Investors Targeting Miami Hotels

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Global investors are expected to pump almost $750 million into Miami's hotel market this year, a 12 percent increase from a year ago, Jones Lang LaSalle predicts.

More than $200 million of hotels has already traded during the first quarter, surpassing the activity in the same quarter of 2012, JLL said in a report released last week to coincide with the Caribbean Hotel & Resort Investment Summit and Hotel Opportunities Latin America conferences in Miami.

"In the year ahead, we'll likely see more hotels trade hands than last year, but the lack of big-box hotel sales opportunities will keep Miami's transaction volume in check," said Gregory Rumpel, leader of JLL's hotel and hospitality group in Miami.
 

The $600 million spent in 2012 featured several high-profile transactions, including the sale of such "big box" properties as the Gansevoort, which was picked up by a consortium led by Starwood Capital Group; and the Miami Beach Resort & Spa, which sold to the Chetrit Group for $117 million.

But most of the activity was in boutique hotels in South Beach and Miami Beach, where 70 percent of the high end properties are independent and unassociated with a brand. Of the total transaction activity in Miami last year, 71 percent occurred in Miami Beach, a trend JLL expects to continue.

Since 2010 REITs, private equity and institutional investors have invested $1.6 billion into Miami, JLL said.

They are lured by Miami's growing tourist numbers, with almost 50 percent of overnight visitors coming from outside the United States. Over the last 13 years Miami has experienced a compound annual RevPAR growth rate (CAGR) of four percent, "significantly higher than the top 25 U.S. markets with the exception of San Francisco," JLL reports.

In the first quarter of 2013, "Miami fundamentals have continued to follow this positive growth trend witnessing a RevPAR increase of 16.7 percent to $192, driven by 12.2 percent growth in ADR and four percent growth in occupancy during the first quarter of 2012," JLL reports.

"The market is positioned to continue to outperform national averages, further solidifying its position as one of the top investment and hospitality markets," JLL v.p. Andrew Dickey said.