19 April 2011
The transaction market is heating up, and I am still getting calls and comments about my interview with Eric Stoessel in the National Real Estate Investor last month, where we discussed how the hotel transaction market is poised for a big turnaround.
I am also getting calls about Meet the Money®, the hotel finance conference that will take place in two weeks in Los Angeles. Registrants want to know: will debt and equity players be there? (The answer is, yes!)
But, first things first.
Hotel Distress Buys: ‘There’s Something for Everyone Right Now’
Eric called me shortly after the $1.28 billon Ashford Hospitality Trust joint-venture acquisition of Highland Hospitality’s 28-hotel portfolio deal closed last month, He wanted to know if more portfolio sales like the Ashford Hospitality Trust deal would be coming online. What did I think?
My answer: Absolutely! Will distressed hotel deals of all sizes be made this year? Absolutely!
Hotel values increased 10% to 15% in 2010 and prices are trending up. Industry fundamentals are improving, there is little new supply and there is virtually unlimited equity on the sideline. For opportunistic investors looking for value, it won’t get better than this. The time is now!
As I told Eric in our interview:
“We’re less likely to see as many bankruptcies and foreclosures as we saw in the 1990s, but we’re more likely to see recapitalizations — meaning fresh capital investments, discounted payments, note sales, restructuring arrangements — where the new investor gets the lion’s share or all the equity.”
Eric and I discussed why how these kinds of deals are often good for the borrower as it may prevent negative tax consequences, or offer some forgiveness of indemnity. Sometimes the original borrower is left with some real economic interest, but the ownership structure generally favors the capital coming in. We discussed why note sales often work for lenders and what kinds of investors are doing deals. We covered a lot of ground in a short interview.
Click here to read the National Real Estate Investor article entitled, Hotel Distress Buys: ‘There’s Something for Everyone Right Now’.
There is no typical scenario for how investors and distressed borrowers come together to discuss distressed hotel deals, but you can be sure that providers and consumers of capital, and people looking to do deals will be at Meet the Money® 2011, May 2-4, 2011 in Los Angeles.
Meet the Money® is one of the “most efficient” hotel investment conferences. Attended by senior level executives, coming to “do business,” this conference is always a reliable venue for providers and consumers of capital. But the timing and the dynamics for the Conference this year are particularly exciting. After a long drought of transactions and finance, deals are back! Simply put, investment opportunities are not going to get better than this, so you need to figure out how to find transactions now, and finance them now.
The timing is NOW. Even a delay of a few weeks or months may mean you miss out. To get more information and register for Meet the Money®, go to www.MeetTheMoney.com.
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This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer, signing off. We’ve done more than $87 billion of hotel transactions and have developed innovative solutions to help investors be successful in bidding for hotel acquisitions, and helping investors and lenders to unlock value from troubled hotel transactions. Who’s your hotel lawyer?
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Our Perspective. We represent hotel lenders, owners and investors. We have helped our clients find business and legal solutions for more than $125 billion of hotel transactions, involving more than 4,700 properties all over the world. For more information, please contact Jim Butler at jbutler@jmbm.com or 310.201.3526.
Jim Butler is a founding partner of JMBM and Chairman of its Global Hospitality Group®. Jim is one of the top hospitality attorneys in the world. GOOGLE “hotel lawyer” and you will see why.
JMBM’s troubled asset team has handled more than 1,000 receiverships and many complex insolvency issues. But Jim and his team are more than “just” great hotel lawyers. They are also hospitality consultants and business advisors. For example, they have developed some unique proprietary approaches to unlock value in underwater hotels that can benefit lenders, borrowers and investors. (GOOGLE “JMBM SAVE program”.)
Whether it is a troubled investment or new transaction, JMBM’s Global Hospitality Group® creates legal and business solutions for hotel owners and lenders. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them.