Daily market intelligence on mortgages, equity raising, investment sales, and CMBS.

Tuesday, 12 June 2018

Strong Economy, Prudent Lending Prolong Hotel Cycle

Reports of the hotel sector's demise appear to be unfounded, thanks to a strong economy, recent tax cuts and a scaling back of development.

Commercial Real Estate Direct Staff Report

The hotel sector is hanging on in a prolonged market cycle. Reports of its death have been greatly exaggerated.

Talk of gloom and doom has persisted amid fears of overbuilding, but the reality is much sunnier, said Peter Nichols, vice president and national director of Marcus & Millichap's national hospitality group. The company's 2018 Hospitality Investment Forecast points to positive factors, including a strong economy and recently enacted tax cuts.

"We're still in a growth period, so it's an opportune time to buy in, or recycle capital," Nichols said. The window could be limited, though, as interest rates are on the way up. But increasing interest rates are usually a sign of economic growth, which typically is good news for hotels.

"Lodging fundamentals continue to grow," added Geraldine Guichardo, vice president, Americas Hotels Research for JLL. That's "primarily attributable to a strong economy. Recent indicators suggest the economic expansion is only accelerating and the economic effects of the recently passed tax legislation have yet to be felt."

            Hotel Rooms Under Construction

HOTELS

Source: STR Inc.

On the ground, operators also have a sunny outlook. Christopher Nassetta, president and chief executive of Hilton Worldwide Inc., noted that corporate hotel customers are more confident and that was resulting in them "sort of loosening up on the purse strings." Speaking on a recent earnings call, he noted that the current cycle is longer than the norm, which...





weekly-call-to-action

“The Weekly”

“The Weekly” is Commercial Real Estate Direct’s PDF newsletter, sent to subscribers every Friday morning. With over 100 news stories published on Commercial Real Estate Direct each week, “The Weekly” features the top stories in commercial real estate that industry participants need to know first. “The Weekly” also contains:

  • Breaking mortgage, CMBS, and REIT news

  • Quarterly league tables with rankings of B-piece buyers, book runners, and lenders

  • Industry moves and changes in “The Insider“

Data Digest

 

CMBS DELINQUENCY VOLUME

dqdataFP1

 

CMBS SPECIAL SERVICING VOLUME

sschartfp

Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44

 

RCA CPPI

 

cppichart FP

 

 

CMBS 2.0 Spreads

AAAspreads

Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41

 

 

 

REITCafe

  • Challenging Retail Environment Weights on REITs
    Mixed economic news is weighing on retail markets, pushing REIT performance down in 2015. This week, the National Retail Federation announced that back-to-school spending is expected to be down 9.3% in 2015. This news came on the heels of a report from the Commerce Department stating that retail sales declined 0.3%...
     
  • US REITs Feeling Effects from Turmoil in Greece and China
    International economic forces have taken center stage this week, affecting both US stock markets and REITs. The crash in the Chinese stock market and ongoing concerns about the future of Greece in the eurozone drove markets down during the first half of the week. REITs fared better than the overall market...

  • What Does Increased Construction Mean for Apartment REITs?
    REITs so far this year have raised $17.1 billion of capital through the sale of unsecured notes, bringing the total raised over the past two and a half years to just more than $75 billion. That’s more than they raised during the previous five years. The massive volume shouldn’t be a surprise as it comes while the yield from 10-year Treasury bonds, the benchmark...
shouldn’t be a surprise as it comes while the yield from 10-year Treasury bonds, the benchmark against which most REIT’s price their bonds
warehouse-backstage