So it’s been quite a while…

Interesting, during a period of time where undeniably just about everyone focuses on discussing the importance of social media and building brand equity through vehicles such as Twitter, Facebook, etc., that many serious CRE organizations seem to have taken a step back from all of these exact vehicles.  Why?

Has anyone else noticed that over the past couple years the information that has been prevalent via social media in the CRE world ( particularly that of lodging) has been self promotion?  Not in the sense of real stories, properties that have sold and how those specific properties are relevant to current trends in our industry, but seemingly more self promotion of information that really isn’t press worthy at all.  Press releases regarding new listings (kind of the business we are in), or new offices (not normally actually with a human being in said office).  The reason to start blogging again is partially because it seems nobody has much to say of interest, so anything that is based in original thought should appear unique in our business.  More important however, there’s a lot of important stuff going on.  Yes, tweets provide everyone the opportunity to in a very short manner basically regurgitate information we get in daily emails from industry publications, but the idea of putting some thought behind it seems to be the proper thing to do right about now.  I can’t say I have a clue why I feel this way, but that’s the beauty, we get to blog when we want for whatever reason.

Life has been very interesting of late.  Business is great.  We can’t complain about our clients and I don’t think they can complain about us.  We find success in the engagements we take on right now at very high percentages.  Blah blah blah is what I assume most would say to that, anyone can say anything (although it’s true!).  But why start blogging again now, why feel the need to express opinion.  The simple reason is people are asking.  Conference panels, articles, it seems the organizations responsible for putting out information are interested in original thought again and that’s fantastic.  But also I think it has something to do with where we are.  Life is good, business is good, the world is good, but is there a proverbial shoe that has been talked about for about 4 years now that folks have been waiting to drop, correct?  I don’t really believe it’s going to, not at a macro level, but I do believe if we don’t start planning for more change, that shoe may be just large enough to kick any individual or business in the ass.

So I will try to start blogging again because I think it’s a good time to and also because I’m experiencing a tad of insomnia so maybe I have a little extra time.  Over the next few weeks we have the Global Wyndham Conference, The Lodging Conference, etc.  Also, I’m very excited NATHIC has moved to Chicago, come visit our beautiful city Nov 20-22 for a hotel investment conference that will not be like any others.

Most important though, and what I will want to blog about in detail, is that something feels strange, feels funny, tastes odd.  There is almost too much news that is simply too good to be really considered news.  Chicago alone has had announcements seemingly every other week about how great things are (and they have been) but this is a city with really strong rate ceilings.  The trades that are happening are not all going to pan out for new owners.  We may be losing focus again on certain fundamentals.  Equity is cheap as we all know, lenders are being less vigilant in their underwriting, CMBS is truly back.  This can all be great stuff but only for the right deals.

Those of you who make fun of Mubaho… Matthew Good is coming out with a new album in September and touring with a full band through the US for the first time in who knows how long, so I’m not the only guy thinking let’s take something old and make it new again, or let’s try something different in general.  If you know the artist just imagine hearing “While We Were Hunting Rabbits” with a full band, and how different it will feel and sound compared to just an acoustic version.  Maybe you think there is no comparison, music to the lodging industry, but I venture to say there are direct parallels.  Let’s visit some of them soon.

Why is finance so complex

Happy Holidays to PLA twitter followers and Blog readers, check out the link to, “Why is finance so complex”

http://www.interfluidity.com/v2/2669.html

It really makes you think about our industry and how much of success is ‘individually driven’ versus ‘timing with Momentum’. Thoughts? Should we incorporate momentum into our pro-forma analysis for buyers? Post and let me know.

Sanjeev Misra
Email

PLA – A Late Thanksgiving

There is no news today. Not literally, but as I ponder the question, to blog or not to blog (I know the answer is to blog, just need to find the time), I’m realizing that there is something I did not do that I should have, and today is a perfect time to take care of it. It’s not news, but it’s important.

In the business world we are blessed when we develop good relationships with the people that we do business with. We are further blessed when we develop good relationships with the people we actually work with. So as Thanksgiving rolled by, I did nothing, no blog, no tweet, no update on LinkedIn, etc. about the fact that I have obscene amounts of gratitude for the outstanding relationships that I have with my teammates at Paramount. There is not a PLA team member I do not consider a friend unless they are so new I haven’t met them yet (very new, I look forward to meeting you next week btw). In Chicago specifically, I can honestly say I know each PLA Chicago team member knows how I feel about them, as in how much I care about them as individuals, and in return I know how much they care about me.

We work hard, we debate, we can’t always act like we’re all best friends, that wouldn’t be productive. We have to teach and learn from each other which as a father I know is not human nature. Wanting to learn I believe is a skill, so sometimes the teaching and learning is done reluctantly.

We work on extensive projects we can’t or won’t talk about or do press on because we use the term “stealth” so often lately and maintain our ethical standards of confidentiality and respect. Even though this is our livelihood and we are compensated, I’m sure there is some frustration that we don’t get to stroke our ego a little bit. Until the work is complete however, or in some cases even after that point, we won’t let anyone know. I’m sure a part of each one of us wants to. We may celebrate with a bottle or Crown and a diet coke for me however.

