Investors’ ‘buy’ intentions at six-year high.
NEW YORK–Jones Lang LaSalle Hotels released updated metrics on the U.S. hotel market, reporting that volume reached US$4.9 billion through May—triple the volume recorded during the first five months of 2010. This is according to Jones Lang LaSalle Hotels’ proprietary database, which tracks asset transactions US$10 million and above, and excludes note sales, recapitalizations and foreclosures.
“We are seeing a striking turnaround in the market for hotel transactions. Building on improving lodging fundamentals which gained strength last year, the volume of capital flowing to hotel real estate has ignited as acquisitive investors re-entered the market in full force, leading to a 170 percent increase in transaction levels,” said Arthur Adler, managing director and CEO-Americas for Jones Lang LaSalle Hotels.
Single-asset hotel transactions dominated the landscape, accounting for 85 percent of deal volume. High-quality assets with in-place cash flow located in key urban markets have made up the bulk of the hotel trades tracked thus far in 2011.
Real estate investment trusts (REITs) continue to make headlines and accounted for a lofty 61 percent of single-asset transaction volume, followed by private equity investors, the second most acquisitive group, representing 25 percent of purchases by volume.
“Values are improving across all metrics,” said Robert Webster, a managing director for Jones Lang LaSalle Hotels. “The average single-asset transaction size jumped to US$84 million during the first five months of 2011, doubling on the prior-year period. The average price per key of single assets that transacted during the period increased 27 percent to top US$234,000.”
Jones Lang LaSalle Hotels’ Hotel Investor Sentiment Survey, also released today, reveals that investors’ ‘buy’ sentiment reached a six-year high in the U.S., with 59 percent of respondents indicating that their primary investment intention over the next six months is to acquire assets. The firm’s survey also highlights that of the 92 lodging markets tracked, the ten cities garnering the highest interest for acquisitions are all located in the Americas. The survey is directed toward the world’s 6,000+ leading hotel investors and owners.
“Based on the pace recorded thus far in 2011, we are confident that transaction volume forecast of US$13 billion for full-year 2011 will be met or exceeded as momentum in the market further accelerates,” said Adler.