Investment Overview of the U.S. Lodging Industry

Size: px

Start display at page:

Download "Investment Overview of the U.S. Lodging Industry"

Shana Porter
6 years ago
Views:

1 Investment Overview of the U.S. Lodging Industry June 7, 2005 Presented to: International Lodging Finance Council Cushman & Wakefield, Inc. 51 West 52nd Street New York, New York USA tel (212) fax (212) daniel_lesser@cushwake.com

Investment Overview of the US Lodging Industry Overview of Mid Year 2005 C&W Significant (Over $10 million) US Hotel Sales Analysis of Top Ten Sale Transactions By: Total Sale Price Total Sale Price

2 Investment Overview of the US Lodging Industry Overview of Mid Year 2005 C&W Significant (Over $10 million) US Hotel Sales Analysis of Top Ten Sale Transactions By: Total Sale Price Total Sale Price Per Room Total Number of Rooms Analysis of Most Active US Hotel Buyers and Sellers Return Analysis of Three Recent Significant US Hotel Sales Overview of Winter 2005 C&W Hotel Investor Survey Valuation/Pricing Challenges In Today s Market Answering the question What are cap rates on hotels? Property Highest and Best Use Condo Hotel-What is It Hotel Lending Risk Considerations In Today s Market

3 Select Significant 2005 U.S. Hotel Sales Property Location No. of Rooms S ale s P ric e Price/Room Buyer Seller P ark Central Hotel New York, NY 935 $215,000,000 $229,947 Highgate Holdings & Goldman Sachs Lehman Brothers Rihga Royal New York, NY 505 $183,000,000 $362,376 Blackstone Group Lehman Brothers Crowne P laza Royal P alm Hotel Miami Beach, FL 417 $127,500,000 $305,755 Falor Companies P eebles Atlantic Development Corp. Aston Waikiki Beach Hotel Honolulu, HI 716 $107,000,000 $149,441 Gaylord Entertainment Co. N/A Westin Hotel P rovidence, RI 364 $95,500,000 $262,363 P rocaccianti Group Rhode Island Convention Center Authority Hotel 71 Chicago, IL 454 $95,050,000 $209,361 Falor Companies Boykin Lodging/AEW P artners III, L.P. Wes tin Galleria Ho tel Dallas, TX 432 $ 95,000,000 $ 219,907 UBS Realty Inves to rs Hines Hilto n Gas lamp Quarter San Diego, CA 282 $ 85,000,000 $ 301,418 LaSalle Ho tel P ro perties S.D. Bridgewo rks LLC Va il M a rrio tt M o untain R e s o rt & S pa Va il, C O 345 $ 62,000,000 $ 179,710 Dia m o ndroc k Ho s pita lity C o. Va il R e s o rts Torrance Marriott Torrance, CA 487 $61,500,000 $126,283 DiamondRock Hospitality Co. Host Marriott Corporation Hilton Hotel & Executive Meeting Center * Long Beach, CA 393 $58,000,000 $147,583 HEI Hospitality Fund AEW Capital Management & Ensemble Investments LLC S a lt La ke C ity M a rrio tt Do wnto wn S a lt La ke C ity, UT 520 $ 49,500,000 $ 95,192 Dia m o ndroc k Ho s pita lity C o. Ho s t M a rrio tt C o rpo ra tio n Marriott Bethesda Bethesda, MD 407 $46,000,000 $113,022 Westbrook P artners & North View Investments Host Marriott Corporation Ceasars Tahoe Lake Tahoe, NV 440 $45,000,000 $102,273 Columbia Sussex Corp. Ceasers (Park Place) Entertainment Washington Terrace Hotel Washington DC 220 $44,250,000 $201,136 RLJ Amstar Group Doubletree O'Hare Rosemont, IL 369 $43,800,000 $118,699 Destination Hotels & Resorts/Lowe Enterprises N/A Hotel Monaco Denver, CO 189 $43,500,000 $230,159 P RISA Hotel LLC Kimpton Hotels & Restaurants LLC Miramar Hotel Santa Barbara, CA 204 $43,000,000 $210,784 Ty Warner Hotels & Resorts Morgans Hotel Group Four P oints by Sheraton Bethesda, MD 164 $41,000,000 $250,000 P atrinely Group BethRam Embassy Suites St. Louis-Downtown St. Louis, MO 297 $38,000,000 $127,946 P innacle Entertainment Inc. FelCor Lodging Trust Inc. Westin Governor Morris Morristown, NJ 224 $35,100,000 $156,696 Innkeepers USA Trust N/A C ro wne P la za Unite d Natio ns New Yo rk, NY 300 $ 34,000,000 $ 113,333 Halifa x Ho ldings a ffilia te o f Highga te Ho ldings Interc o ntine ntal Ho tels Group Embassy Suites P hoenix-scottsdale Scottsdale, AZ 270 $33,000,000 $122,222 Eagle Hospitality P roperties Trust Inc. P acific Coast Capital P artners LLC Golden Nugget Laughlin Laughlin, NV 300 $31,000,000 $103,333 Barrick Gaming Corp. P oster Financial Group Inc. Hilto n Co nco rd Co nco rd, CA 329 $ 29,150,000 $ 88,602 Inters tate Ho tels & Res o rts Hanfo rd Ho tels Malibu Beach Inn Malibu, CA 47 $29,000,000 $617,021 Geffen Companies Vicky and Marty Cooper M ira m o nte R e s o rt & S pa India n We lls, C A 215 $ 29,000,000 $ 134,884 Destinatio n Ho tels & R e s o rts /Lo we Enterpris e s P re fe rre d Ho te ls & R e s orts Onyx Hotel Boston, MA 112 $28,600,000 $255,357 LaSalle Hotel P roperties N/A Grafton on Sunset West Hollywood, CA 108 $25,500,000 $236,111 LaSalle Hotel P roperties Le Songe LLC/Outrigger Lodging Services French Lick Springs Resort & Spa French Lick, IN 470 $25,000,000 $53,191 N/A Boykin Lodging Co.

