I KNOW THIS IS OPTIMISTIC , BUT I BELIEVE THE TRANSACTION VOLUME WILL REACH PRE-COVID LEVELS BY THE END OF 2022 . THE REASON FOR THIS IS ALL THE EQUITY CHASING DEALS , FINANCING LOOSING UP , AND HOTEL PERFORMANCE RECOVERING SO AN INVESTOR CAN UNDERWRITE A CREDIBLE RETURN ON DAY ONE .
– ERIC GUERRERO
the same time , the ratio of deals that are on the market and close will trend higher . The 2021 sales year can be characterized as being very slow in Q1 , with a pick up in the first half of Q2 , then an outright explosion of listed and unlisted deals in the second half of Q2 and into Q3 . The 2021 Q2 and Q3 sales opportunities resulted in sellers with high expectations from the buying community , and prices at or above 2019 levels . The Delta variant definitely slowed this momentum down , acting as a bit of a gatekeeper on the opportunities coming to market , the expectations of the sellers and the eagerness of buyer ’ s capital .
Patrick Scholes , Gregory Miller , Truist Securities : Obviously San
Francisco , Chicago , New York are heavily out of favor . But you may see some more aggressive , higher risk type of companies , or some more aggressive private equity firms looking for bargains in those urban markets . I ’ m not getting any sense that the public hotel REITs are looking to increase their exposure to New York or Chicago or San Francisco , as they ’ ll still be net sellers out of those markets …
If hotels are more profitable and companies on a trailing 12-month can show greater EBITDA , that might get some folks off the sidelines who have perhaps been waiting for that moment to say , ‘ Hey , you know what , on a cap rate or EBITDA multiple , it is much more attractive for us to sell this year . Maybe the last two years we haven ’ t sold because we haven ’ t had great finances to show .’ That would help get some sellers off the sidelines because they ’ ll say investments are more attractive and they could get a better price for the asset .
Emil Iskandar , HVS Capital Markets : In the Western U . S ., buyer appetite is high . However , sellers are not as motivated to do deals and are holding prices very close to 2019 levels . Owners are expecting to recoup losses caused by the pandemic relatively quickly and their lenders are very accommodating .
Dan Hawkins , Berkadia : The greater Mid-Atlantic area has yielded decent sales activity throughout the pandemic . That momentum in the area is strong relative to our Northeast and Midwest counter parts . Suburban extended-stay and select-service hotels led these sales
trends for most of 2021 . Looking ahead , however , we see suburban full-service hotels that are located in submarkets where demand has returned – weekend SMERF demand and building weekday transient business demand – as the next lodging asset type that will garner
WE EXPECT THAT THE NUMBER OF DEALS HITTING THE MARKET WILL COOL . HOWEVER , AT THE SAME TIME , THE RATIO OF DEALS THAT ARE ON THE MARKET AND CLOSE WILL TREND HIGHER .
– DAN HAWKINS
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