Our Atlanta real estate partner, Michael Ward, was recently interviewed by National Real Estate Investor magazine for an article that delves into hotel investment trends for high net worth investors.
Specifically, the article compares the potential yields between full-service hotels and select-service properties such as extended stay hotels. Here’s an excerpt from the report:
In the estimation of Rob Goldstein, assistant portfolio manager for real estate securities at Plymouth Meeting, Pa.-based CenterSquare Investment Management LLC, HNW investors might want to be careful about limited-service hotels in 2019.
“Given the elevated construction pipeline as a percentage of stock within the limited-service segment, we’re cautious on the competitive landscape for existing limited-service hotels, particularly in suburban locations where demand may not be as robust as in urban environments,” Goldstein says.
Meanwhile, Michael Ward, a commercial real estate attorney in the Atlanta office of law firm Culhane Meadows PLLC whose practice includes hotel transactions, suggests potentially shying away from older properties, as they’re less able than newer properties to compete for travelers’ dollars. Nonetheless, compelling prices and cap rates for an older hotel could swing that philosophy in the other direction, according to Ward.
HNW investors should be hunting next year for opportunistic turnarounds (assets that have been through bankruptcy or have been mismanaged, for instance) and distressed properties in the hotel sector, according to Peter Anadranistakis, co-founder and president of Phoenix-based hotel investment and management firm Oxygen Hospitality Group. On his radar are recently de-flagged hotels with 100 to 150 guest rooms.
“These situations offer the ability to reposition the asset through rebranding, renovation, redevelopment, new management and cost control,” Anadranistakis says.
Click HERE to view the complete online article.