Hotel & Motel Management - June 2, 2008 - (Page 34)

34 Special Report NYU INVESTMENT CONFERENCE H&MM June 2, 2008 | HotelMotel.com www.HotelMotel.com/digital_edition Developers panel Continued from page 32 are going to need 35 percent to 40 percent equity, and have to sign some sort of recourse. That would be a dealbreaker for many people,” said Mark Owens, managing director, Ackman-Ziff Real Estate Group, New York. While it is not necessary to be an established hotel brand to obtain ﬁnancing in this market, it is often helpful, along with partners that have a history of equity. “One thing the market really likes right now is historical cash ﬂow. Reputation and historical track record are huge for new developments,” Owens said. Credible developers are obtaining the few loans out there, Gordon said. “If a project is well-conceived, and a developer is credible and reasonably well-capitalized … deals have and will continue to get done,” Gordon said. Good news The positive news is that ﬁnancial deals for new construction, renovations and other projects are get- ting approved more frequently. “A lot of brands—big hotel companies as well as branded boutique operators—are doing forms of credit enhancement. They’re helping to ﬁnance in some creative way,” Owens said. One of those “creative” ways is through “aggressively priced mezzanine debt,” according to Owens. Mezzanine debt adds additional debt behind a ﬁrst mort- THE BEST PATH LEADS YOU HOME. gage, and is priced more conservatively than a ﬁrst mortgage. For example, if the borrower is only able to get 60-percent ﬁnancing, he can go to a mezzanine lender and get additional debt up to 75 percent higher. “More investors are willing to provide mezzanine ﬁnancing to 70 to 75 percent. There has been a stabilizing of mezzanine pricing as well,” Gordon said. Hotel developers and their partners are ﬁnding lenders in the U.S. and abroad who may not have been big players in the hotel financing market in the past, but want to make their mark now. Gordon “Lenders PERKINS COIE who have not been particularly active over the last couple of years are now using this opportunity to regain market share,” Gordon said. “Overseas investors are looking at ﬁrst-tier cities. They not only are looking at the play on the lower dollar, but also in broadening investments,” Owens said. Overseas investors wanting to get involved in the U.S. hotel market include those from Canada, Europe, the Middle East and Asia, according to the panelists. Some of the deals receiving funding are those for limited service hotels. “Smaller loans for limited-service hotels that have historically been ﬁnanced by local banks are still getting done. Those typically have a lot more in the way of developer guarantees,” Long said. Future outlook OXFORD LODGING HAS CHANGED ITS NAME BACK TO THE CHARTRES LODGING GROUP . Oxford Lodging Investment & Advisory Group, LLC, marks its sixth anniversary this year as one of the industry’s fastest-growing lodging investment and management companies. So we’re celebrating by going back to our roots. We’ve changed our name (back) to The Chartres Lodging Group, LLC. And we’re thanking the extended Chartres Lodging family of employees, partners and investment and real estate professionals for joining us along our journey. www.chartreslodging.com CIRCLE NO. 113 In the long term, the difﬁculty in the ﬁnancing market will help balance supply and demand for hotel rooms. Because of the ease in obtaining capital about two years ago, many hotel and mixed-use projects received funding, which could have created an oversupply. “We’re going to beneﬁt as a sector. You’re not going to have that glut in supply,” Owens said. “Only the best deals will get done, which is a good thing for the U.S. hotel industry,” Gordon said. hmm@questex.com http://HotelMotel.com http://www.HotelMotel.com/digital_edition http://www.chartreslodging.com

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Hotel & Motel Management - June 2, 2008 Contents State Programs Help Define Green Hotels AmericInn Boosts its American Presence Questex, The Bench to Host Russia Event Perspective Letter to the Editor Legally Speaking Guest Column Marketing Matters Consultant's Corner Satisfaction Trends On Finance Travel Trends Cornell Insights Energy Star Update Maintenance Doctor Management Trends Trends & Stats Finding Financing Challenges Developers Credit Crunch Still Tops List of Lawyers' Concerns Mixed-use Funding Bleak, Panelists Say Luxury Landscape Keeps Pushing Higher PTACs Events Casegoods Seating Energy Controls and Sensors Pest Control Electronic Locks Transactions Supplier News Timeshare Misconceptions Still Prevalent Awards People Ad/Edit Index Marketplace Classifieds Checking Out

Hotel & Motel Management - June 2, 2008

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