4 Select Significant 2005 U.S. Hotel Sales Continued Property Location No. of Rooms S ale s P ric e Price/Room Buyer Seller Hilto n J acks o nville Riverfro nt J acks o nville, TX 292 $ 22,000,000 $ 75,342 MHI Ho s pitality Co rp. AFL-CIO Building Inves tment Trus t Hilto n C o lle ge S tatio n & C o nfe re nce C e nter C o lle ge S tatio n, TX 303 $ 21,000,000 $ 69,307 J ER P a rtners La ne Ho s pitality & LNR P ro perty C orp. Hyatt Regency Oak Brook Oak Brook, IL 423 $20,500,000 $48,463 P yramid Advisors Hyatt Equities LLC Hilton Monterey Monterey, CA 204 $20,000,000 $98,039 Ocean Park Hotels Meristar Hospitality Hilto n Santa Fe Santa Fe, NM 157 $ 18,200,000 $ 115,924 As hfo rd Ho s pitality Trus t N/A Doubletree Guest Suites Washington DC 105 $18,000,000 $171,429 Innkeepers USA Trust N/A Holiday Inn Montvale, NJ 190 $18,000,000 $94,737 Innkeepers USA Trust N/A Sherato n Annapo lis Annapo lis, MD 196 $ 18,000,000 $ 91,837 Highland Ho s pitality Co rp. Grubarges -Annapo lis LLC Ho liday Inn B a y B ridge Eme ryville, C A 280 $ 16,000,000 $ 57,143 Angelo Go rdo n & R IM Ho s pitality J o hn Q. Ham m o ns Ho tels Hilto n Garde n Inn Fo rt M yers, FL 126 $ 14,500,000 $ 115,079 Equity Inns Inc. Unive rs ity C o m m o ns Ho tel LP Ho liday Inn Expres s Sco tts dale, AZ 170 $ 12,000,000 $ 70,588 Campbell Ho ldings Sco tts dale Lo dging LLC Sheraton Denver Tech Hotel Denver, CO 263 $11,500,000 $43,726 St. Investments LLC/The Hotel Group Opportunity Fun Starwood Hotels & Resorts Worldwide Holiday Inn Airport-Marina Sarasota, FL 180 $10,000,000 $55,556 Cay Clubs N/A Hampton Inn Columbia, MD 83 $10,000,000 $120,482 Innkeepers USA Trust N/A

