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GLG News by this Author

When hip meets industrial rigor

September 3, 2007

Analysis of:Ian Schrager On Marriott | blog.washingtonpost.com

Marriott expands its reach and adds another brand and goes after a lucrative market Schrager adds significant fire power and "Uber" global reach. Unexpected venture sometimes yield great results Marriott is finally responding to Starwood's W and untested Aloft.

Hotel C.Corp stocks: No plateau in sight....but Buy & Sell timing is critical

July 10, 2007

Analysis of:Hotel buyouts a bonanza for many mutual funds | www.reutersrealestate.com

This article brings us back to the KEY investment principle: BUY LOW / SELL HIGH. Monitoring Mutual Fund hotel holdings is a good indicator of how healthy the hospitality sector is perceived to be. So far, it leads me to say that there's still room....only for long-term investor though.  High Market prices leaves little if not, no room for quick and large flips.

This is a long term play... there's more than Real Estate and fat management fees. Now, who's Next on the buyout list?

July 6, 2007

Analysis of:Blackstone to buy Hilton for $26 bln | www.reutersrealestate.com

Blackstone (BX) recent purchase of Hilton Hotels (HLT) fro $26Bln (incl. debt) shows a shift in their business model and their ability to win over board of directors, shareholders (not as yet at the time of this analysis) They also manage to reassure Workers unions indicates that they have a long term plan with the intent to grow the company they're acquiring and not necessarily, strip it, sell its parts and overload it with their management fee (which as I understand makes most of their income). This is the new approach. It opens up an interesting speculation as to who will be next.  My bet is Starwood Hotels and Resorts and by no less than Starwood Capital for not only strong underlying company fundamentals but also for emotional reasons.  

Go East for long term growth. Both on the R.E. development and outbound customers.

July 3, 2007

Analysis of:Marriott to triple India hotel portfolio | today.reuters.com

Large and emerging markets such as India and China represent the biggest opportunities in terms of hotel development for both brands and hotel developers (and to some extent, mortgage lenders). India and China are very interesting markets because not only they provide numerous and different development opportunities due to the size of their countries together with a deep market potential, but their populations represent sizeable outbound markets for international brands operating around the world.

Peak in 2007. Foreign deal chase. Institutional money vs. Private

April 30, 2007

Analysis of:Global Hotel Liquidity: Depth is Not An Issue | nreionline.com

Hotel real estate has unequivocally reached institutional investment grade status despite its highly cyclical and value influential attached "business" component.

Last 2 weeks (from April 26 07), portfolio transactions showed how likely the second half of 2007 will break another record in hotel transactions volume wise, as Art indicates.

Sustained appetite from a wide breadth of capital sources, and most likely institutional money, will chase portfolio deals to gain quick and large presence in this prolific market.

Another Fine deal from Blackstone. Great Timing as well good vision

April 24, 2007

Analysis of:Lightstone to Purchase Extended Stay for $8bn | online.wsj.com

This deal highlights several interesting facts:
- Blackstone confirms its unrivaled ability to time the market
- Blackstone unveils it is more than a normal Private Equity fund loading up debt on companies they intend to piecemeal. It has had a clear strategy and executed it flawlessly.
- The Cap Rate used on this transaction (7.5) shows how a select service sector rivals with full service hotels in terms of returns.

Condo Developer. Beware!

April 24, 2007

Analysis of:Fremont Exits Subprimes To Make Risky Bets on Condos | online.wsj.com

In my opinion, Condo development and its financing in Florida are uncertain activities.
A very large new inventory is coming on line in the next 18 months.
Demand is already saturated and will likely not absorb new inventory

Caveat Emptor. The Buyer beware is a concept easily transferable to Developers and lenders alike for this type of projects, specifically in this geographic market!

Residential Real Estate has and will affect Hospitality Real Estate

April 23, 2007

Analysis of:Hotel Industry Faces Uncertain Future | www.globest.com

- Number of new Mixed use projects (condo hotel / fractional / Villas) will come on the market soon which will add pressure on existing hotel properties.
- Residential frenzy fueled in part all of these mixed use projects.
- Appetite for Residential real estate has and will continue to decrease making hotel trading performance reach a plateau or even subsiding in some secondary / tertiary markets.

Why hotel real estate is hot

March 15, 2007

Analysis of:Ernst & Young Identifies Top 10 Trends in the Hospitality Industry | www.ey.com

Hotel investment is currently more attractive for the following reasons:

• Global Economic stability together with strong GDP growth in major economies, all favor strong travel and tourism demand. Businesses send more people traveling, a large chunk of the population has more disposable income to spend on travel and vacation which, together beef up hotels occupancies and average room rates at record high. Once hotel industry fundamentals are strong and sustained, hotel profitability increases, positively impact property values, and eventually improves economic and financial returns.

• The availability of debt for hotel acquisitions is at an all time high, while interest rates remain near historic lows (and according to Business Week Feb 19 07, the consensus seems to indicate another 4 to 6 years of low cost of debt). Lender sizing and pricing of debt has become much more liberal and aggressive in their quest to place capital.

• Easier access to debt from a borrower's perspective, is also explained by the lender’s ability to offload their loans on the secondary market through securitization (Commercial Mortgage Backed Securities (CMBS), more competition amongst lenders, all contribute to low cost of funds available.

• Basic principle of diversification of risk. Spread your risk in different asset class.

• Supply of new hotels has been kept under tight leash, which helped sustain high profitability for existing hotels.

• Hotel investment has reached an institutional status in terms of alternative real estate investment, which makes it more secure and more mainstream and therefore makes it more competitive with other asset class.

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