BOULDER, Colorado—Debt and equity trends remained steady during the third quarter despite hiccups in the market, according to the Hotel Investors Gauge, a survey from STR Analytics and HotelNewsNow.com.
“Although the national and global economies seem to be on a rollercoaster ride of late, hotel investment continues to have a strong outlook,” said Steve Hennis, director at STR Analytics. “The hotel investment climate is highly appealing with low supply growth, demand at an all-time high and interest rates at very low spreads.”
Other key findings from the Hotel Investors Gauge include:
• Leveraged return expectations for both buyers and developers are still around the typical 20-percent range.
• Lenders are willing to provide debt at good terms. Loan-to-value ratios averaged 68 percent with interest rates benchmarked at an average of 350 basis points above the London Interbank Offered Rate.
• New York is both loved and feared by investors. New York; Washington, D.C.; Boston; Miami; and Los Angeles are the top five most appealing markets for investors. On the flip side, Detroit; St. Louis; New York; Tampa-St. Petersburg; and Orlando are the markets investors are least likely to consider for investment.
• The outlook is optimistic through at least 2014. More than 90 percent of respondents expect the next market peak to come after 2013, with more than a third of those surveyed expecting the next market peak to occur during 2016.
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The Hotel Investors Gauge included a broad spectrum of hotel investors and lenders. The survey is conducted on a quarterly basis by HotelNewsNow.com and STR Analytics.
For full survey analysis and results, please visit www.HotelInvestmentBarometer.com. The Hotel Investment Barometer provides subscribers with the latest hotel real-estate transaction news, the status of two dozen metrics that real-estate pros need to know, and includes lists of the latest transactions, hotel openings, foreclosures, signed management contracts and more. The Hotel Investment Barometer is a paid subscription newsletter that is delivered on the second and fourth Tuesday of each month.
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