Hotel Online Special Report
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Reductions in Public Lodging Company Stock Prices Provide New Opportunities for Private & Institutional Investors
 
 
NEW YORK, NY - August 14, 1998 - Sonnenblick-Goldman Company announced today that despite the recent decrease in stock prices of public lodging companies  (both REITs and C-Corps), the market for high-end lodging properties has remained strong due to the influx of equity by private and institutional investors. 

The recent downturn in the overall stock market, combined with concerns regarding the ability of public lodging companies to continue to post double-digit growth rates,  has had an overall negative impact on lodging stock valuations. Due to this undervaluation (which has caused many lodging companies' public market valuations to fall below the value of its assets), public lodging companies are hesitant to use their stock as acquisition currency or to raise additional public equity.  In addition, lodging REITs frequently have debt ceilings that limit their ability to use significant leverage. As a result, many public lodging companies are waiting on the sidelines until stock valuations improve. However, the upscale lodging market is still attracting significant investment interest. 

"The upscale lodging market is still exhibiting extremely strong fundamentals" notes Arthur Adler, Managing Director of Sonnenblick-Goldman's Lodging and Leisure Group. "Even as occupancies stabilize, the strong national economy and the lack of new supply are creating continued upward pressure on room rates.   As a result, industry profits are projected to increase for the next three years." Sonnenblick-Goldman has seen the void left by the public lodging companies filled by financial institutions, private equity funds, and foreign capital sources.  These buyers are taking advantage of the favorable debt markets and low interest rates to capture assets that would typically have been purchased by public lodging companies. 

"We have seen a continued strength in the market for well located, well positioned hotels both in the U.S. and in Europe" cites Mr. Adler.  "The temporary withdrawal of the public lodging companies has provided opportunities for financial institutions and other private equity sources to enter the market.  In addition, lending institutions recognize the strength of the lodging industry and are aggressively seeking opportunities to finance acquisitions.  As such, the current buyers are taking advantage of the continued strong hotel market and favorable interest rates to leverage their equity returns.  We expect this trend to continue as long as market fundamentals remain strong" 

Sonnenblick-Goldman Company is the nation's leading independent real estate investment banking firm.  Founded in 1893 to serve the financing needs of the real estate industry, Sonnenblick-Goldman Company provides a full range of real estate financial services including debt and equity placements, joint ventures, and other real estate advisory services. Headquartered in New York, Sonnenblick-Goldman Company maintains regional offices in Denver, Los Angeles, San Francisco, Miami, and Washington, D.C. 

 

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Contact:
Sonnenblick-Goldman Company
712 Fifth Ave.
New York, NY 10019
(212) 841-9200
(212) 262-4224 - Fax
 
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Also See:
Hotel Online's List of 80 Lodging and Gaming Stocks - Ranked by % Gain/Loss for the six Months ending June 30, 1998 

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