Lenders weigh in on deals in select-service at Lenders Brunch

NEW YORK—At the Hotel Business Lenders Brunch, sponsored by Best Western Hotels & Resorts, lending experts gathered at the Dream Downtown in the city’s Chelsea neighborhood for networking with industry peers and one-on-one video interviews where they weighed in on deals in select-service.

Bruce Ford, SVP and director of global business development, Lodging Econometrics (LE) provided a data-rich keynote speech that was streamed via Facebook Live for viewers on the social media platform.

Among the lending experts were: Peter Berk, PMZ Realty Capital; Jonathan Falik, JF Capital Advisors; Scott Rowland, Remsen Capital; Joe Epstein, First American Realty; and Daniel Fromm, Newmark Grubb Knight Frank.

Hotel Business Digital Content Editor Corris Little asked lenders to weigh in on this premise: During the current cycle, the more attractive deals appear to be taking place in select-service. Do you see that continuing?

Joe Epstein, founder and president of First American Realty Associates, shared that it’s really across the board. “Select-service has had a marvelous run and justly so, but in this market, I find the rules have changed and the lenders are now in charge of the asylum. Going forward, it’s going to be an unbelievably Main St. business,” said Epstein.

Jonathan Falik, CEO of JF Capital, noted that while there have been a lot of select-service transactions over the last several years, it’s the international market that’s made its way into New York, Los Angeles and San Francisco. “It generally favors the luxury and full-service hotels,” said Falik. “Examples of that include the acquisition of the Waldorf Astoria by Anbang and the acquisition of Strategic Hotels & Resorts, which is a portfolio of 15 luxury hotels in urban and resort markets all over the U.S.”

Topping off this industry perspective, Ford provided a window into the lodging landscape and, according to him, there are many things on the horizon in terms of the economic impact—internal and external—in the hotel industry. He gave a detailed overview of the new construction pipeline, hotel transactions and what’s occurring in the industry on a global scale. 

Abstractions such as data and research are the cornerstone of Lodging Econometrics’ global real estate intelligence, with a team of 30 researchers who speak 18 different languages from around the world. LE’s data is culled from hotel brands, global franchise companies, owners and others in order to understand the dynamics of the portfolios—what’s being sold, built or purchased—and spot trends. 

“Today in the hotel business, we’ve had six or seven years of incredible operating performance growth coming off a downturn in 2008. In 2015, we’ve seen record profitability and it’s really accelerated investment in new construction,” said Ford. “Last year, we had 150 developers of three or more new construction projects active in the pipeline and this year, it’s up to 249 projects. They’re building these midscale, upper-midscale and upscale hotels with a very popular prototype design that, in fact, can be built cheaper than you can buy one.”