Hotel Valuations and Development Feasibility  ULI Fall Conference  October 26, 2011 Steve Haggerty – Global Head R.E. & De...
Hotel 101 – The Basics  Occupancy, ADR & RevPAR Source: Smith Travel Research
U.S. hotel transaction volume to increase to $16B in 2011 Source: Jones Lang LaSalle Hotels. Note: Transactions $10M and a...
Significant Sales in 2011
Don’t forget: You can copy-paste this slide into other presentations, and move or resize the poll.
U.S. market RevPAR and supply RevPAR performs best during periods of low annual supply increases Source: Smith Travel Rese...
Lodging REIT Cap Rates –  Reflect  or  Set  the Market? Source: Thompson, EDGAR Online, Morningstar, RW Baird, Morgan Stan...
"REIT Cap Rates Likely to Decline in 2009"  - April, 09 Hotel News Now  (A) "...I believe cap rates based o...
Capital trends: buyer and seller composition REITs dominate acquisitions of institutional grade assets Source: Jones Lang ...
Capital trends Lodging stock issuance  Source: Morgan Stanley
Capital trends U.S. hotel CMBS issuance Source: Commercial Mortgage Alert
U.S. hotel CMBS loans Source: Morningstar, Jones Lang LaSalle Hotels    Hypothetical three-year loan extensions
Current market attitudes Flight to quality to primary markets and best-in-class, top tier branded hotels in major secondar...
Leveraged IRR requirements generally contract Source:  Jones Lang LaSalle Hotels’  Hotel Investor Sentiment Survey  (April...
Don’t forget: You can copy-paste this slide into other presentations, and move or resize the poll.
Capital trends Hotel DPP sales  Source: A. Stanger & Co., Inc., Jones Lang LaSalle Hotels
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A Tale of Two Markets: Hotel Valuations and Hotel Development Feasibility (Greg Hartmann) - ULI Fall Meeting 102611

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  • Press F5 or use the tool bar to enter presentation mode in order to see the poll. http://www.polleverywhere.com/multiple_choice_polls/LTg0MTI2MTQx If you like, you can use this slide as a template for your own voting slides. You might use a slide like this if you feel your audience would benefit from the picture showing a text message on a phone. In an emergency during your presentation, if the poll isn't showing, navigate to this link in your web browser:
  • The survey represents the investment yield level required by respondents to consummate a transaction and the lowest cap rate (initial yield) they may accept in a transaction. Initial yield is defined as net operating income in the first year of trading divided by the sales price. These yields are those that investors seek, while yields required to successfully secure an investment may be lower than the HISS average. Accordingly, these yields should not be applied in any valuation or appraisal assignment.
  • Press F5 or use the tool bar to enter presentation mode in order to see the poll. http://www.polleverywhere.com/multiple_choice_polls/NzQ0MDMzNDQ If you like, you can use this slide as a template for your own voting slides. You might use a slide like this if you feel your audience would benefit from the picture showing a text message on a phone. In an emergency during your presentation, if the poll isn't showing, navigate to this link in your web browser:
  • A Tale of Two Markets: Hotel Valuations and Hotel Development Feasibility (Greg Hartmann) - ULI Fall Meeting 102611

    1. 1. Hotel Valuations and Development Feasibility ULI Fall Conference October 26, 2011 Steve Haggerty – Global Head R.E. & Development Hyatt Hotels & Resorts Michael Barnello – President & CEO LaSalle Hotel Properties Mathew Sparks – SVP Luxury Lodging Hilton Worldwide Karim Alibhai – Founder & Principal The Gencom Group Greg Hartmann, MAI, CHA – Moderator
    2. 2. Hotel 101 – The Basics Occupancy, ADR & RevPAR Source: Smith Travel Research
    3. 3. U.S. hotel transaction volume to increase to $16B in 2011 Source: Jones Lang LaSalle Hotels. Note: Transactions $10M and above. Excludes land site and casino deals Buy Sell Buy Sell
    4. 4. Significant Sales in 2011
    5. 5. Don’t forget: You can copy-paste this slide into other presentations, and move or resize the poll.
    6. 6. U.S. market RevPAR and supply RevPAR performs best during periods of low annual supply increases Source: Smith Travel Research, Jones Lang LaSalle Hotels
    7. 7. Lodging REIT Cap Rates – Reflect or Set the Market? Source: Thompson, EDGAR Online, Morningstar, RW Baird, Morgan Stanley, Jones Lang LaSalle Hotels
    8. 8. "REIT Cap Rates Likely to Decline in 2009" - April, 09 Hotel News Now (A) "...I believe cap rates based on TTM income are at their high points (in 3/09)" "So whether you are lowering your income on a TTM basis or forecasting 2009, you can safely anticipate most of those cap rates to trend downward through 2010" "Cap Rates Continue Trend Downward in Q-2" - June, 09 HVS Global Report (B) Annual EBITDA will have likely declined year over year by 25% to 30% on average. This would result in another 200-basis-point decline in cap rates from June to December (2009). "Bid/Ask Chasm Created by Buyers and Sellers" - November, 09 Hotel Business (C) “ private equity firms will have to either get comfortable with an 8% or lower cap rate in the short term if they want to buy now or we will likely see the public REITS starting to use their lower cost of capital to buy up those assets …. (long-term) we should see average cap rates remain in the 7 to 8% range. Recognizing Capital Trends - “On the Record ” Back in 2009
    9. 9. Capital trends: buyer and seller composition REITs dominate acquisitions of institutional grade assets Source: Jones Lang LaSalle Hotels
    10. 10. Capital trends Lodging stock issuance Source: Morgan Stanley
    11. 11. Capital trends U.S. hotel CMBS issuance Source: Commercial Mortgage Alert
    12. 12. U.S. hotel CMBS loans Source: Morningstar, Jones Lang LaSalle Hotels Hypothetical three-year loan extensions
    13. 13. Current market attitudes Flight to quality to primary markets and best-in-class, top tier branded hotels in major secondary markets High High Low Low Pricing Probability Primary market Full service Urban select service Best-in-class Top tier brand Secondary market Full service Select service Best-in-class Top tier brand Secondary market Full service Select service Non-strategic asset Secondary brand Tertiary market Full service Select service Non-strategic asset Top tier and secondary brands
    14. 14. Leveraged IRR requirements generally contract Source: Jones Lang LaSalle Hotels’ Hotel Investor Sentiment Survey (April 2011) U.S. average cap rate (initial yield) for new acquisition U.S. average leveraged IRR for new acquisition Cap rates remain lowest in international gateway markets U.S. average: 7.7% U.S. average: 18.4%
    15. 15. Don’t forget: You can copy-paste this slide into other presentations, and move or resize the poll.
    16. 16. Capital trends Hotel DPP sales Source: A. Stanger & Co., Inc., Jones Lang LaSalle Hotels

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