5 Top Ten Select Significant 2005 U.S. Hotel Sales - By Estimated Sales Price Property Location No. of Rooms Es timate d Sales Price Estimated Price/Room Buyer Seller Park Central Hotel New York, NY 935 $215,000,000 $229,947 Highgate Holdings & Goldman Sachs Lehman Brothers Rihga Royal New York, NY 505 $183,000,000 $362,376 Blackstone Group Lehman Brothers Crow ne Plaza Royal Palm Hotel Miami Beach, FL 417 $127,500,000 $305,755 Falor Companies Peebles Atlantic Development Corp. Aston Waikiki Beach Hotel Honolulu, HI 716 $107,000,000 $149,441 Gaylord Entertainment Co. N/A Westin Hotel Providence, RI 364 $95,500,000 $262,363 Procaccianti Group Rhode Island Convention Center Authority Hotel 71 Chicago, IL 454 $95,050,000 $209,361 Falor Companies Boykin Lodging/AEW Partners III, L.P. Westin Galleria Hotel Dallas, TX 432 $95,000,000 $219,907 UBS Realty Investors Hines Hilton Gaslamp Quarter San Diego, CA 282 $85,000,000 $301,418 LaSalle Hotel Properties S.D. Bridgew orks LLC Vail Marriott Mountain Resort & Spa Vail, CO 345 $62,000,000 $179,710 DiamondRock Hospitality Co. Vail Resorts Torrance Marriott Torrance, CA 487 $61,500,000 $126,283 DiamondRock Hospitality Co. Host Marriott Corporation

6 Top Ten Select Significant 2005 U.S. Hotel Sales - By Estimated Sales Price Per Room Property Location No. of Rooms S ale s P ric e Price/Room B uye r S e lle r Malibu Beach Inn Malibu, CA 47 $29,000,000 $617,021 Geffen Companies Vicky and Marty Cooper Rihga Royal New York, NY 505 $183,000,000 $362,376 Blackstone Group Lehman Brothers Crowne Plaza Royal Palm Hotel Miami Beach, FL 417 $127,500,000 $305,755 F a lo r C o m panie s P e e ble s Atla ntic Develo pme nt C o rp. Hilton Gaslamp Quarter San Diego, CA 282 $85,000,000 $301,418 LaSalle Hotel P roperties S.D. Bridgeworks LLC Westin Hotel P rovidence, RI 364 $95,500,000 $262,363 Procaccianti Group Rhode Island Convention Center Authority O n yx H o t e l B o s t o n, M A 112 $28,600,000 $255,357 LaSalle Hotel P roperties N/A Four Points by Sheraton Bethesda, MD 164 $41,000,000 $250,000 P atrinely Group BethRam Grafton on Sunset West Hollywood, CA 108 $25,500,000 $236,111 LaSalle Hotel P roperties Le Songe LLC/Outrigger Lodging Services Hotel Monaco Denver, CO 189 $43,500,000 $230,159 P RISA Hotel LLC Kimpton Hotels & Restaurants LLC P ark Central Ho tel New Yo rk, NY 935 $215,000,000 $229,947 Highgate Holdings & Goldman Sachs Lehman Brothers

7 Top Ten Select Significant 2005 U.S. Hotel Sales - By Size (Number of Rooms) Property Location No. of Rooms Sales Price Price/Room B uye r S e lle r P ark Central Hotel New York, NY 935 $215,000,000 $229,947 Highgate Holdings & Goldman Sachs Lehman Brothers Aston Waikiki Beach Hotel Honolulu, HI 716 $107,000,000 $149,441 Gaylord Entertainment Co. N/A Salt Lake City Marriott Downtown Salt Lake City, UT 520 $49,500,000 $95,192 DiamondRock Hospitality Co. Host Marriott Corporation Rihga Royal New York, NY 505 $183,000,000 $362,376 Blackstone Group Lehman Brothers Torrance Marriott Torrance, CA 487 $61,500,000 $126,283 DiamondRock Hospitality Co. Host Marriott Corporation French Lick Springs Resort & Spa French Lick, IN 470 $25,000,000 $53,191 N/A Boykin Lodging Co. Hotel 71 Chicago, IL 454 $95,050,000 $209,361 Falor Companies Boykin Lodging/AEW P artners III, L.P. Ceasars Tahoe Lake Tahoe, NV 440 $45,000,000 $102,273 Columbia Sussex Corp. Ceasers (P ark P lace) Entertainment We s tin Galle ria Ho tel Dalla s, TX 432 $95,000,000 $219,907 UBS Realty Investors Hines Hyatt Regency Oak Brook Oak Brook, IL 423 $20,500,000 $48,463 P yramid Advisors Hyatt Equities LLC

