U.S. hotel transaction volume reached US$5.1 billion through May 2012, representing the second-highest volume over the past four years, according to Jones Lang LaSalle Hotels (JLLH). The data excludes note sales, recapitalizations and foreclosures, as well as the US$1.9 billion Motel 6 transaction that has not closed yet.
The first five months of 2012 were only exceeded by the first five months of 2011, when REITs dominated purchases of prime urban assets for more than US$100 million. During that same period in 2011, total transaction volume was US$6.4 billion.
The average price per key for single assets that traded year-to-date 2012 topped US$194,000, 5% above the full-year 2011 level. This level far exceeds the average price per key recorded over the past several years.
Single-asset hotel transactions dominated the landscape, accounting for 70% of deal volume. High-quality assets with in-place cash flow located in key urban markets have made up the bulk of the hotel trades tracked thus far in 2012.
Private equity investors have become the most active hotel buyers, representing a shift from the first five months of 2011. “Private equity investors continue to make headlines and account for 52% of transaction volume, followed by REITs as the second-most acquisitive group, representing 25% of purchases by volume,” said JLLH Americas CEO Arthur Adler. “REITs remain active bidders for a number of hotel transactions, and are expected to be increasingly active in the market in 2012.”