Paramount Real Estate Properties, Brokerage’s Post

A "Perfect Storm" is set to light up U.S. Hotel Transactions...Zach Demuth, JLL’s Global Head of Hotels Research, discusses with CoStar Group why hotel owners might be looking at selling. Despite strong RevPAR, profitability challenges are prompting more to consider selling, especially in markets reliant on group or business travel like New Orleans, Houston, and San Francisco. As Zach says, this isn’t about widespread distress but strategic opportunities. Well-capitalized buyers are stepping up, seeing potential even with values 20-30% below peak. For more insights, watch his full interview below or contact me directly. #Hospitality #HotelTransactions #JLL #RealEstate #InvestmentOpportunities https://lnkd.in/ebPRNYgE

Incoming hot assets: hotels. Lately, these properties have been drawing some attention, including ours  👀 Following a challenging post-pandemic period, we’ve seen investors’ interest in hotels increase as performance continues to improve and, while still not at pre-pandemic levels, US foreign visitation levels rise. During Q3, the sector demonstrated stability, with occupancy reaching 63% (only 3% below pre-pandemic levels), average daily rates experiencing more than 2% growth YOY, and revenue per available room exceeding pre-pandemic benchmarks, according to the National Association of Realtors and CoStar data. Yes, challenges remain. Among them we continue to see: • High cost of debt • Workforce shortages • Rising property insurance premiums • Increasing operating costs However, the sector also has some factors working in its favor: • Strong demand • Significant volume of acquisitions set for conversions, impacting existing supply • Dampened new construction due to high costs And then, even though transaction activity has been lower compared to Q3 2023, the number of transactions has risen by 10%, along with an increase in sale price per room and total dollar volume. But with loans set to mature in the next year and refinancing not always being possible, we will probably see more assets hitting the market, leading to a higher transaction volume. This presents an opportunity for investors to either convert spaces for new purposes or add value to existing hotels, especially in urban markets. Have you been looking to acquire hotels lately? We can help with the acquisition process by financing your earnest money deposit during the due diligence phase, so you don’t have to freeze your capital and can focus on more opportunities. Visit our website https://www.duckfund.com/ for more information or schedule a call with our team to learn how we can assist you: https://lnkd.in/eS7fhaec #CommercialRealEstate #SoftLanding #CREMarketTrends #CREMarket #RealEstateInvesting #CREIvestor #HotelInvestment #HotelSector

HOTELS ARE A SMART INVESTMENT AMONG OTHER ASSET CLASSES - Though financial seas are a bit choppy right now, the hospitality industry remains an attractive investment vehicle, especially with respect to several of its commercial real estate peers. As long as there is reasonable liquidity of capital, we expect to see increased hotel transaction activity as the year progresses. The two key driving forces are both long-familiar industry dynamics: Loans coming due. There is a significant amount of hotel debt that is maturing over the next two years. In fact, about $15 billion in hotel CMBS loans alone are coming due in the next two years, according to a CoStar report earlier this year. PIPs. Even if their loans aren’t reaching maturity, there are a slew of properties now facing impending property improvement plans or other capital needs. It’s a double-edged sword: Many properties survived the pandemic by raiding formal CapEx and FF&E reserves to help keep loans solvent with lenders, thereby with the cooperation of the brands, thereby eluding scheduled property improvement plans (with the blessing of the brands). In some cases, capital improvements were restricted to emergency situations like a leaky roof or un-repairable heating plant. Now, in many cases, PIPs can no longer be deferred and major brands are anxious to resume the regular schedule of property improvements that help keep properties competitive in a given market. At the same time, supply chain constraints and construction costs, along with availability of skilled labor, in many cases favor “buy and upgrade” over new construction. Thus, distilling the post-pandemic marketplace, the greatest opportunity is either through refinancing an existing loan or through the recapitalization and subsequent renovation or repositioning of a buy-sell transaction. Either way, the debt markets hold the keys to both executions. https://lnkd.in/ertRBvnn #propertysquarellc #FranckRobert #rivieramaya #mexico #caribbean #centralamerica #RealEstate

