BOULDER, Colorado—Investors and lenders are showing growing signs of optimism, according to the most recent Hotel Investors Gauge, a quarterly survey from STR Analytics and HotelNewsNow.com.
"While there remains a significant amount of uncertainty with the future of the global economy, investors and lenders in the hotel industry are focusing on the simple fundamentals of strong demand levels, limited supply growth and an expectation of room rates continuing their recovery,” said Steve Hennis, director at STR Analytics.
Key findings from the Hotel Investors Gauge include:
• Investors’ return expectations for acquisitions declined to 18.5 percent from 20.0 percent in our prior survey, illustrating that investors are getting more confident in the lodging sector’s recovery.
• Developers’ return expectations also declined slightly to 20.6 percent.
• The median cap rate on trailing 12-month net income for stable assets was 7.9 percent. Although the cap rate is relatively stable compared to the previous Hotel Investors Gauge, the increasing cash flows and lower return expectation will likely increase asset pricing.
• Most of the lender terms remain relatively unchanged from the prior survey. Loan-to-value ratios generally ranged between 62.5 percent and 70.0 percent. The average LIBOR spread was 350bps. Most loan terms were five years.
The Hotel Investors Gauge included a broad spectrum of hotel investors and lenders. The survey is conducted on a quarterly basis by STR Analytics and HotelNewsNow.com.
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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