Features

Strong Economy Propels Hotel Industry Forward, But Construction Lenders Remain Cautious

by Camren Skelton March 29, 2018

ATLANTA — Despite possible headwinds from Capitol Hill, the hospitality industry is poised for a healthy 2018. The combination of a strong economy, tax cuts and rising consumer confidence is boosting demand for hotels across the country. Meanwhile, lenders are tightening their purse strings when it comes to new development, leaving hoteliers confident that the industry is on solid footing. Those points were among the big takeaways stemming from two separate panel discussions held last Friday morning, March 23, during the Hunter Hotel Conference. The 30th annual event drew 1,700 attendees to the famed Atlanta Marriott Marquis hotel downtown designed by the late John C. Portman. In February, the unemployment rate remained unchanged at 4.1 percent, a 17-year low. The Consumer Confidence Index is at its highest level since 2000. “Domestically, things are great,” said Chip Rogers, president and CEO of the Asian American Hotel Owners Association (AAHOA). “This past holiday season was the most traveled holiday season on record.” Rogers said some credit goes to the low cost of gasoline. The price per gallon has been under $3 for four consecutive years, he pointed out. “You can see a direct relationship between how willing people are to travel and the …

March 29, 2018

Features Hospitality

This Will Be Record Year for Hotel RevPar, Occupancy, Says STR’s Freitag

by Taylor Williams March 27, 2018

ATLANTA — American hotels posted record levels of revenue per available room (RevPAR) and occupancy in 2017. According to one industry researcher who recently spoke at a national hotel conference, 2018 is shaping up to be even better. Jan Freitag, senior vice president of lodging insights at Tennessee-based research firm STR, was the first panelist to deliver a “state of the union” presentation at the Hunter Hotel Conference. The event drew 1,700 industry experts to downtown Atlanta on March 22. Freitag noted that the U.S. hotel sector closed 2017 with RevPAR of $84 and an occupancy rate of 66 percent. These figures represent year-over-year increases of 3.1 percent and 1 percent, respectively. Both of these metrics are functions of demand for hotel rooms, which rose by 3 percent from 2016 to 2017. STR’s data projects a 2.3 percent increase in demand for hotel rooms in 2018. Specifically, the company forecasts RevPAR growth of 2.7 percent and occupancy growth of 0.3 percent in 2018. What Happened in 2017 Freitag opened his discussion by noting that growth in demand for hotels in 2017 was tied to Hurricanes Irma and Harvey, which accounted for more than $130 billion in combined property damages. RevPAR for hotels in Florida …

March 27, 2018

Features Multifamily Seniors Housing Texas

NIC: Collaboration is the Future of Seniors Housing

by Katie Sloan March 23, 2018

The future of seniors housing is dependent on collaboration and cooperation between all the stakeholders in the industry, particularly operators and “senior care enablers,” according to Brian Jurutka, president and CEO of the National Investment Center for Seniors Housing & Care (NIC). The comments came during a question-and-answer session moderated by Mary Ann Donaghy, NIC’s chief marketing and communications officer, at the organization’s Spring Investment Forum, held March 7 to 9 in Dallas. NIC is a Maryland-based nonprofit association that provides data metrics on the seniors housing industry. Examples of senior care enablers include healthcare systems, home health providers, software companies and others who provide care outside of the standard offerings of a seniors housing community. “Historically we have been more focused on the real estate piece,” says Jurutka. “However, one of the components we think is important is that instead of seniors going to healthcare, healthcare will come to seniors. What that means is there are opportunities for value to be created for seniors housing communities.” Examples of such collaborations in action could include: Bringing home health aides into independent living communities to slow the transition to assisted living. Bringing rehabilitation and therapy providers into assisted living communities to …

