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Real Estate Bisnow
The largest commercial real estate publication in the United States.
January 17, 2012 

Wanna build a hotel on Park Place? Well, you’ll need a lot more than Monopoly money to get it done, we learned at the Bisnow Texas Hospitality Summit on Thursday at the Hilton Anatole. LTV is down to 50% and lenders focus more on the sponsor and locations, says Behringer Harvard SVP for hotel acquisitions and asset management Rick Frank.
crowd shot
Who’s going to fund the hospitality deals this year? It won’t be the life companies, says event sponsor Allied Advisors senior managing director Richard Rudd. (And it sure as heck won't be that old spare change jar.) CMBS is back and it'll go higher up on the capital stack, he says. His picks: CMBS, a good source despite tightened criteria; mezzanine funds, good for deals in which you want cheaper deals for underlying senior debt; and debt (in the 7% range), which provides cheap, plentiful equity. The key: it all starts with a sponsor. The lender wants to see who the borrower will be, then they’ll listen to the story, Richard says.
Allied Advisors senior managing director Richard Rudd
Richard says the volume of hospitality transactions was up in ’11 and will continue this year on selective deals. There’s still an aversion to risk (and telling lenders to "man up!" usually doesn't go over well), so there will be a keen eye for underwriting. Equity funds are getting as picky as some of the REITs and the institutional buyers, but they still want the higher yields.
Behringer Harvard SVP for hotel acquisitions and asset management Rick Frank
Rick says the top 25 MSAs will still see the most action this year, but the wild card is the availability of debt. If it stays skittish, there will simply be less activity. When he’s on the prowl for acquisitions, Rick says he looks to take advantage of someone else’s discomfort or help them through it. “On one side of the fence, I’m that person,” he says. “But we have five or six hotels that aren’t doing great and we need to sell them, but I’m not willing to sell them at the prices buyers are willing to pay." Liken him to the Mayhem guy from Allstate: not a willing seller, but also a pain-in-the-neck buyer—and that's what he thinks you're seeing across the board.
Real Estate Tax Consultants COO Amish Gupta
Event sponsor Real Estate Tax Consultants COO Amish Gupta did double duty at the event, moderating both panel discussions. Fortunately, he didn’t have to break up any fights.
Ashford Hospitality founder & CEO Monty Bennett
Ashford Hospitality founder & CEO Monty Bennett says lining up debt and equity will be more of a struggle that in past years. A recently completed deal took 14 months to finish because of negotiations with all the participants in the capital stack, he says. A positive for hospitality: limited new supply and increasing inflation. Occupancy is growing throughout the country, and barring any type of European spillover, we’ll continue to see demand, occupancy, rates and RevPAR grow, he says.
Varro Hospitality CEO Jeremy Soder
Comparing the hospitality investment community to the Army marching into Baghdad, Varro Hospitality CEO Jeremy Soder says his firm is the special ops unit in that mission. Using guerilla tactics, Jeremy says the firm is opportunistic and will make a play for the little deals that the big guys skip over. “While everyone was in distress and despair, I got more excited… we managed our own fears,” he says breaking into what Amish tagged as his Tony Robbins moment. No "what ifs" were allowed. It was all about staying positive.
The Real Estate Council’s Tessa Samarripas and Lindsey Jamar with Accountemps staffing manager Ujala Kothari
Mid-schmooze, we snapped event sponsor The Real Estate Council’s Tessa Samarripas and Lindsey Jamar with Accountemps staffing manager Ujala Kothari. Tessa tells us TREC has a community breakfast event coming up on Feb. 1 focusing on guerrilla philanthropy. (Seems to be a theme for the day.)
We interrupted Moody National Cos acquisition analyst Teddy Dykoski (who came from Houston for the event) from his iPad. He tells us Moody is in acquisition mode, focusing on Marriotts, Hiltons, and other select-service products in the top 20 markets across the Sunbelt, West Coast, and East Coast. With a $1B REIT ramping up, we bet Teddy’s iPad will see quite a few reports (and maybe a few rounds of Angry Birds).
We snapped Hospitality Management Corp’s Bob Jones, Monty, Studio 11’s Kellie Sirna, Amish, and Hyphen Construction Co’s Dinesh Chandiramani. Dinesh tells us hotels have been waiting some three years for refurbishing properties. Hyphen’s working on the Marriott Courtyard in Killeen, a Crowne Plaza in Melbourne, Fla, a Fairfield Inn and Suites in Lake Charles, La, the Roosevelt Lofts in LA, the Las Vegas Marriott Renaissance, and the Sheraton in Omaha. Maybe he'll trade you some frequent flier miles.
Keith Kilpatrick and Drew Landis
We corralled Terracon’s Keith Kilpatrick and Drew Landis and dragged them away from the networking to quiz them on the best barbecue joints in North Texas. Here’s what they had to say.

Martin Luther King Jr

Like many of you, we took yesterday to acknowledge the service of Dr. Martin Luther King, Jr. We admire his courage and continuing impact on American cities. This picture is from 1964, and if 95% of the Bisnow staff had been alive then, we'd certainly have been there to take it. But from what we can glean, it looks like Dr. King's response to someone asking, "How big an impact will transit-oriented development have on city centers in the year 2012?" Whether he's saying "a lot" or "why are you asking me this," it's an appropriate response.

Come back tomorrow for the second day of event coverage. In the meantime, email your news to tonie@bisnow.com.
Caddis Partners
Bradford (Crisis)
REFM (DealsWebinar) DFW
BOMA Dallas (Awards)
REES Architects 2
Healthcare REIT DFW
CREW DFW (dr. Ray)
Addison (Climb) DFW
Gaedeke (Monopoly3) DFW
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