SPECIAL REPORT
pockets entering the space , and able to think about and structure strategies that meet borrowers ’ objectives in the face of current macroeconomic conditions . Meikleham : I assume it will be from
the public markets . Broad : Assumable debt and seller financing will become more common as a way for sellers to maintain pricing and , overall , keep deals flowing . H : Who are the most active buyers , and why ? Hecker : Private equity seems to be everywhere now and taking an interest in the hospitality sector . Sovereign wealth funds , as well . Human : Europe is looking pretty interesting for dollar-based-buyers , but it ’ s hard to see the PE funds being particularly active in the near term . That will , of course , change if there is distress . We will probably see the greatest activity from longstanding European investors who do not require significant leverage and see long-term value .
Meikleham : I believe any group with cash is going to be very selective in the coming year . Most of the buyers that I ’ ve talked to believe there will be more distressed assets to buy and distressed loan sales to buy , as well as rescue capital opportunities in the next two to three years . Spencer Scott , Berkadia : We anticipate the most active buyers in 2023 will be private cash buyers .
ASSUMABLE DEBT AND SELLER FINANCING WILL BECOME MORE COMMON AS A WAY FOR SELLERS TO MAINTAIN PRICING AND , OVERALL , KEEP DEALS FLOWING .
– ANDREW BROAD
The common themes surfacing in Q4 are increased inquiries from family firms , inquiries from 1031 exchange buyers and outreach from entrepreneurial firms with “ fundraised ” ready to go . Ryan Lindgren , Berkadia : All cash buyers and / or buyers with deep banking relationships have a material competitive advantage over the rest of the market right now . The advantage of all-cash is obviously the elimination of expensive debt , but it also provides certainty to a seller and could speed up the closing timeline . Buyers with deep banking relationships are getting out-of-market debt terms that are 300-400bps inside of market debt , giving them a clear advantage over groups that don ’ t have those relationships .
Broad : As always , property fundamentals like asset condition and quality , location , market potential and so on drive the most successful deals . Motivated all-cash buyers or low leverage buyers may win the day in the present financial environment , as well as those buyers who are creative with their capital structure .
H : Predict transaction volumes in North America versus EMEA versus Asia Pacific ? Hecker : I can ’ t get quantitative about volume , but North America is typically the biggest market and is expected to remain so . Asia Pac remains limited primarily to Japan and Australia , with smatterings of deals in Thailand , Indonesia , Malaysia and the Maldives . Europe is somewhere in between . Human : Volume will almost certainly remain highest in North America – it always is and it is the market that sees the quickest correction in a downturn . Then Europe . Middle East will continue to see low levels of transaction activity . Petiz : North America is expected to continue to lead transactional volume due to its sounder and more stable economic position , especially as it relates to energy and utility prices .
We expect EMEA and Asia Pac to see a natural deceleration mainly due to geopolitical issues . However , there will be regional standouts such as Spain , Portugal and Italy in Europe and India and Australia / New Zealand in Asia Pacific .
H : How much leverage is being required to get deals done ? Hecker : 60 % is the norm . Human : That depends .
70 hotelsmag . com Jan / Feb 2023