8 Analysis of Recent Significant US Hotel Sales Transaction #1 Transaction #2 Transaction #3 Date of Sale Property Size (No. Rooms) Purchase Price Per Room $185,000 $160,000 $285,000 % of Replacement Cost 70-80% 70-80% 75-85% T-12 Cap Rate 5.5% 7.30% 7.20% Unlevered IRR (5 Year) 12.10% 10.50% 10.60% Levered IRR (5 Year) 21.10% 19.90% 17.60%

9 Cushman & Wakefield Hospitality & Gaming Group Winter 2004/2005 Investor Survey Going-In Terminal Internal Rate Management CAP Rate CAP Rate of Return Fees Reserves LUXURY/RESORT HOTELS Low 8.0% 8.5% 10.5% 2.5% 4.0% High 11.5% 11.5% 15.0% 5.0% 5.0% Average 9.9% 10.2% 13.1% 3.3% 4.4% FULL SERVICE HOTELS Low 8.0% 9.0% 11.0% 2.5% 4.0% High 11.5% 11.5% 15.5% 5.0% 5.0% Average 10.4% 10.7% 13.3% 3.2% 4.6% LIMITED SERVICE HOTELS Low 9.5% 9.5% 12.0% 3.0% 4.0% High 13.5% 13.5% 17.0% 6.0% 5.5% Average 11.4% 11.8% 14.3% 4.5% 4.8%

10 Hotel Cap Rates Trailing 12 Months Implied Cap Rate Assumed $50 Million Sale $ % of Gross Revenues Gross Revenues $20,000, % GOP Before Mgt Fees and Reserves $6,000, % 12.0% Base Management Fee $500, % Incentive Management Fee $200, % Reserve for Replacement $800, % NOI After Base Management Fee $5,500, % 11.0% NOI After Base & Incentive Management Fee $5,300, % 10.6% NOI After Base & Incentive Management Fee & Reserves $4,500, % 9.0% Projected Year One Implied Cap Rate Assumed $50 Million Sale $ % of Gross Revenues Gross Revenues $21,000, % GOP Before Mgt Fees and Reserves $6,930, % 13.9% Base Management Fee $525, % Incentive Management Fee $210, % Reserve for Replacement $840, %

11 Property Highest and Best Use Hotel Economics NOI $6,500,000 Cap Rate 9.0% Market Value $72,222,222 Residential Conversion (Shell Building) Building Square Foot 210,000 Market Value Per Squ $425 Market Value $89,250,000

12 Condo Hotel - What Is It? Traditional Hotel Where Each Hotel Room Is A Deeded Condominium Unit (Condo- Hotel) Traditional Transient Hotel Rooms Owned By Individual Investors Mandatory Requirement Or Option That Unit Be In Hotel Rental Pool Traditional Hotel With An Adjoining Condominium Residential Component That Offers Hotel Services (Not A Condo Hotel) Transient Hotel Owned In Fee Residential Condominium Component Primary Residence Apartments No Option To Place In A Rental Pool Hotel Services And Amenities Available To Residential Condominium Apartment Residents Traditional Hotel With A Component Of Condominium Units That May Or May Not Be Included In The Traditional Hotel Rental Pool AND An Adjoining Condominium Component That Offers Hotel Services (Has A Condo-Hotel Component) Transient Hotel Owned In Fee Residential Condominium Component Vacation/Second Home Residence Apartments Option To Place Unit In Hotel Rental Pool When Not In Use Hotel Services And Amenities Available To Condominium Apartment Owners

13 Hotel Lending Risk Considerations Event Risk Labor Unrest Rising Cost Of Employee Benefits Rising Energy Costs Continued Room Pricing Pressure From Internet Websites Housing Market Bubble Rising Interest Rates Economic Recession

Investment Overview of the U.S. Lodging Industry

Investment Overview of the U.S. Lodging Industry Presented to: NYSSCPA/FAE Restaurant and Hospitality Breakfast Conference November 7, 2007 Daniel H. Lesser Senior Managing Director Industry Leader Hospitality