HOTELS ARE A SMART INVESTMENT AMONG OTHER ASSET CLASSES - Though financial seas are a bit choppy right now, the hospitality industry remains an attractive investment vehicle, especially with respect to several of its commercial real estate peers. As long as there is reasonable liquidity of capital, we expect to see increased hotel transaction activity as the year progresses. The two key driving forces are both long-familiar industry dynamics: Loans coming due. There is a significant amount of hotel debt that is maturing over the next two years. In fact, about $15 billion in hotel CMBS loans alone are coming due in the next two years, according to a CoStar report earlier this year. PIPs. Even if their loans aren’t reaching maturity, there are a slew of properties now facing impending property improvement plans or other capital needs. It’s a double-edged sword: Many properties survived the pandemic by raiding formal CapEx and FF&E reserves to help keep loans solvent with lenders, thereby with the cooperation of the brands, thereby eluding scheduled property improvement plans (with the blessing of the brands). In some cases, capital improvements were restricted to emergency situations like a leaky roof or un-repairable heating plant. Now, in many cases, PIPs can no longer be deferred and major brands are anxious to resume the regular schedule of property improvements that help keep properties competitive in a given market. At the same time, supply chain constraints and construction costs, along with availability of skilled labor, in many cases favor “buy and upgrade” over new construction. Thus, distilling the post-pandemic marketplace, the greatest opportunity is either through refinancing an existing loan or through the recapitalization and subsequent renovation or repositioning of a buy-sell transaction. Either way, the debt markets hold the keys to both executions. https://lnkd.in/e39jV-3F #propertysquarellc #FranckRobert #rivieramaya #mexico #caribbean #centralamerica #RealEstate

Getting a deal done for a hotel has been difficult over the past few years, with inflationary pressures and banking woes headlining the difficulties. That could start to change in the second half of 2024, hotel executives say. #hospitality #hotelinvestment #hotelsandresorts #financing

In the U.S., one-quarter of investors surveyed plan a large spike in their buying intentions, and another quarter plan a small increase. That could lead to a major rebound from 2023. There was only about $53B of hotel sales last year, a 33% downturn from 2022. #realestate #cre #commercialrealestate #retail #office #industrial #multifamily #leasing #investment #brokerage #properties https://lnkd.in/gSGadphj

MacCap has strong niche' in Hospitality finance and agrees wholeheartedly with attached article. As one our clients said to me recently " who would have thought that Hotels are preferred asset type over office or even multifamily?" Best JB

"CBRE Hotels Research reiterates RevPAR growth of 3.0% for 2024. 2024 would mark the 4th consecutive year of positive RevPAR growth this cycle with RevPAR forecast to reach 113.2% of 2019’s level on a nominal basis. Given the continuing recovery of group and international travel, we expect growth to be strongest at urban and airport locations in 2024." https://lnkd.in/dNTAdhNe

A recent CoStar US article shared several of my thoughts on what is occurring in the U.S. hotel sector. Lodging assets are now considered a main food group for investors—a shift that was previously unheard of. Despite the inherent volatility, high fixed costs, and significant labor expenses, hotels offer unique advantages including daily leasing of guestrooms coupled with the flexibility to continuously adjust rates and introduce diverse revenue streams such as food and beverage, recreation, and more. The transparency provided by available hotel market performance data positions the sector as appealing compared to other asset classes. As I highlighted in the article, "There are a lot of segments that are out of favor, and yet there's all this money that needs to be deployed. So barring any black swan event, I do see that continuing. If there's a black swan event, that's going to affect everything negatively, not just hospitality." The much-anticipated wave of debt maturities has slowly commenced, with many capital-starved hotels under brand pressure to now execute pandemic deferred Property Improvement Plans (PIPs). Property owners that utilized Reserve for Replacement funds to service debt during the past four years are now faced with refinancing in an elevated interest rate environment. Many will elect to dispose of assets, while others will “hand keys” to their lender(s) which will result in increased hotel sale transaction activity. While the first half of 2024 has presented its challenges, the hotel sector's resilience and strategic opportunities continue to make it a compelling investment choice. At LW Hospitality Advisors, we remain optimistic about the industry's prospects for the remainder of the year.   Thoughts? #hospitalityindustry #markettrends