Hotel industry looks for deal pace to pick up

LOS ANGELES (Reuters) – Hotel companies and real estate firms are optimistic that deal transactions will pick up this year despite concerns about Europe‘s economy and challenges in obtaining debt financing.
While a business-led economic recovery has helped lift U.S. hotel occupancy rates, development is still a soft spot as tight credit conditions have limited new-hotel builds. Still, there is a growing sense that the hotel sector has momentum and performance will continue to improve.
“People are expecting 2012 to be a pretty positive year, with solid performance by the industry in terms of the demand for hotel accommodations and the ability to get deals done,” Arthur de Haast, chairman of Jones Lang LaSalle Hotels, said at this week’s Americas Lodging Investment Summit.
The hotel investment services firm has forecast that hotel deals in the Americas this year will at least match the 2011 level in value of an estimated $15 billion.
U.S. hotel deal activity picked up in the first half of 2011 but calmed in the latter part of the year as debt woes in Europe began dominating the headlines.
While Europe is still a risk, attendees at the three-day hotel conference said a continued recovery marked by rising room rates would make the sector attractive for investment.
“There’s a lot of money on the sidelines waiting to pounce and find opportunities,” said Christian Charre, president and chief executive of the Charre Group, a Florida-based hotel brokerage and consulting firm.
FOREIGN MONEY
Private equity funds that have capital will be in a good position to make acquisitions, some said. Real estate investment trusts were active buyers in the first half of 2011 but are expected to be quieter this year as their share prices suffered in the latter part of 2011.
“The mix of the investors probably will change,” said Sri Sambamurthy, co-founder of real estate firm West Point Partners in New York. He said Middle Eastern, European and Asian investors especially find the U.S. market to be extremely attractive now.
“The U.S. is still considered very safe, the dollar has performed extraordinarily well,” Sambamurthy added.
Hotel companies said they were looking to make acquisitions in a bid to expand their reach.
“No question that we’ll be active in the marketplace in 2012,” said Paul Whetsell, president and chief executive of Loews Hotels, which owns and/or operates 18 hotels. The unit of Loews Corp has committed more than $500 million to acquiring hotels or developing new properties.
Whetsell said Loews is looking for 4-star or higher-rated hotels in major cities where it does not have a presence such as Boston, Washington, San Francisco, Chicago and Los Angeles, as well as smaller markets like Charlotte, North Carolina, and Baltimore, Maryland.
Choice Hotels International , which franchises hotels focused mainly at the mid-tier and economy market segments under brands such as Comfort Inn and Econo Lodge, said it is in the hunt to acquire a value-oriented, full-service upscale brand that would help attract more business customers.
“We clearly would be a very aggressive purchaser of brands that come up,” Choice Chief Executive Steve Joyce said in an interview [ID:nL2E8CO1IS].
(Editing by Gary Hill)
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Prudential Mortgage Capital Company provides $160 million financing for 21 industrial facilities in Mexico

Prudential Mortgage Capital Company has provided $160 million in financing to a co-investment venture managed by San Francisco-based Prologis, L.P., for a portfolio of industrial buildings in Mexico. Prudential Mortgage Capital is the commercial mortgage lending business of Prudential Financial Inc. (NYSE: PRU).
The fixed-rate, five-year refinancing is secured by 21 industrial and warehouse distribution buildings with 4.7 million square-feet of usable space. The property portfolio comprises modern properties in Mexico’s leading industrial markets of Mexico City and Guadalajara and is more than 95 percent leased to a broad mix of multinational and regional tenants.
Frederick van Overbeek, a principal with Prudential Mortgage Capital Company, and Elizabeth Velazquez, a director, led the transaction.
“The loan is secured by a high quality, well-located and well-leased industrial property portfolio. When combined with the strength, experience, and local market expertise of Prologis, this is a compelling mortgage investment for Prudential,” said van Overbeek.
“The significant improvement in Mexico’s economy over the past couple of years along with continued manufacturing growth bodes well for Mexico’s industrial real estate sector,” added Velazquez.
“We chose to refinance this portfolio with Prudential Mortgage Capital Company because of its professionalism, reliability and superior quality of service. Prudential Mortgage Capital is a sophisticated, relationship-oriented lender that understands our needs,” said Gayle Starr, senior vice president of capital markets for Prologis.
Prologis, Inc. is one of the leading owner, operator and developer of industrial real estate, focused on global and regional markets across the Americas, Europe and Asia. As of September 30, 2011, Prologis owned or had investments in, on a consolidated basis or through unconsolidated joint ventures, properties and development projects expected to total approximately 55.7 million square meters in 22 countries. The company leases modern distribution facilities to more than 4,500 customers, including manufacturers, retailers, transportation companies, third-party logistics providers and other enterprises.
Prudential Mortgage Capital Company is a national full-service, commercial and multifamily mortgage finance business with $69.5 billion in assets under management and administration as of September 30, 2011. Leveraging a 135-year history of real estate finance, the company offers one of the most comprehensive lines of real estate finance products and originates loans for Fannie Mae DUS®, Freddie Mac Program Plus® and specialized affordable housing programs; FHA; Conduit; Prudential’s general account and proprietary balance sheet program; and other institutional investors. The company maintains a loan servicing portfolio of approximately $66.9 billion, as of September 30, 2011. For more information, please visit http://www.prumortgagecapital.com.
Prudential Financial, Inc. (NYSE: PRU), a financial services leader with approximately $871 billion of assets under management as of September 30, 2011, has operations in the United States, Asia, Europe, and Latin America. Prudential’s diverse and talented employees are committed to helping individual and institutional customers grow and protect their wealth through a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds, investment management, and real estate services. In the U.S., Prudential’s iconic Rock symbol has stood for strength, stability, expertise and innovation for more than a century. For more information, please visit http://www.news.prudential.com/

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