Magazine article Mortgage Banking

JLL: Strong Hotel Lending, Plentiful Equity Yield a Liquid Market

Magazine article Mortgage Banking

JLL: Strong Hotel Lending, Plentiful Equity Yield a Liquid Market

Article excerpt

Midway through 2014, the lodging sector continues to keep investors and lenders bullish. The sector could reach $25 billion in transaction volume in 2014, reported Jones Lang LaSalle (JLL), Chicago. Drivers include an abundance of equity capital led by private-equity funds and real estate investment trusts (REITs) as well as other investor types, including offshore buyers.

"With $8.3 billion already tallied in hotel transactions in the U.S., 2014 is on track to contribute to the hotel sector's momentum," said Arthur Adler, managing director of JLL Hotels and Hospitality Group. "There is plenty of available capital chasing assets ranging from high-profile full-service hotels to select-service portfolios to resorts in markets across the spectrum."

Private equity continues to lead the pack, accounting for one-third of transactions so far this year, JLL said. Equity funds' primary targets include large select-service portfolios, luxury resorts and big-ticket full-service hotels.

REITs remain a dominant sector player; their purchasing volume could reach $5 billion this year, Adler said. REITs generally target high-quality branded assets in primary markets.

Offshore investment may reach $3 billion in 2014. "Asian investors were the most active in 2013, and for 2014 buyers from the Middle East are in the lead," JLL reported.

Resorts suffered during the downturn as demand fundamentals for two of their largest guest segments--leisure travelers and group business--took longer to recover. …

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