Some may be casting doubt on the hotel transactions market for 2017, but there are many reasons to be optimistic.
Cap Rates were relatively level in 2016 at 8.5% overall, stopping a worrying upward creep. Real Capital Analytics 2016 Trend Report stated:
“Declines in volume while cap rates rise can suggest that buyers and sellers are simply too far apart on pricing expectations. These signs of flattening cap rates might provide a more stable environment for transaction activity to grow in the year ahead.”
For now, despite the U.S. Prime lending rate increase, interest rates are still historically low. Plus, hotel lenders are hungry.
However, unless there is some reversal in declining demand trends, aggregate supply growth in 2017 will exceed demand for the 1st time since 2010.
The best strategy to avoid negative impact from future supply is to sell before that new supply hits the local market. We recommend all sellers plan an exit strategy, whether that means a sale now before the signs of the end of this cycle hit, or planning on holding through the next downturn, and sell in the next up cycle perhaps, or even if you just built a hotel and plan to hold it until the mortgage is paid off, PLAN YOUR EXIT!
Here are 3 reasons to take that exit now:
(1.) Cap Rates leveled after upward trend,
(2.) Interest rates are expected to increase again in 2017,
(3.) New supply is coming to a market near you!
Any of MBA Hotel Brokers experienced hotel brokers can provide a complimentary hotel valuation. CLICK TO GET A FREE VALUATION
MBA Hotel Brokers has 20+ years of hotel real estate experience. MBA Hotel Brokers is fully engaged with the hotel industry netwrok of buyers that are hungry for new investment opportunities. Our national yet targeted marketing campaigns give hotels full exposure to the hotel industry and consistently yeild multiple buyer offers.
MBA Hotel Brokers has increased its market share of hotel transactions, representing lenders in the sale of REO hotels, receivers in the sale of hotels in receivership, owners in short sales, and other complicated situations, as well as representing sellers of cash flowing hotel asset sales. MBA has sold hotels in 26 states, valued in the hundreds of millions of dollars and has 7 brokers across 6 brokerage offices.
"Even though MBA represented the seller in this transaction, John was also very helpful to us, the buyers, especially in expediting the franchise application and franchise agreement process with Choice Hotels International, where MBA has some valuable business contacts and has formed a strong relationship with the franchisor." - Buyer Comfort Inn and Suites, Pennsylvania