CoStar News - No matter what the conditions, deal-making in the hotel industry never fully stops.
Despite a number of factors, particularly recent economic uncertainty and slowed U.S. hotel transaction pace during the first half of the year, there were hotel owners and investors who still tried to find and close deals, particularly for hotels priced at under $50 million...
Currently, macroeconomic headwinds add varying levels of uncertainty to the hospitality market, said Michael Bernath, senior vice president of acquisitions and dispositions at investment firm Peachtree Group. For example, when looking at a value-add strategy in which the buyer looks at properties that need some level of renovation, the U.S. tariff situation adds to the complexity of the deal.
Peachtree is in the process of renovating a handful of hotels, both existing properties and newly acquired ones, and there has been an increase in costs, which Bernath said depend on where a company procures its soft goods and case goods.
Peachtree looks at every acquisition holistically, Bernath said. It’s not simply stating a purchase price and the net operating income to figure out the capitalization rate going in.
“We look at the deal, how we're going to capitalize the asset, when we're going to have to execute the renovation, if we have to execute a renovation,” he said. “The reality is costs have increased, therefore our ability to pay up for an asset is solely dependent on the timing of those renovations, and again, where we're actually procuring those items from what country.”
CoStar News - No matter what the conditions, deal-making in the hotel industry never fully stops.
Despite a number of factors, particularly recent economic uncertainty and slowed U.S. hotel transaction pace during the first half of the year, there were hotel owners and investors who still tried to find and close deals, particularly for hotels priced at under $50 million...
Currently, macroeconomic headwinds add varying levels of uncertainty to the hospitality market, said Michael Bernath, senior vice president of acquisitions and dispositions at investment firm Peachtree Group. For example, when looking at a value-add strategy in which the buyer looks at properties that need some level of renovation, the U.S. tariff situation adds to the complexity of the deal.
Peachtree is in the process of renovating a handful of hotels, both existing properties and newly acquired ones, and there has been an increase in costs, which Bernath said depend on where a company procures its soft goods and case goods.
Peachtree looks at every acquisition holistically, Bernath said. It’s not simply stating a purchase price and the net operating income to figure out the capitalization rate going in.
“We look at the deal, how we're going to capitalize the asset, when we're going to have to execute the renovation, if we have to execute a renovation,” he said. “The reality is costs have increased, therefore our ability to pay up for an asset is solely dependent on the timing of those renovations, and again, where we're actually procuring those items from what country.”
