2011 Hotel Investment Up 180% in the Americas

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Full-year 2011 deal volume forecast for the Americas to $16 billion

According to Jones Lang LaSalle Hotels, the volume of hotel investment transactions that closed in the Americas market in the first six months of 2011 reached $7.4 billion -- a robust increase of approximately 180 percent on the same prior-year period.

The numbers represent preliminary totals from Jones Lang LaSalle Hotels' Hotel Investment Highlights Americas Report due to be released later this month. The firm's research tracks hotel asset transactions in excess of $10 million, and excludes note sales, recapitalizations and foreclosures.

"Investors are aggressively re-entering the hotel market. Real estate investment trusts (REITs) have been trading at strong multiples and have been able to access the equity markets, while private equity funds have raised significant sums of capital and the debt markets are more active, which has led to the significant increase in activity. We now project full-year hotel trade levels to reach $16 billion, up from our previous forecast of $13 billion," said Arthur Adler, Managing Director and CEO-Americas of Jones Lang LaSalle Hotels.

"Big-ticket sales are back. The firm tracked 14 sales that transacted above the $100 million mark in 2011, the third-highest amount ever for the first six months of the year," added Bob Webster, Managing Director of Jones Lang LaSalle Hotels.

Deal volume was driven by single-asset hotel transactions which accounted for 90 percent of deal volume. The bulk of the single-asset trades consist of high-quality assets located in key urban markets with strong in-place cash flows.

New York City is at the forefront of this year's deal volume. Hotel transactions in the amount of $2.1 billion have closed in the city thus far in 2011. Based on the pipeline of deals in the market, such as the 597-key Paramount Hotel, deal volume is on track to potentially reach $4 billion this year--the highest level single-asset volume on record for Manhattan.

"While REITs accounted for 45 percent of the acquisitions volume during the first half of the year and were the most active buyer group overall, private equity investors, which were relatively silent during the downturn, have picked up steam. In the first quarter of 2011, private equity groups accounted for 25 percent of purchase volume, a figure which jumped to 46 percent in the second quarter of the year," said Webster.

The United States continues to be the dominant country in the Americas region for hotel transactions, accounting for 94 percent of the regional transaction volume. Another four percent of regional activity resulted from hotel trades in Canada. Brazil was the third most liquid investment market in the Americas recording $94 million in hotel transactions.

"Based on the pace recorded thus far in 2011, and large pending transactions such as Chatham Lodging Trust and Cerberus Capital Management, L.P.'s acquisition of 64 assets for approximately $1.125 billion, plus Pebblebrook Hotel Trust and Denihan Hospitality Group's agreement to invest in six Manhattan hotels for $910 million, we are confident that our updated transaction volume forecast of $16 billion for full-year 2011 will be met or exceeded," said Adler.

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