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Are quiet deals now hard to find?

Are quiet deals now hard to find?

It is the sweet deal that everyone is looking for?not yet on the market, with a motivated seller and a property with unrealized value.


I?m constantly asked if I know of any off-market deals, but even as transaction activity picks up (and it has, especially in the last 60 days), the quiet deal seems harder than ever to find. Where are those deals? In the United States, we have so much hungry capital chasing so few deals these days that owners (which include former lenders) see the value in taking their properties to market, heavily promoting them, and letting the pack of buyers (which includes many international players) bid up the price, and commit to a short diligence period and a quick and near-certain close.


While a lot of would-be buyers have lamented the fact that by the time a deal makes it to market, the real opportunity is gone, it?s hard to blame the sellers for loudly hawking their wares to the throng of interested buyers in an effort to get the best deal. Although the current absence of off-market deals is, no doubt, frustrating for buyers, it is a natural and necessary step to rebuilding a thriving hotel market that features both public and private transactions.


Off-market deals only make sense when there are lots of public deals against which a seller can measure the value of its property and the quality of the terms being offered.  When there are few other deals being done in the open to compare to, a seller cannot be comfortable that the deal that it is making makes sense. Moreover, with eager buyers making offers with few contingencies and an expedited closing schedule, sellers have little incentive to commit to exclusivity early, accept the uncertainty of a long diligence period, and do an off-market deal.


With cap rates on recently traded properties ranging from ?sub-3 to 7s,? if you are thinking of being a seller, why do anything different at this point? Although this leaves opportunistic buyers grumbling, there is a silver lining to this cloud?an active and open market provides, over time, the information necessary to give sellers the confidence that they can return to making smart off-market, or narrowly-marketed, deals.

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