Which leads me to my thoughts today. So it isn’t always peaches working with your colleagues. However, there are times to be serious and get down to business (like when I’m done writing this for example, which is completely spur of the moment), and there are times to relax, have fun and enjoy the things we have that are taken for granted even for one minute too long. I didn’t give thanks to the PLA team on Thanksgiving. Tonight however as we have our Chicago team holiday event, I will be truly grateful and thankful for each and every person that is there and that is not, who they are, what they have done and what I know they want for themselves and for this group of misfits, who somehow find ourselves right where we wanted to be.

Lots to be grateful for at the office? Since home is where the heart is, life is good.

Thx PLA.

The Future Hotel Owner…Who is it?

Who will own hotels that the traveling public stays in moving forward?

I think about this question a lot.  Things have certainly changed in the 20 years I have been involved in the industry, and I suspect they will change even more over the next few years.

From what I learned in hotel school, the rules of the trade started with innkeepers laws in the United Kingdom over 500 years ago.  I personally started my romantic desire to own, operate, broker and consult on hotels when I saw the musical Les Miserables in my early teen years.  There is a song called, “Master of the House”, that details the daily happenings at the Inn and how the Innkeeper manages all the daily chaos.  That Innkeeper had revenue management perfected!  The song shares his revenue secrets, here is an excerpt:

Charge ‘em for the lice, extra for the mice
Two percent for looking in the mirror twice
Here a little slice, there a little cut
Three percent for sleeping with the window shut
When it comes to fixing prices
There are a lot of tricks he knows
How it all increases, all them bits and pieces
Jesus! It’s amazing how it grows!

So I am digressing a little bit with my fond memories, but it does lead me to my main thought. I wonder if the day and age of the private hotel owner that is actively engaged in the operation of the hotel is slowing exiting stage right.  This has been a function of bigger pockets of money (this would be REITs, Private Funds and Institutional Investors) becoming more comfortable with owning hotels.

The thought for the last decade has been that Hotels are Good Real Estate.  The reality is and has always been that Hotels are an Operating Business. I thought that the institutional investors figured that out when our industry took a nose-dive at the end of 2008.  We have now seen the largest volume of hotel assets in default with their lenders and in special servicing than ever before.  Will this deter big money from our industry or serve as a light of opportunity to find undervalued distressed hotels?  Only time will tell.

If we look at 2010, private owners were the biggest net sellers, unloading  $1.9B of hotel assets, while public companies and REITs were the biggest buyers, with acquisitions of over $2B.  Lenders were the next largest buyers of hotel assets with $1.8B in acquisitions (this is really net change to holdings).  You could say that Lenders are the ‘involuntary owners’ today and it will be curious where these assets end up.

One might say that the private owner will always have a place because larger investors do not pursue smaller hotel ownership or investment in markets outside the top 25 MSAs.  So does that mean that the chance to run into a hotel owner at an actual hotel will only occur at your highway exit hotel or in places like Flint, Cleveland, Des Moines and Greenville? (I have no idea why I listed those places, consider it a random selection of where institutional hotel players don’t want to invest)

So these are my rambling thoughts tonight and I would be interested to see people post comments on who they think will be the most active hotel owners in the future.

Sanjeev Misra

PLAv5 addition

Welcoming Dave Marta to the PLA team in Chicago, adding a wealth of Capital Markets knowledge and relationships, as well as a desire to be a broker in the manner we see brokerage in today’s environment, pure advocacy and unbeatable success. Welcome Dave, we’ll send press over the next couple weeks. We will be redoing our blog site and social media distribution again also, so bear with us, but there will be lots to discuss this year, and we feel it’s important to deliver messages and thoughts that may provide value to our clients and the rest of the industry when applicable.

Real Estate Debt and Equity Availability… Looking Good

This morning, Bisnow hosted a real estate capital markets gathering in Chicago with both debt and equity panels.

Here are a few main points I’d like to share with you:

  • The view on equity is that it is plentiful for institutional quality, core assets but much tougher to come by for value add or opportunistic investments. Not too surprising.
  • CMBS origination should total about $10B in 2010 and is expected to be triple that in 2011.
  • Anything going through CMBS now is likely to be CBD properties with top flags and underwritten on T12 income to at most 65% LTV.
  • Bank and life company origination is starting to pick up but almost entirely on prime assets with excellent sponsorship. So that eliminates 90% of the deals; but nevertheless..
  • Debt availability is trending in the right direction so it bodes well for 2011.

What do you think? I would like to hear your take on this. You can also contact me directly via email.

- Walker Geyer

PLA: Ready for action in Florida

Back in September, we announced the addition of  our new office in Naples, Florida. (If you have not read that Press Release, you can view it here.) In line with this development, we are excited let you know that Howard Bergen has now joined our hotel brokerage and advisory team.

Howard brings the experience that we want on the Paramount team - an extensive hotel operations background that allows us to understand the needs of buyers and sellers in today’s market. The addition of the Tampa office is part of a strategic set-up to be able to cover the Florida and Southeast markets effectively.

You will find more details about this announcement on the Press Release that we have just sent out. If you would like to chat about the hotel market in Florida and the Southeast, send us an email or feel free to leave a comment below.

In behalf of the PLA team ,” Welcome” Howard!

- Mike Bou-Sliman