SAN DIEGO—As Marty Collins sees it, 2010 is likely to be a strong year in terms of investment opportunities—and he wants his company to get a slice of the action.
Collins, president and CEO of Gatehouse Capital, said he envisions Gatehouse will complete four investments totaling US$20 million this year.
The company takes a “cyclical” approach to its business, moving between development and buying and selling.
Gatehouse’s shift into investment mode occurred during 2008, when the company cancelled or delayed about US$800 million in development for other parties.
“In robust times we’re developers, and when things aren’t so robust like they are becoming and like they were prior to this cycle, we are buyers and sellers,” he said during an interview at the Americas Lodging Investment Summit in San Diego last month. “So for us, the opportunities are divided into those two classes. Obviously, as we wind down, the development opportunities become scarcer and the buying opportunities hopefully become more abundant.”
Looking to deal
Most recently, Gatehouse finished the long-term development of the W Hollywood on 28 January, a mixed-use development with condominiums, apartments and retail space. The company has also begun work on an Aloft development in Jacksonville, Florida, on behalf of third-party clients that will finish in about a year.
“But setting that aside, … our near-term future certainly lies in the buying and selling, I believe, and perhaps some development services,” he said.
There might be some interest in luxury hotel properties from buyers, Collins said, as that sector remains under pressure.
“As employment continues to contract and even … setting aside unemployment, people’s real wages, the fact that they’re not getting a bonus, that they’re going to have to work for less money and stuff, I think would lead you to the conclusion that luxury is going to be a problem space,” he said. “It may have some opportunities for buyers, however. But on the demand side, I think it’s going to be a very tough space.”
“Constrained” hotel environment
In the hotel space, Collins said the market environment is “constrained.”
“I think (revenue per available room) bottoms this year, at least that’s the consensus to the extent that there is one, and so I certainly think that’s gotten tighter,” he said. “And for operators and brands whose growth strategies were based on development strategies, I think those are problematic in terms of new product rollouts.
“I think probably the smartest thing I’ve seen recently, I think, is Marriott’s Autograph program, where you kind of step into an existing situation and adopt.”
Collins said he does not believe credit will loosen much this year.
“I think the consensus is there’s plenty of product, generally,” he said. “And not just in hotels, but I think it transcends hotels into all real-estate products.”