The volume of U.S.sales through midyear has set a record at $21.8 billion, surpassing the total volume of 2005 of $21.0 billion in just six months. According to Jones Lang LaSalle Hotels’ proprietary database, which tracks transactions $10 million and above, 135 transactions closed during the first half of the year.
Given this pace of transaction activity, combined with the volume of assets currently on the market and investors’ positive outlook, Jones Lang LaSalle Hotels forecasts full year transaction volume for assets $10 million and above to exceed $30 billion in 2006.
“Hotels continue to offer excellent risk adjusted returns relative to other forms of real estate, good current yields and extremely strong long term IRRs, a good annuity income stream, and an exceptional inflation hedge,” says Arthur Adler, managing director and CEO-Americas for Jones Lang LaSalle Hotels.
“In particular, private equity firms have capitalized on this opportune time to invest in hotels, adopting a combined income and capital growth strategy and public REITs continue to be active investors due to their strong earnings multiples.”
“The U.S. is leading the trend for global hotel sales with its explosive activity. Globally, the volume of full-service hotel sales is poised to exceed $60 billion – a 33% increase over last year, with U.S. sales comprising half of that volume,” said Kristina Paider, senior vice president of marketing and research for Jones Lang LaSalle Hotels.
Of the top ten hotel sales for the first half of the year, four single asset transactions exceeded the $300 million mark, with the Four Seasons Resort Hualalai in Hawaii (arranged by Jones Lang LaSalle Hotels), leading the pack at more than $500 million, followed by the Westin St. Francis in San Francisco, Swissotel The Drake in New York, and theMarriott Downtown (financing arranged by Jones Lang LaSalle Hotels).