News for the Hospitality Executive
Transaction Market Heating Up
4, 2012) – During the
hospitality industry’s worst decline, The Plasencia Group (TPG) had its
full advising hotel owners how to effectively manage costs while
asset value. Now, with the industry in recovery, the firm is busy
advising on nearly $1 billion in hotel disposition engagements.
“The hotel industry is showing signs that it is almost back to the peak investment levels seen in 2007. I'm happy to report that The Plasencia Group is also exceeding our historic highs in terms of the number and volume of the firm’s engagements,” stated Lou Plasencia, Chief Executive Officer.
TPG’s current roster of sale assets includes large, full-service hotels in primary and secondary markets, as well as premium select-service portfolios in key urban and suburban locations. Plasencia added, “The fact that we’re now marketing a diverse and valuable mix of properties approaching a billion dollars in value is a clear sign that the core issues previously impeding hotel transactions are becoming less of a factor. Moreover, there is no shortage of quality hospitality investors. It’s been a while since we've seen this much pure cash going after hotels.”
Factors that had been affecting the hotel investment pipeline included:
Pricing gap – the expectations of what a seller could reasonably achieve and what buyers are willing to pay are now more in line with each other. As additional hotel assets transact on the open market, that gap continues to shrink.
Lack of debt – the inability of lenders to finance acquisitions is finally giving way and a wider pool of debt sources have now entered the market, albeit at relatively conservative levels and under more watchful underwriting eyes. Nonetheless, the majority of investors The Plasencia Group is dealing with are all-cash buyers.
Distressed or REO sales – owners forced to sell or banks forced to own distressed hotels will continue to be a factor, but the waterfall of quality product that investors expected from these sources has failed to fully materialize. Improving industry fundamentals, combined with an active and capable investor community, should continue to enhance an already dynamic hospitality real estate transaction market.
The Plasencia Group anticipates that the remainder of 2012 will see vastly increased hotel transaction activity, characterized by strong pricing and heightened buyer interest in a sector of the real estate industry that is able to more nimbly react to improving economic indicators than other asset classes.
About the Plasencia Group
The Plasencia Group is a multi-faceted, full-service hotel investment and consulting firm with three corporate divisions: Transaction Services, Capital Markets, and Consulting & Advisory Services serving clients through its U.S. regional offices. For more information, go to www.TPGhotels.com.
Vice President of Marketing & Communications
The Plasencia Group, Inc.
Plasencia Group Recognized by Industry Peers with Transaction of the
Year Award; The Plasencia Group’s handling of the Amelia Island
Plantation bankruptcy sale on behalf of the property’s owner garnered
honors as the Single-Asset Transaction of the Year for 2010 /