Hotel & Motel Management - October 20, 2008 - (Page 22) 22 On The Block TRANSACTIONS UPDATE H&MM October 20, 2008 | HotelMotel.com www.HotelMotel.com/digital_edition Transactions worse than most predicted IN THE details Limited-service holds strong Hotel transaction volume is creeping along slowly, especially in the luxury segment. The limited-service segment, however, has seen some relative strength so far, but concerns remain due to: Slowdown from ’07 Funding availability Banking crisis By Emily Hanna ASSOCIATE EDITOR done deals On behalf of a trust specifically serviced by Capital Asset Management LLC, Jones Lang LaSalle Hotels’ select-service division sold the Days Inn Grand Rapids (Mich.) Airport to A&M Hospitality. The 119-guestroom hotel features an outdoor swimming pool, fitness center and a 600-squarefoot conference room. The new ownership plans a renovation and repositioning of the hotel to a Clarion Inn & Suites. Mumford Co. represented an affiliate of the Beck Co. in the recent sale of the Econo Lodge of Winchester, Va., to Aadesh LLC, a local investor group, for $2.9 million. The 50-unit property is in good physical condition and the new ownership group plans to retain the Econo Lodge franchise after cosmetic renovations. Jones Lang LaSalle Hotels announced the sale of the 192-room Hotel Monaco Chicago, the 189-room Hotel Monaco Denver and the 225-room Hotel Monaco Salt Lake City on behalf of institutional clients advised by Prudential Real Estate Investors. The portfolio of assets was purchased by Cornerstone Real Estate Advisers LLC for the Cornerstone Hotel Income & Equity Fund II LP for an undisclosed sum. Molinaro Koger assisted InterContinental Hotels Group in the sale of the 524-room Holiday Inn SunSpree Resort, Montego Bay, Jamaica. The 16-acre resort was acquired for $30 million by Octagon Hotels Group Limited. Octagon signed a 10-year Holiday Inn franchise agreement for the resort with IHG and plans a complete renovation. Compiled by Emily Hanna, ehanna@questex.com or the first nine months of 2008, hotel transaction volume was sluggish— especially in comparison to the rapid-fire buying and selling of 2007. Year-to-date through August 2007, total transaction volume was $36 billion, compared to year-to-date 2008 volume of $7.2 billion, according to Art Adler, CEO–The Americas of Jones Lang LaSalle Hotels. At the end of 2007, many brokers and investors anticipated a downturn in 2008, but not to the extent seen so far, Adler said. Peter Holmes, COO of HotelBrokerOne, said his firm predicted a downturn to range anywhere from 25 to 50 percent—not nearing the 80 percent he said it has reached. “I really think that many of us anticipated a downturn, but I think there were very, very, very few brokers that could have pre- Adler dicted or were predicting JLLS HOTELS declines of 80 percent.” Pushing the decline is the drop in portfolio sales and the slow- F the segment. “The reason is that those hotels historically have not used securitized debt; they’ve used community and regional banks, and the investment dollars on those have not been the private equity fund—they’ve been entrepreneurial capital—so they’ve done quite well,” Adler said. Beider sees strength in other segments. “Midscale and upscale focused-service product is in demand, is more easily underwritten by lenders and, frankly, is a better product to own during times where the consumer is trying to save money and looking for value,” he said. As for the future, brokers are Despite a struggling economy, brokers said deals still can close hopeful the industry has hit botoutside of the limited-service segment, like the Hilton Dallas Lincoln tom. “Ample buyer cash and appeCentre above that Jones Lang LaSalle sold recently. tite is present, and once the credit markets have sorted themselves Conversely, the limited-ser- out, pent-up transaction demand down in taking real estate investment trusts private, said Daniel vice segment seems to be faring will be unleashed,” Francis said. Beider, managing director of Par- well. Mumford Co., which spe- “We believe the transaction maramount Lodging Advisors. But cializes in hotels under $15 mil- ket is presently bottoming out and additionally, a lack of liquidity lion, is running at about 80 per- that volumes will grow in 2009, led by select-service under cent of 2007 volume—a leads the pack. $15 million.” “The volume is way down— number comparable to The disturbance on everybody knows that—and I 2006 figures, according Wall Street actually may think the reasons are fairly well to Mumford principal be welcomed by “accelerknown, in that there’s a liquidity Michael Francis. “Withating the bottom,” Adler crisis, which started out kind of as in that transaction zone, said. “Investors want to a credit crisis in terms of unavail- we are finding that hofeel where the bottom of ability of debt, and as the tels eligible for [Small the market is before they economy has waned as a Business Administrastart to invest again, and result of that, many [peo- tion] financing or that Francis over the last year-plus, ple] are sitting on the are small enough to be MUMFORD CO. it’s been a slow, painful sidelines trying to wait done by regional lenders are getting done,” Francis said. debt. They’ve taken write-downs that out,” Adler said. The luxury segment “That said, it is more important in bits and pieces, so when some has been hit hard, par- than ever that the buyer is fully of these institutions either fail or tially due to a lack of qualified and is capable of at least get bought and get these bad loans