Everything is worth an ask
The havoc wreaked on hotel investors by the recession has made motivations much harder to guess and, in some cases, much more nuanced. A seller may be looking for an opportunity to exit a troubled asset or may be thinking about trading up and chasing another property in the market, which requires disposing of a current one quickly. A buyer may believe that current circumstances present an extraordinary buying opportunity to grab a property that was previously, and may soon again, be out of reach. An investor who previously required absolute control may do the unthinkable and be willing to share the wheel with a joint venture partner who gives quick distribution in a new market or access to a new property type. A lender may now conclude that “pretend and extend” has run its course.
With so many market players having been displaced from their normal comfort zones, it is harder than ever to know what their ultimate end game may be and what they may find acceptable. Some participants are looking for more legal and financial certainty and are willing to pay handsomely for it, while others are willing to swallow a little more risk to seize a once-in-a-cycle opportunity.
Not too long ago, a client was chasing a deal that seemed hopelessly unrealistic. By every historical perspective, the deal did not stand a chance of ever getting done. The risks seemed too high and the uncertainty too great. But even though the client said, “I would never agree to that if I were him,” he wasn’t afraid to ask the question. To everyone’s astonishment, the other side said yes, and a creative and unusual deal was struck.
So the next time the solution to a deal seems far-fetched or extreme, don’t negotiate against yourself and presume that you know more about the other guy than he does — ask the question. You might be surprised at the answer you get.