Hotel & Motel Management - December 27, 2007 - (Page 44) Local Knowledge National Coverage NN A » BY EMILY HEAEDITOR ASSOCI AT Exclusively Hospitality TPG Transactions T Portfolio and single asset transactions THE PLASENCIA GROUP, INC. Highs and lows expected for 2008 fter a stellar year of transaction activity in 2006, few lodging executives expected as furious a pace in 2007. Experts suggested in December 2006 that 2007 would remain strong, but transaction pace might slow as part of the industry’s cycle. But 2007 proved the naysayers wrong, led by portfolio sales large and small. “If you look at ’06 and ’07, in terms of long-term trends in transactions, it was really unprecedented in terms of total value of transactions, and a lot of it has to do with largeportfolio and real-estate investment trust transactions,” said Geoff Davis, president of HREC Investment Advisors. “But for the year in total, what’s continued to be robust is really the middle market.” The lodging industry was viewed as a wise investment in 2007 because plenty of capital was available for financing transactions and the Davis industry had seen four solid years of liquidity in HREC ADVISORS the market, said Bob Eaton, executive managing director of PKF Capital. “The debt component was really the lubricant that made a lot of these transactions happen because it was so readily available and so efficient,” he said. The success of 2007 also stems from strong supply and demand fundamentals in nearly every segment of the lodging industry, Eaton said. Although the sales of large portfolios and real-estate investment trusts might have headlined the industry in 2007, don’t expect the same in 2008. “Consolidation will continue in 2008, but to a lesser degree than we have seen in 2007,” said Steven Marx, Hotel Source president. Eaton expects overall transaction volume Eaton in 2008 to be lower because of increasing costs PKF CAPITAL of debt and slower revenue per available room growth. Many anticipate the credit crunch to affect the availability and pricing of capital, Davis said. Marx, however, is not as concerned about the matter. “Credit markets will continue to tighten, but experienced and savvy operators will grow their portfolios,” he said. Development Management Consultants Hotel development and management advisory services Capital Markets Group Debt and equity placement Sun Hospitality Select-service, single asset, and portfolio transactions Regent Street Sophisticated sales of distinctive hotels and resorts A THE PLASENCIA GROUP, INC. See Expectations | page 55 44 HOTEL & MOTEL MANAGEMENT | THE ADVISOR http://www.TPGhotels.com http://www.TPGhotels.com http://www.TPGhotels.com
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