo, managing director of Real Capital Analytics (RCA), “There’s a general consensus that the worst is over…the fundamentals are starting to improve. We’ve definitely seen it in some of the major cities.”
Reflecting improved business and leisure travel rates over the past two quarters, hotel owners and operators have seen revenues rise, prompting investors both inside and outside the hotel market to consider further investments. The Press Democrat relied on RCA data to state, “So far this year, 77 U.S. hotel deals have been made worth $8.5 billion, compared to 30 deals for $1.2 billion during the same period in 2009.”
As for the distressed hotel properties, Mr Fasulo stated that “there are signs of a thaw in the hotel investment market…A lot of the over-leveraged properties are finally starting to work their way through the system.” Another reason hotel investors are beginning to consider distressed assets in earnest is because, according to Mr Fasulo, “At this point, most of the really great assets have already been picked off.” Now, with few options in the core sector and major markets, investors must turn to secondary markets and distressed opportunities.
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Posted by: Nina Turner