SPECIAL REPORT
buyers ’ attention .
Preston Reid , Berkadia : Florida is one of , if not the top , market for hotel investment in the country . We have never seen more deals on the market and closing than in late 2021 . However , there are some challenges as owners are holding out for lofty pricing . Said another way , we are pricing some deals at record pricing that will ultimately not trade as owners decide to hold .
Spencer Scott , Berkadia : In Arizona and the Southwest , the appetite for acquisition is strong . Active and new investors to the region are following business and leisure demand towards mountain and desert submarkets . Recent exploration into leisure hotels has demystified past concerns for various market seasonality . Sensitivity to labor shortages and other growing costs draws attention to Californiaadjacent states .
WHAT ARE THE ONGOING BARRIERS TO DEAL MAKING , AND HOW LIKELY ARE THEY TO BE OVERCOME ?
Evan Hurd , Stephen O ’ Connor , RobertDouglas : Unrealistic expectations for sale prices . In late 2021 , the once expected COVID discounts seem to be as scarce as hen ’ s teeth . Some are even expecting a premium for having done well during the pandemic . We call it the fire sale that never happened .
The bid-ask spread should tighten as more assets go on the market , especially as loans that have been extended finally come calling . Lender fatigue , the buck must land here , may induce property owners to sell existing assets rather than negotiate refinancing . Mounting PIP and capex requirements should result in more assets coming to market , as brands are increasing pressure to complete COVIDdelayed renovations , and deferred maintenance piles up .
Eric Guerrero , HVS : COVID is the biggest barrier and any spike in cases from a new variant could derail deal making . Financing is another obstacle , but with it becoming more available recently , I don ’ t see it being a barrier anymore .
Kevin Mallory , CBRE Hotels : Investor and lender bandwidth is being stretched as the deal market broadens . Human capital is an issue for investors and lenders . While deals in the market will trade , specific investors or lenders whose
IN LATE 2021 , THE ONCE EXPECTED COVID DISCOUNTS SEEM TO BE AS SCARCE AS HEN ’ S TEETH . SOME ARE EVEN EXPECTING A PREMIUM FOR HAVING DONE WELL DURING THE PANDEMIC . WE CALL IT THE FIRE SALE THAT NEVER HAPPENED .
– STEPHEN O ’ CONNOR investment parameters might align with an opportunity may not be able to act if otherwise at capacity for their people .
Lindsey deButts , Berkadia : The bid / ask gap between buyers and seller remains a challenge . The market never really saw the wave of distressed assets that many investors expected . If a property has weathered the COVID-storm , so to speak , sellers are not willing to take the discount to 2019 values that many buyers were hoping for .
For the debt side , property performance in 2019 and ramp up post-COVID will be critical . The further we move into recovery , the more important the 30-60-90 days of past performance will be on underwriting . Right now , many lenders are willing to de-emphasize 2020 performance , emphasizing instead proforma income over in
60 hotelsmag . com January / February 2022