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Capital search focus of Meet the Money
May 1 2012

Capital providers will descend upon Los Angeles next week for the Meet the Money conference, where they will shed light on how hotel companies can find financing in an uncertain environment.

Highlights
  • The financing environment for hotels has “warmed up,” JMBM’s Jim Butler said.
  • California hotels have demonstrated a “phenomenal” turnaround, Atlas Hospitality Group’s Alan Reay said.
  • The veterans with successful track records find it easier to attract capital and get their deals done,” Butler said. “(Joint ventures) are huge as a way of marrying capital, talent and deal flow.”

LOS ANGELES—This year’s Meet the Money conference in Los Angeles will focus on where hotel companies can find capital amid the tumult facing the industry today.

The obstacles are many, Jim Butler, partner and chairman of the Hospitality Group at Jeffer Mangels Butler & Mitchell LLP. They include the eurozone crisis; unions; the roller-coaster commercial, mortgage-backed securities market; health care; and more, he said in an email.

 

Jim Butler

The financing environment, Butler said, has “warmed up.”

 

“Development is still a challenge, but we have panels of developers to tell you how they are doing it now,” he said. “Experience, relationships, location and sponsorship are the best foundation for success.”

Several panels will feature active capital providers, and representatives from hotel investors such as Pebblebrook Hotel Trust, Hospitality Properties Trust and Apple REIT, also will participate.

At least in California, investors will discover a few “red hot” markets, said Alan Reay, president of Atlas Hospitality Group. Reay is scheduled to speak 9 May on the state of the California hotel sector.

“It’s a tale of two or three markets … Silicon Valley is extremely hot,” he said. “It’s a good time to be a buyer and a good time to be a seller because there is very little new development going on.”

 

Doug Dreher

Reay is surprised at how quickly hotels in California rebounded. “It’s nothing short of a phenomenal turnaround,” he said.

 

Doug Dreher, president and CEO of Edmonds, Washington-based The Hotel Group, said, outside of California, there are “rate opportunities” as well.

“So far, most of our properties are exceeding last year and pacing pretty nice,” said Dreher, who will participate in a breakout panel titled “Value Add with Repositioning.” THG has 25 hotels comprising approximately 2,500 rooms in its portfolio.

Hotel acquisitions
And as it relates to hotel acquisitions, it will be a case where “the rich get richer,” Butler said.

 

Alan Reay

“The veterans with successful track records find it easier to attract capital and get their deals done,” he said. “(Joint ventures) are huge as a way of marrying capital, talent and deal flow.”

 

Dreher said deals are “really hard to find.”

“It takes a long time,” he said. “You might look at 100 deals, and you might find one that fits.” He said a deal might look good on the surface, but then upon further investigation the acquirer sees that there are other problems, such as renovation costs being higher than originally anticipated.

Meet the Money will be held 7 May through 9 May at the Sheraton Gateway Los Angeles. JMBM is organizing the event.

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