Accidental owners of hotels — banks and receivers — are expected to again be big sellers in 2013, according to a preview of a Jones Lang LaSalle report expected to be released in late January.
Executives in the Chicago-based real estate investment firm's hotels and hospitality division expect worldwide hotel transactions to hit $32 billion this year, a bit higher than an estimated $31.8 billion for 2012 and below the $33.9 billion in transactions the year before.
Sixty percent of buyers worldwide this year are expected to be private equity firms that specialize in real estate and real estate investment trusts. In the U.S. alone in 2012, private equity firms made up 44% of the purchases by volume and REITs, another 23%. Most of these firms will have significant buying power and higher risk tolerance, according to the study preview. REITs are expected to continue making acquisitions of stable properties big enough to make headlines in the hottest real estate markets, especially in North America and the Asia-Pacific region.
Banks that ended up with hotel properties by foreclosing from owners unable to refinance their properties are expected to be the biggest sellers.
There are a number of overleveraged hotel investments “in markets (Western Europe, U.S. and Japan) where high levels of debt were used for acquisitions that took place from 2005-2007,” said Lauro Ferroni, Jones Lang LaSalle's vice president of hotels research, in an e-mail. The firm expects the availability of debt in 2013 to be at the highest level since 2007.
