By Jim Butler
22 May 2009
This slide shows that 2009 and 2010 will be the maximum opportunity
to buy hotel investments.
| "Now is the time to buy debt. We have close to $2 billion of capital
to put out, but we are challenged because even at historically low interest
rates, the assets are not covering debt. Borrowers are saying, "what are
we going to do now?" There are also confusing messages from the federal
government on down as to what is going to happen. We are looking to buy
debt at a discount. We are seeing a capital stack that has been over-levered
and it needs to be de-levered." / Jonathan Roth Principal Canyon
Capital Realty Advisors |
| "The challenge is finding a mezzanine debt opportunity or acquisition
that is a better return than buying back our own stock. We think that buying
back our stock is pretty good." / Deric Eubanks Ashford Hospitality
Trust, Inc. |
| "Over all, there is a complete reappraisal of values. We have been
an investor across a spectrum of property types. The real issue is cash
flow from the investment. We think this is going away from opportunistic
investment. There will be some opportunities, but it is all about cash
flow -- buying assets at a discount. Buying cash flow." / Chad Christensen
Vice President Washington Real Estate Holdings, LLC |
| "The next 24-36 months will be the greatest buying opportunity for
a generation. But only those with capital will be able to play. We are
looking to partner with people to help them out." "This is the best buying
opportunity in 20 years, if you have capital. We operate in the boutique
space where demand is 3 times that of the average demand. We have capital
and we are actively looking." / Michael Depatie President and CEO
Kimpton Hotel & Restaurant Group, LLC |
| "This is a great opportunity. We think it has started already. We are
attracting more capital now. Investors sense the opportunity and want to
participate. " / Bruce G. Wiles Managing Director & Principal
Thayer Lodging Group |
| "The greatest hotel buying opportunity of our lifetime will be the
next 12-18 months. The key is having all equity to close without mortgage
financing." / Michael Cahill, CRE, MAI, FRICS, CHA CEO and Founder
HREC - Hospitality Real Estate Counselors |
| "I have never seen this much negative RevPAR and it keeps going on.
We have had double digit negative RevPAR for many months and I don't see
what turns it around. Nobody knows when it goes positive. Once there is
some clarity, there will be great opportunity." / Thomas Corcoran
Chairman of the Board Felcor Lodging Trust Incorporated |
| "We want to see 3-4 months of flattened RevPAR to indicate stabilization
before we invest." / Russ Urban Senior Vice President, Development
HEI Hotels & Resorts LLC |
| "Where are we? Still early, unfortunately. Most of the stuff coming
on the market is in tertiary markets or is junk. I am afraid that we are
6-9 months away from our ability to invest money. That gives time to look
at opportunities and raise equity. I think rates will keep falling through
the end of the year." / Paul Novak President Bedrock Partners |
| "This is a good time to buy, if you can. Here is the secret sauce:
if you take the economy quarter by quarter, over time, it correlates with
lodging demand exactly, with a few notable exceptions, like 9-11. Right
now, the economy is down 2 percent, but lodging demand is down 9 percent.
I believe that whenever the country believes the recession is over, demand
will go right back up to where the economy is. We are in artificial down.
We are looking at 20 percent drop in RevPAR when the economy is only down
2 percent! Five star properties have been hurt the worse. When the recession
is over, people will relax and take that vacation, companies will send
more people to conferences. Buy. Buy now!" / Jack vanHartesvelt
Executive Vice President - Partner Kennedy Associates Real Estate |
| "We are looking to invest. We have raised $3.5 billion in capital and
have invested only 5% of equity in the last 12 months, due to the economy.
But, we have a patient view. We are waiting for the deleveraging of the
industry." / Barry Olson Managing Director Archorn Group, LP |
| "Many pension funds are clearly experiencing the downdraft in real
estate portfolios. The more savvy of funds will want to invest now, as
they will underperform in the next few years if they don't." Bernard
N. Siegel Principal KSL Capital Partners, LLC |
| "We are not seeing the deal flow, yet. What is being shown to us is
off market or plain junk. I wouldn't take the stuff for free because there
is no profitability. For the assets worth acquiring, the bid-ask spread
is still too wide." / Scott Brown CEO/Co-Founder ABA Development,
LLC |
| "There are already opportunities for buy positions - but they are going
to get cheaper." Stephen Krooth President Krooth Advisory Services
LLC |
"Lots of properties were listed with receivers this year, and they
will select brokers soon. You might see transactions involving smaller
assets available this year. The bigger ones still have band aids on them."
/ Patrick O'Neal
Vice President Midland Loan Services, Inc. |
.
When is it time to buy hotels? The time is now -- or as soon as prices
and values are right.
Billions of dollars are ready to buy debt or properties. But the question
is value, pricing and strategy. It requires massive de-levering.
Jim Butler is a founding partner of JMBM and Chairman of its Global
Hospitality Group®. Jim is one of the top hospitality attorneys in
the world. GOOGLE "hotel lawyer" and you will see why. JMBM's troubled
asset team has handled more than 1,000 receiverships and many complex insolvency
issues. But Jim and his team are more than "just" great hotel lawyers.
They are also hospitality consultants and business advisors. For example,
they have developed some unique proprietary approaches to unlock value
in underwater hotels that can benefit lenders, borrowers and investors.
(GOOGLE "JMBM's SAVE program".) Whether it is a troubled investment or
new transaction, JMBM's Global Hospitality Group® creates legal and
business solutions for hotel owners and lenders. They are deal makers.
They can help find the right operator or capital provider. They know who
to call and how to reach them. |
