In June, Watermark Lodging Trust, a Chicago REIT, sold its Hutton Hotel in Nashville for $70 million. The price is $7 million less than what the REIT said it paid to acquire and upgrade the hotel seven years ago.
A month later, Watermark said it signed a deal in which it sold shares worth $200 million to a joint venture between Ascendant Capital Partners and Oaktree Capital Management.
The influx of cash will be used to keep Watermark in business and give Ascendant and Oaktree preferred equity positions. Watermark will pay the JV a 12 percent annual dividend rate.
The activity is a harbinger of what’s to come as hotel owners struggling to stay afloat amid the economic downturn caused by the coronavirus pandemic may soon be forced to sell their assets at a discount or borrow money to keep paying their mortgages.
In this episode of Lodging Leaders podcast, we explore what opportunistic investors might have in store as the lodging industry faces the possibility of mortgage defaults.
We talk to financiers who are stepping up with what they call “rescue capital” to help owners get to the other side with their businesses intact or be among the first to reap a return if an asset is forced to go to market. And we talk to asset managers who advise on how to position your hotel to either survive the crisis or go to market.
Our report features Amanda Chivers, managing principal at Crown Hospitality Consulting in Atlanta; Evens Charles, president and CEO of Frontier Development & Hospitality Group in Washington, D.C.; David Turley, principal at Cronheim Hotel Capital in New York City; and Brian Waldman, executive vice president of investments at Peachtree Hotel Group in Atlanta.
Resources and Links
Lodging Econometrics has tracked the hotel industry since 1998. Its global database includes new-hotel pipelines as well as renovations and brand conversions. Hotel franchisers once eager to launch new brands are focused on converting existing hotels because it’s a faster way to recover revenue lost to the COVID-19 pandemic than through new construction. In Episode 346, Lodging Leaders explores the increasing number of conversions in the U.S. hotel industry and what owners and operators need to consider before repositioning an asset.
In the first few months of the COVID-19 pandemic in the U.S., financiers anticipated a swell of distressed hotel businesses. Some raised rescue funds to respond to what they thought was a pending crisis. Though there are financial rescues taking place, the level of such activity is far below what industry advisers and fund managers expected. Commercial real estate investors positioned to act in the early days of the pandemic held off and are now just beginning to unleash their cash hoards totaling billions of dollars. Episode 345 of Lodging Leaders podcast explores the state of capital investment in the hotel industry.