AMERICAS Transaction volume across the Americas increased five-fold in 2010, reaching US$11.9 billion, while the average sale price soared compared to the dismal 2009, according to a new Jones Lang LaSalle Hotels report.
“Hotel investment is back,” says Arthur Adler, managing director and Americas CEO for JLLH. “Improving fundamentals, the breadth of equity capital and easing debt levels are generating further optimism. We expect deal volume to total at least US$13 billion in 2011 in the Americas.”
The average value of single-asset transactions increased from US$30.3 million in 2009 to US$51 million in 2010. Concurrently, the average price per key for single-asset trades jumped from US$129,500 to US$194,000, due to the preponderance of transactions occurring in major urban markets.
Portfolio transactions—which were largely absent in 2009—started to resurface in 2010, accounting for 27% of investment volume during the course of the year.
The reawakening of hotel debt capital markets is also influencing the rebound of hotel real estate deals. Now reentering the market in search of yield, the pool of prospective lenders has widened to include CMBS lenders, as well as insurance companies, foreign and domestic banks, and alternative lenders. The increase of active lenders has compressed spreads and improved structure and terms.
Lenders are sizing loans using debt yields between 9% percent and 13%, JLLH says.