cleared and written off … the available financing from a 25-percent equity injection.” JLLS Hotels houses a select- sooner [the bad loans] are cleared Wall Street, especially after the collapse of finan- service division that Adler said out of the system, the sooner we cial institutions in mid-Septem- has seen success so far in 2008, can head toward a recovery.” ehanna@questex.com ber, Holmes said. closing about 30 transactions in Southern U.S. Paramount Lodging Advisors advised Homecourt Hospitality in the sale of a six-hotel, 613-key portfolio. Apple REIT bought the portfolio, which was composed of the following: the 122-room Courtyard by Marriott in WinstonSalem, N.C., renovated in 2007; the 119-suite Homewood Suites in Jacksonville, Fla., opened in 2005 [pictured at left]; the 120-room Hilton Garden Inn in Hilton Head, S.C.; the 95suite Homewood Suites in Birmingham South, Ala., opened in 2005; the 78-suite Residence Inn by Marriott in Greenville, S.C., renovated in 2006; and the 95-suite TownePlace Suites by Marriott in Tampa, Fla., renovated in 2007. APPLE REIT JLLS http://www.HotelMotel.com http://www.HotelMotel.com/digital_edition
Table of Contents Feed for the Digital Edition of Hotel & Motel Management - October 20, 2008 Hotel & Motel Management - October 20, 2008 Contents Event Empowers Property-Level Leaders Boutique Bonanza Perspective Legal FAQ Consultant's Corner AAHOA Update Sales Clinic HotelWorld Update On Finance Trends & Stats Surprise Guests by Predicting Their Needs Transactions Worse Than Most Predicted Electronic Safes Housekeeping Services Marketplace Events Ad/Edit Index Classifieds Checking Out Hotel & Motel Management - October 20, 2008 Hotel & Motel Management - October 20, 2008 - Hotel & Motel Management - October 20, 2008 (Page Cover1) Hotel & Motel Management - October 20, 2008 - Hotel & Motel Management - October 20, 2008 (Page Cover2) Hotel & Motel Management - October 20, 2008 - Hotel & Motel Management - October 20, 2008 (Page 1) Hotel & Motel Management - October 20, 2008 - Hotel & Motel Management - October 20, 2008 (Page 2) Hotel & Motel Management - October 20, 2008 - Contents (Page 3) Hotel & Motel Management - October 20, 2008 - Boutique Bonanza (Page 4) Hotel & Motel Management - October 20, 2008 - Boutique Bonanza (Page 5) Hotel & Motel Management - October 20, 2008 - Perspective (Page 6) Hotel & Motel Management - October 20, 2008 - Perspective (Page 7) Hotel & Motel Management - October 20, 2008 - Consultant's Corner (Page 8) Hotel & Motel Management - October 20, 2008 - Consultant's Corner (Page 9) Hotel & Motel Management - October 20, 2008 - AAHOA Update (Page 10) Hotel & Motel Management - October 20, 2008 - AAHOA Update (Page 11) Hotel & Motel Management - October 20, 2008 - Sales Clinic (Page 12) Hotel & Motel Management - October 20, 2008 - Sales Clinic (Page 13) Hotel & Motel Management - October 20, 2008 - HotelWorld Update (Page 14) Hotel & Motel Management - October 20, 2008 - HotelWorld Update (Page 15) Hotel & Motel Management - October 20, 2008 - On Finance (Page 16) Hotel & Motel Management - October 20, 2008 - On Finance (Page 17) Hotel & Motel Management - October 20, 2008 - Trends & Stats (Page 18) Hotel & Motel Management - October 20, 2008 - Trends & Stats (Page 19) Hotel & Motel Management - October 20, 2008 - Surprise Guests by Predicting Their Needs (Page 20) Hotel & Motel Management - October 20, 2008 - Surprise Guests by Predicting Their Needs (Page 21) Hotel & Motel Management - October 20, 2008 - Transactions Worse Than Most Predicted (Page 22) Hotel & Motel Management - October 20, 2008 - Transactions Worse Than Most Predicted (Page 23) Hotel & Motel Management - October 20, 2008 - Transactions Worse Than Most Predicted (Page 24) Hotel & Motel Management - October 20, 2008 - Transactions Worse Than Most Predicted (Page 25) Hotel & Motel Management - October 20, 2008 - Electronic Safes (Page 26) Hotel & Motel Management - October 20, 2008 - Electronic Safes (Page 27) Hotel & Motel Management - October 20, 2008 - Electronic Safes (Page 28) Hotel & Motel Management - October 20, 2008 - Electronic Safes (Page 29) Hotel & Motel Management - October 20, 2008 - Housekeeping Services (Page 30) Hotel & Motel Management - October 20, 2008 - Housekeeping Services (Page 31) Hotel & Motel Management - October 20, 2008 - Housekeeping Services (Page 32) Hotel & Motel Management - October 20, 2008 - Housekeeping Services (Page 33) Hotel & Motel Management - October 20, 2008 - Housekeeping Services (Page 34) Hotel & Motel Management - October 20, 2008 - Housekeeping Services (Page 35) Hotel & Motel Management - October 20, 2008 - Housekeeping Services (Page 36) Hotel & Motel Management - October 20, 2008 - Housekeeping Services (Page 37) Hotel & Motel Management - October 20, 2008 - Marketplace (Page 38) Hotel & Motel Management - October 20, 2008 - Events (Page 39) Hotel & Motel Management - October 20, 2008 - Ad/Edit Index (Page 40) Hotel & Motel Management - October 20, 2008 - Classifieds (Page 41) Hotel & Motel Management - October 20, 2008 - Classifieds (Page 42) Hotel & Motel Management - October 20, 2008 - Classifieds (Page 43) Hotel & Motel Management - October 20, 2008 - Classifieds (Page 44) Hotel & Motel Management - October 20, 2008 - Classifieds (Page 45) Hotel & Motel Management - October 20, 2008 - Checking Out (Page 46) Hotel & Motel Management - October 20, 2008 - Checking Out (Page Cover3) Hotel & Motel Management - October 20, 2008 - Checking Out (Page Cover4)
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