Luxury leads the way
Hotel asset transactions are getting done and while the pace has slowed a touch, we're still optimistic for sellers such as HOT. Asset sales are a big part of the Starwood investment thesis and to a lesser extent, Hyatt and Hilton. While not perfect, conditions remain favorable for narrower bid/asks.
Most Lodging REIT stocks are flat to +8% on a YTD basis as of Friday's close, are within 5% to 10% of their respective 52 weeks high prices, and trading flat to +15% above their last equity issuance price. Combined with decent balance sheets, lodging REITs are well positioned to continue to be buyers of assets from the C-Corps, namely Starwood and Hyatt.
Upper upscale (UUP) & Luxury Transaction Trends for Q1 2014
- Q1 2014 worldwide hotel transactions (UUP & Luxury brands) volume was close to $2.5 billion, lower than the $3.3 billion seen in Q4 2013 but slightly higher than Q1 2013's.
- The number of US luxury/UUP hotel transactions (where price was disclosed) was 12 in Q1 2014 - 5 less sequentially but 5 more than in Q1 2013
- The number of non-US luxury/UUP hotel transactions (where price was disclosed) was 11 in Q1 2014 – 3 more sequentially and 4 more than in Q1 2013.
- Relative to a two-year trailing average, US average price per key (APPK) in the UUP segment was $215k, below 6 quarter average of $266k. This is attributable to some second/third tier city sales.
- Luxury was the outperformer in Q1 2014. APPK was $453k in the US and $527k internationally. The 12 transactions were the most in a quarter since we started tracking transactions in 2010.
- RLJ Lodging Trust was the most active in the market
- There were several multi-asset sales in Q1 2014
Companies of note
- Sold Courtyard Nashua for $41k APPK
- Bought Powell Hotel for $497k APPK
- Sold Renaissance Barcelona for $499k APPK
- Sold 10 Hyatts for $201k APPK
- Sold St. Regis Bal Harbour for $1.03m APPK
- Sold Hotel Aloft Guadalajara Las Americas for $126k APPK
Our detailed transaction database is available on request.