March 23, 2018

Features Georgia Hospitality Property Type Southeast Southeast Feature Archive

Battle for Market Share: Leading Hotel Companies Expand Via Acquisitions, New Brands

by John Nelson March 22, 2018

ATLANTA — The world’s largest hotel company, Wyndham Hotel Group, made a splash in January when parent company Wyndham Worldwide Corp. purchased La Quinta’s franchise and management business for nearly $2 billion. Speaking at the 30th annual Hunter Hotel Conference in Atlanta Wednesday, Geoff Ballotti, president and CEO of Wyndham Hotel Group, spoke about how the acquisition has helped expand the company’s platform. “It is our 21st brand. We’re the company that operates more hotels than any other company today at 9,100 hotels,” says Ballotti at the three-day conference, which is drawing 1,700 attendees. “La Quinta is a brand that franchises well — 85 percent of La Quinta’s franchisees score four stars or above on TripAdvisor. It’s a great value for our shareholders.” The past few years have seen mega transactions like this, none bigger than Marriott International’s $13 billion acquisition of Starwood Hotels & Resorts in 2016. Joining Ballotti on the stage during the President’s Panel, held at the Atlanta Marriott Marquis in downtown Atlanta, was Patrick Pacious, president and CEO of Choice Hotels International Inc. The Rockville, Maryland-based company is the second-largest hotel group by property count at 6,800 hotels in 40 countries. Similar to Wyndham, Choice Hotels …

March 22, 2018

Features Multifamily

RENTCafé: February Multifamily Rents Increasing Fastest in Small Markets

by Katie Sloan March 20, 2018

SANTA BARBARA, CALIF. — The average rent for a multifamily unit in the United States was $1,364 this February, a 2.7 percent year-over-year increase, according to Santa Barbara-based RENTCafé’s latest monthly Apartment Market Report. The cost of renting one-, two- and three-bedroom units increased by 3.2 percent year over year, and by 0.2 percent month over month. This number outpaced rents for studio apartments, which only grew by 2 percent year-over-year and remained stagnant for the month. The average price of a studio apartment across the U.S. in February was $1,258, while the average national price for a three-bedroom unit was $1,649. RENTCafé’s Apartment Market Report is based off of data compiled from actual rents charged in the 250 largest cities in the U.S., coupled with data from multifamily software program Yardi Matrix. The report is based on apartment data related to buildings containing 50 or more units in cities with populations over 100,000, and a rental stock of at least 2,900 apartments. In this report, large cities are classified as having a population of 600,000 people or more; mid-sized cities are cities with a population between 300,000 and 600,000; and small cities are cities with a population of less …

March 20, 2018

Features

A Company Has a Towering Offer: Under What Conditions Should You Say Yes?

by Camren Skelton March 15, 2018

With the number of U.S. smart phone users estimated to climb to 271 million by 2022, telecom providers are rushing to add capacity, and tower companies are working hard to accommodate the telecom providers’ need for infrastructure. Tower companies are dangling large sums of money in front of property owners whose locations can hold such infrastructure, thereby enabling telecom providers to relieve network congestion and strengthen coverage. Tower companies are always looking for new and creative locations to place communication equipment. (i.e. Who would have guessed that telecom providers would one day place small cell antennas on downtown streetlights?) For various reasons, they often prefer to pay up-front, lump sum payments for perpetual property rights instead of monthly rents. These payments often exceed $300,000, and every so often reach as much as $1 million. Before entering binding agreements for these kinds of arrangements, tower companies generally send a letter of intent to the property owner, memorializing the parties’ payment terms and the general scope of their agreement. Once the parties agree on the business terms and sign the letter of intent, the tower company will send over its standard form of easement documentation while it begins its site-specific diligence efforts. …

March 15, 2018

Features Retail

NRF Survey: St. Patrick’s Day Spending to Hit Record $5.9B, Food and Beverage Most Popular Items

by Camren Skelton March 13, 2018

WASHINGTON, D.C. — More than 149 million U.S. adults are expected to celebrate St. Patrick’s Day on Saturday, spending a record $5.9 billion on items related to the holiday, according to a survey by the National Retail Federation (NRF) and Proper Insights & Analytics. The annual survey, conduced Feb. 2 to 13, asked 7,657 consumers ages 18 and up about their St. Patrick’s Day plans. The 2018 figure is the highest level in the survey’s 14-year history, up from last year’s previous record of $5.3 billion. “The holiday falls on a Saturday this year, so Americans will have more time to splurge a little as they get together with friends and loved ones for a day of festivities,” says Matthew Shay, president and CEO of NRF, a Washington, D.C.-based retail trade association. According to the survey, consumers are expected to spend an average of $39.65 per person, up from last year’s total of $37.92. The holiday is most popular among individuals 18 to 24 years old, with 77 percent celebrating, but those 35 to 44 will be the biggest spenders at an average of $45.76 each. Celebrants plan to make the majority of their St. Paddy’s purchases from grocery stores (38 …

