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Over $11.5 billion in Luxury Lodging Facilities Changed Hands in the
First Half of 2007; Maui Prince Makena Tops the List of
Transactions at a Price of $575 million
DENVER, Colorado – July 12, 2007 – Over $11.5 billion in upscale and luxury lodging facilities changed hands in the first half of 2007, according to Stephen Hennis, Managing Director of Hospitium. Through the second quarter, 177 assets have traded, exceeding the 158 transactions that occurred in the first half of 2006. “The robust hotel investment landscape shows no immediate signs of tapering,” Hennis states. “At the current pace, 2007 is expected to reach $20 billion in high-end asset transactions, the third straight year with over $17 billion in deal activity.”

According to Hospitium, per-room pricing for upscale and luxury lodging assets declined slightly from a record $243,000 in 2006 to $228,000 through the first half of this year, but is nevertheless well above historic levels. “Asset pricing has apparently reached its peak. Property cash flows are continuing to grow; however, market values are being kept in check as cap rates edge upwards,” Hennis says.

“The overall industry outlook remains positive, yet buyers are beginning to heed caution with their underwriting. While return expectations and cap rates for lodging facilities are anticipated to remain below those of the prior real estate cycle, the investment environment will likely be impacted by rising interest rates over the next couple of years,” notes Hennis. “New supply additions in certain markets will also have an affect.”

The sale of the Maui Prince Makena topped the list of major transactions in the first half of 2007 at a price of $575 million, which included its two golf courses and 1,317 acres of highly-coveted land along the Maui coast. The overall price per room for the Maui Prince equated to over $1.8 million. The sale of the Casa Malibu Inn in California was close to $1 million per unit. The Fairmont Sonoma Mission Inn and the Sonoma Golf Club, sold as part of Crescent Real Estate’s lodging divestiture, garnered a price per room of $767,000. The Dylan in New York fetched $729,000 per key.

Urban hotels are the dominant investments thus far in 2007, accounting for almost half of the transactions. Of the major cities, Boston, Dallas, Houston, New York, and Washington, DC, experienced the most acquisition activity through the first and second quarters. Of the primary resort locations, Hawaii was the most active for lodging investments during the period.

About Hospitium
Hospitium is a hotel consulting firm that specializes in the upscale and luxury sectors of the lodging industry. From the early stages of development or deal negotiation through asset disposition, Hospitium delivers timely and useful research, analysis, and insight that assist the various needs of owners, developers, management companies, and financial institutions. Hospitium provides a wide array of advisory services and products, including feasibility studies, due diligence, underwriting, appraisals, strategic planning, and transaction guidance.


Stephen R. Hennis, CHA
Managing Director

Also See: As Part of the its Reorganization the Seibu Group is to Sell the 310-room Maui Prince Hotel, the 304-room Alyeska Prince Hotel and the 384-room Toronto Prince Hotel / November 2006
Crescent Real Estate Equities Company Sells Equity Interest in the Sonoma Mission Inn & Spa to Fairmont Hotels & Resorts; Resort to be Managed by Fairmont, Reflagged The Fairmont Sonoma Mission Inn & Spa / Aug 2002
Crescent Real Estate Equities Company Selling Six Hotels, One Office Building for $620 million / May 2007


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