Worldwide Hotel Transaction Volume to Hit $32 Billion in 2013
Debt availability to reach highest level since 2007
CHICAGO, Jan. 9, 2013
CHICAGO, Jan. 9, 2013 /PRNewswire/ --Jones Lang LaSalle's Hotels and
Hospitality experts expect worldwide hotel deal volume to reach $32 billion in
2013, as increased transparency around the world gives way to a more
globalized arena for investors. As the investment landscape continues to
transform, a strong bench of buyer groups will remain interested in acquiring
assets, according to initial results from Jones Lang LaSalle's annual Hotel
Investment Outlook report, to be released in late January. Cross-border
capital, which accounted for 30 percent of global hotel investment in 2012,
could also accelerate in 2013.
Previous economic cycles have provided few clues as to what lies ahead for
hotelsin the coming year, as new indicators of a coupled global economy
define investment roadmaps:
oGlobal debt availability is expected to be at its highest level since 2007
oPrivate equity and REITs will dominate purchasing activity with 60 percent
of the global market
oThe biggest sellers will be bank-induced refinancing challenges
"Inadvertent hotel owners, like banks and receivers, will continue to drive a
significant share of hotel product to market. We also expect institutional
investors to liquidate select non-core assets that will create opportunities
for value-add investors," said Mark Wynne-Smith, Global CEO of Jones Lang
LaSalle's Hotels & Hospitality Group. "While buyers have indicated a greater
intent to purchase in 2013, the global economic uncertainty will keep a
ceiling on transaction volumes."
Of the active players, private equity investors will continue to lead the
pack, being in the favorable position of achieving opportunistic returns
through their significant buying power and risk tolerance. REITs, net buyers
throughout 2012, will continue to make headline acquisitions of core
properties in gateway markets. This is particularly true in North America and
Asia Pacific where two new hotel REITs in Singapore have been listed. Funds
from the Middle East will continue to scour the globe for trophy assets
looking for opportunities to export capital in 2013.
Debt: progress and growth, or stagnation?
The global availability of debt is expected to be at the highest level in 2013
since 2007, notwithstanding regional variances. Large banks, traditionally key
providers of real estate debt financing, don't have sufficient balance sheet
capacity to lend significant sources of new money. Sovereign wealth funds,
mutual funds and insurance companies, however, will fill the gap as providers
of senior and in some instances mezzanine debt.
Hotel operating fundamentals reassure outlook
Hotel operating fundamentals are generally holding strong, and in some cases
are outperforming expectations, given the economic pressures. At the forefront
of growth in revenue per available room (RevPAR) in 2013 are the world's
gateway and resource-rich cities, which underscore the attractiveness
high-quality, income-producing hotel real estate provides as an asset class.
Global travellers will boost demand and average room rates in markets such as
Istanbul, Munich, San Francisco, Boston, Sydney and Singapore, which have
already enticed investor interest and will be the markets to watch in 2013.
A long road ahead
Transaction levels, capital values, hotel trading fundamentals and rents are
generally improving against a backdrop of downward revisions to economic
growth. However, given the amount of stimulus that continues to be injected
into the world economy, economic growth rates in the coming years are expected
to slowly improve.
"Investment strategies moving forward will be more structural and strategic
than cyclical, impacting what we've always deemed as the 'typical' ebb and
flow of the transaction market," concluded David Green-Morgan, Global Capital
Markets Research Director for Jones Lang LaSalle. "Flexible investors and
operators who can calculate risk and adapt the quickest will be the most
successful next year."
Jones Lang LaSalle's Hotels & Hospitality Group's annual Hotel Investment
Outlook report will be broadly released in January 2013. To request a copy of
the full report, please subscribe here.
Jones Lang LaSalle's Hotels & Hospitality Group serves as the hospitality
industry's global leader in real estate services for luxury, upscale, select
service and budget hotels; timeshare and fractional ownership properties;
convention centers; mixed-use developments and other hospitality properties.
The firm's more than 265 dedicated hotel and hospitality experts partner with
investors and owner/operators around the globe to support and shape investment
strategies that deliver maximum value throughout the entire lifecycle of an
asset. In the last five years, the team completed more transactions than any
other hotels and hospitality real estate advisor in the world totaling nearly
US$25 billion, while also completing approximately 4,000 advisory and
valuation assignments. The group's hotels and hospitality specialists provide
independent and expert advice to clients, backed by industry-leading research.
For more news, videos and research from Jones Lang LaSalle's Hotels &
Hospitality Group, please visit: www.jll.com/hospitality
About Jones Lang LaSalle
Jones Lang LaSalle (NYSE: JLL) is a financial and professional services firm
specializing in real estate. The firm offers integrated services delivered by
expert teams worldwide to clients seeking increased value by owning, occupying
or investing in real estate. With 2011 global revenue of $3.6 billion, Jones
Lang LaSalle serves clients in 70 countries from more than 1,000 locations
worldwide, including 200 corporate offices. The firm is an industry leader in
property and corporate facility management services, with a portfolio of
approximately 2.1 billion square feet worldwide. LaSalle Investment
Management, the company's investment management business, is one of the
world's largest and most diverse in real estate with $47 billion of assets
under management. For further information, please visit
SOURCE Jones Lang LaSalle
Contact: Katie Sershon, +1-312-228-3127, Katie.Sershon@am.jll.com; or Paige
Steers, +1-312-228-2797, Paige.Steers@am.jll.com
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