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August 16, 2012

$6 billion in hotel transactions in the U.S. reported in first-half 2012

(Boulder/Colorado, USA – August 16, 2012) Almost US$6 billion in hotel transactions occurred in the U.S. during the first half of 2012, according to data from the Hotel Transaction Almanac Midyear 2012 Update, a report from STR Analytics and the Hotel Investment Barometer.

“The investment landscape for hotels has obviously changed since last year,” said Steve Hennis, director at STR Analytics. “Deal flow has tapered since 2011, particularly in the luxury segment. Additionally, there has been a shift in buyer strategy to some degree with fewer distressed sales and less activity by real estate investment trusts (REITs).”

Key findings from the Hotel Transaction Almanac Midyear Update:

  • Only 13 percent of transactions involved distressed assets, a sharp decline from 2011 when almost one out of three asset trades included struggling properties.
  • Only 16 percent of hotel acquisitions were by REITs, a noticeable decline from 2011 when 35 percent of purchases were by REITs.
  • The average room revenue multiplier was 3.9, a modest drop from the average multiplier of 4.2 in 2011.
  • Surprisingly, the average cap rate declined to 9.2 percent in 2012 from 10.5 percent in 2011.

The Hotel Transaction Almanac is an overview of historical trends in U.S. deal volume and pricing. It includes aggregate breakdowns by region, property class and location type for numerous key metrics. The Hotel Transaction Almanac combines STR Analytics’ in-house transaction database with that of data partner Hotel Brokers International (HBI) to create a comprehensive hotel transactions report. The report also includes valuation parameters including price per key, room revenue multiplier, additional capital invested, cap rate and financial terms including interest rates and loan-to-value ratios. The hotel Transaction Almanac will be produced on an annual basis going forward.

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