By
Jim
Butler and the Global Hospitality
Group®
Hotel Lawyers | Authors
of www.HotelLawBlog.com
October 19, 2012
Hotel
Lawyer with Robert W. Baird hospitality research on hotel industry
trends
We are very pleased to report that
David Loeb has agreed to share his Robert W. Baird hospitality reports
with us,
and has agreed to make them available on HotelLawyer.com.
Just click on the "Resource Center" and then "Industry
Presentations."
Here are
the first two reports on C-Corps and REITs and Highlights from the
Lodging
Conference.
The first is the presentation given
by David to the hotel industry think tank, the Lodging Industry
Investment
Council, on October 3, 2012, titled Hotel
Update:
C-Corps and REITs.
The second is a fascinating summary
of RW Baird's take on the state of the industry after more than 15
meetings
with industry leaders in Phoenix. It is dated October 8, 2012 and is
titled Highlights
from
The Lodging Conference, Select-Service Bullishness, Open Debt Markets.
Highlights
from RW Baird's reports
We
asked David to give us his bullet point summary of the highlights in
these
reports, and here is what he said:
- We at Baird believe we are in a long-term bull market for
hotel stocks. Baird's work suggests that we appear to be years away
from fundamentals flashing a sell signal for hotel stocks, given robust
demand growth and minimal growth in supply.
- Demand is strong, despite worries about the global and US
economy. One big change in the demand equation is that international
travel is growing rapidly and the US is finally taking steps (slowly)
to welcome foreign travelers. After 9/11, the US slammed the door on
international tourism, which appeared to have limited the length and
magnitude of the recovery.
- We believe group demand has actually recovered strongly,
but that some of that recovery has been masked by market share gains by
Las Vegas, creating the appearance of a much more tepid recovery of
group business in traditional (non-gaming) hotel markets. We expect
that recovery to accelerate nationally in the next year or so.
- Supply growth remains tame, despite general easing of
credit conditions. What limited development financing there is
available is expensive and has very tight conditions, including
developer recourse and low LTV ratios. EB-5 is the one area where
development financing is attainable, and we expect more projects to use
this funding source.
- Debt markets are opening, but still primarily for the best
assets, the largest markets and the best sponsors. There has been a
material easing of credit conditions in recent months, including a
newly-resurgent CMBS market for hotel debt. However, even with that
easing, debt is still difficult to attain for all but the public
companies and the largest PE funds and private owners. LTVs remain in
the 60%-65% range but interest rates are very low.
- Transaction pace is picking up, as the REITs and PE firms
are becoming more aggressive. With higher hotel REIT share prices, more
hotels that are being pitched to the REITs have come to market, and we
expect more deals to be announced over the next six months. PE firms
are looking at deals in secondary markets, where yields are higher, and
also at portfolios of select service assets, given attractive yields
which can be matched with low-cost debt, locking in wide spreads and
thus high returns.
David Loeb is a Managing Director
and Senior Research Analyst for Robert W. Baird & Co. (Baird),
covering
Real Estate with a specialization in Lodging and Office companies. He
has
focused on real estate-related businesses for more than 20 years and
has published
research on the lodging industry since 1994. In 2007, 2008, 2009, and
2010,
David was ranked by StarMine as a Top 3 Industry Estimator in the Real
Estate
Investment Trusts (REITs) and hotel/gaming industries, with a No. 1
ranking in
2008.
For more information, please contact
David Loeb at [email protected]
or +1
(414) 765-7063.
___________________________
This is Jim Butler,
author of www.HotelLawBlog.com
and hotel lawyer,
signing off. We've done more than $60 billion of hotel transactions and
have
developed innovative solutions to unlock value from hotels. Who's your
hotel
lawyer?
__________________________
Our Perspective. We
represent hotel lenders,
owners and investors. We have helped our clients find business and
legal
solutions for more than $60 billion of hotel transactions, involving
more than
1,300 properties all over the world. For more information, please
contact Jim
Butler at [email protected] or
+1
(310) 201-3526.
Jim Butler is a founding partner of JMBM, and
Chairman of its Global Hospitality Group® and Chinese Investment
Group™. Jim is
one of the top hospitality attorneys in the world. GOOGLE "hotel
lawyer" and you will see why.
Jim and his team are more than "just"
great hotel lawyers. They are also hospitality consultants and business
advisors. They are deal makers. They can help find the right operator
or
capital provider. They know who to call and how to reach them.
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