March 13, 2018

Features Loans Multifamily

Multifamily Investors Look Beyond the Core, Says Capital One Survey

by John Nelson March 8, 2018

After years of historic increases, 2017 was the year that the central business districts (CBDs) of the nation’s major cities lost some of their luster. Multifamily rent growth slowed in cities like San Francisco and San Jose, Calif. Landlords in some submarkets, such as San Francisco’s South of Market (SoMa) district, actually lowered rents and offered concessions to new tenants during the early part of the year. These West Coast cities were not alone. Rents in New York, Chicago and Miami grew only slightly, while rents in Washington, D.C., actually contracted. Sluggish rental growth in markets like these is one reason for a significant change in the results of Capital One’s Multifamily Survey. When asked where they expected to see the greatest increase in value in 2018, 43 percent of multifamily respondents named secondary and tertiary markets, while another 35 percent selected suburban markets. Only 17 percent chose urban markets. This contrasts markedly with the results from the previous year’s survey. At that time, 47 percent of respondents selected urban markets, 27 percent chose suburban, and 19 percent named secondary and tertiary. Urban Markets on Pause There are a number of reasons why urban markets have fallen from grace. One …

March 8, 2018

Features

GSU’s Rajeev Dhawan: Decisive Year Ahead for Federal Reserve

by John Nelson March 6, 2018

ATLANTA — Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University’s (GSU) J. Mack Robinson College of Business, anticipates that the Federal Reserve will raise the federal funds rate several times this year. “Three is a safe bet based on my projections for growth,” writes Dhawan in his quarterly Forecast of the Nation report released last week. The veteran economist expects Jay Powell, who succeeded Janet Yellen in January as the new Fed chair, to set forth the first hike at the next Federal Open Market Committee (FOMC) meeting on March 20-21. But that isn’t a given, according to Dhawan. Financial Markets ‘Skittish’ Since the beginning of the year, the 10-year Treasury yield jumped nearly 50 basis points and hit a four-year peak at 2.94 percent on Feb. 21. (The latest 10-year rate as of this writing was 2.81 percent.) The suddenness of the upswing, and the near “correction” (or 10 percent drop) in February of the Dow Jones industrial average may be signaling that it’s not a good time for the Fed to raise short-term rates. “This first one may get delayed if financial markets are in turmoil,” writes Dhawan. “The recent volatility in markets is …

March 6, 2018

Features Loans

PGIM: Liquid Market Means ‘It’s a Good Time to Be a Borrower’

by Kristin Harlow March 1, 2018

SAN DIEGO — In 2017, PGIM Real Estate Finance originated $14.8 billion in financing, led by production in multifamily and industrial lending. The company also announced that it has as much as $15 billion available for financing in 2018 and will target growth in international markets and agency business in the Western United States. REBusinessOnline spoke with Paige Hood, CIO and senior portfolio manager with PGIM Real Estate Finance, at the Mortgage Bankers Association CREF Multifamily Housing Convention & Expo. The conference took place at the Marriott Marquis San Diego Marina on Feb. 11-14. Based in Atlanta, Hood oversees the investment process for the company’s core and core-plus mortgage investment, as well as the general account and funds management portfolios, which were valued at $57.8 billion in assets under management at the end of 2017. What follows is an edited version of the conversation. REBusinessOnline: What impact do you think the Tax Cuts and Jobs Act will have on commercial real estate lending, both from the borrower perspective and the lender perspective? Paige Hood: There are a lot of things to discuss as far as the tax bill, and a lot of them could be negative in relation to real estate. …

March 1, 2018

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