NATIONAL REPORT—The LW Hospitality Advisors (LWHA) Q2 2020 Major U.S. Hotel Sales Survey includes six announced single-asset sale transactions of more than $10 million, none of which are part of a portfolio. These transactions totaled roughly $246 million and included approximately 1,459 hotel rooms with an average sale price per room of roughly $169,000. By comparison, the LWHA Q2 2019 Major U.S. Hotel Sales Survey identified 35 transactions totaling roughly $2.6 billion, including 9,100 hotel rooms with an average sale price per room of $286,000. Comparing Q2 2020 with Q2 2019, the number of trades decreased by approximately 83%, while total dollar volume declined roughly 91% and sales price per room dropped by 41%. The Q2 2020 sales include the following:
- The Buccini/Pollin Group (BPG) acquired the 622-room Renaissance Baltimore Harborplace in Baltimore for $80 million or $129,000 per unit. In January, BPG signed a contract to purchase the hotel for $100 million. During March, when the COVID-19 crisis hit the U.S. in earnest, the seller, Sunstone Hotel Investors Inc., agreed to lower its clearing price, resulting in a 20% decline. This trade is the first major U.S. hotel sale transaction that has produced market-based evidence of perceived value erosion because of the COVID-19 pandemic.
- BentallGreenOak, Flank Management LP, and Geolo Capital announced in June the acquisition of the Hutton Hotel in Nashville in an all-cash $70 million or $280,000 per room purchase price. The seller, Watermark Lodging Trust (formerly known as Carey Watermark Investors Inc.), reportedly acquired the property in 2013 for $73.6 million. The Wall Street Journal recently published that the 250-room hotel was valued between $90 million and $100 million before the COVID-19 outbreak, according to people familiar with the matter.
- Pebblebrook Hotel Trust executed a contract to sell the 125-room Union Station Hotel Nashville, Autograph Collection for $56.0 million or $448,000 per room to Southwest Value Partners. According to Pebblebrook (PEB), “The transaction is subject to normal closing conditions, and PEB offers no assurances that the sale will be completed on these terms, or at all. PEB is targeting to complete the sale in the third quarter of 2020.”
- Boynton Property Holdings LLC purchased the Courtyard by Marriott Boynton Beach, FL, for $19 million or $111,000 per room from Boulder Hotel Management. The deal for the 8.1-acre property included the 171-room hotel with 18 two-bedroom luxury townhouse rental units, a Buffalo Wild Wings restaurant and a preschool.
- The 113-key Quality Inn & Suites by the Parks in Kissimmee, FL, was sold by Rosemont Hotels Inc. for $10,550,000 or $93,400 per unit to Japan-based Sarasa Hotels Ltd.
- SureStay Plus Hotel by Best Western Clearwater Central in Clearwater, FL, sold for $10.5 million or $59,000 per unit. The 178-room hotel sits on nearly five acres of land and was originally built as a Hampton Inn.
“While the post-COVID-19 environment may meaningfully reduce demand for commercial real estate, past downturns no matter how painful, have always been followed by recoveries during which new highs were achieved for both rental rates as well as property valuations,” said Daniel H. Lesser, LWHA president/CEO. “With the unprecedented amount of fiscal and monetary stimulus activity already committed to, and yet more likely to come, it is reasonable to expect that this trend will hold true once again in the coming years.”
He added, “Although the world is currently in uncharted territory, having recovered from prior economic and demand shocks, America’s hotel industry has a proven track record of resiliency. The fact is that, over a long-term basis, commercial real estate and particularly hotels offer superior risk adjusted yields compared with other investment classes focused on value-add opportunities.”