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Hotel Sheet
January 2, 2013 
Why Investors Are Rushing Into Hotels


Just as we've resolved to eat more vegetables in 2013, Boxer Property wants to buy more hotels. So why is the Houston-based investor, which usually snaps up office, changing?

Boxer Property Group's David Kayle and Andre Pereira

For two decades, Boxer Property has invested in value-add office, transforming them into premium digs. But it recently noticed similarities between office and hotel: Many assets are suffering bad debt, overleveraged and held by special servicers. “There were a lot of great discounts and we couldn’t help ourselves,” says Boxer director of acquisitions David Kayle, here with fellow director of acquisitions Andre Pereira (seated). Its wish list: irreplaceable, resort-style hotels around the world where it can fast-track capital improvements and boost hotels back to five stars.

Pointe Hilton Tapatio Cliffs Resorts in Phoenix

Here's Boxer's first purchase, which closed in December: the 584-room Pointe Hilton Tapatio Cliffs Resorts in Phoenix, which has not only a resort hotel, but the Tocaloma Spa & Salon and Lookout Mountain Golf Club. In this case, Hilton will remain the operator with Boxer’s capital backing. Moving forward, Boxer will consider boutique or unflagged hotels—preferably 100 rooms or more—in strong hospitality markets. There are already a few deals in the works for Q1, but David and Andre couldn’t divulge details yet. (Well, we’re not telling them what veggies we’re eating either.)

Sam Nazarian and Michael Scheinberg

One of 2012's final hotel deals was the acquisition of South Beach’s legendary Raleigh Hotel by developer David Edelstein and Sam Nazarian’s sbe. (David developed and owns W South Beach, while sbe recently opened SLS Hotel South Beach.) Right before Sam inked the deal, the hotel impresario headlined the packed Bisnow Southern California Hotel Investment Summit at his very own SLS Hotel Beverly Hills, where he told the crowd that he’s about to begin construction on SLS Hotel & Casino Las Vegas (the old Sahara) and that sbe will have 3,500 rooms open by the end of 2014. Above, he’s joined by Pircher, Nichols & Meeks partner Michael Scheinberg; read more from the event here.

JLL Hotels SVP Gilda Perez-Alvarado

2012 was a spectacular tourism year for NYC: Mayor Mike Bloomberg announced New Year’s Eve that the city broke records with 52 million visitors. But even with strong hotel fundamentals, healthy occupancy, and hotels nearing peak RevPAR, JLL Hotels SVP Gilda Perez-Alvarado tells us that some investors are actually bearish on the sector, with relatively flat budgets compared to 2012 and concerns about general macro trends that might affect travel and demand. Another worry: how increased benefit costs and labor constraints may impact the bottom line. Despite these, NY remains the choice hotel investment market—just look at recent impressive deals like the Essex House, The Setai, and The Plaza, she says.

Greenberg Traurig’s Nelson Migdal

But will NYC’s tourism run last? What’s transpiring overseas, from foreign debt to peace and tranquility, will ultimately impact travel to the US, says Greenberg Traurig’s Nelson Migdal, who co-chairs the law firm’s international hospitality practice. In the first half of 2012, 46% of all visas processed by US embassies were for the Chinese leisure travelers, he tells us; in 2011, there were 1.1 million Chinese visitors to the US. It’s important to make sure their entry into the US and access to our markets is simple, he says. Two other major trends that'll drive the sector: brands focusing more on lifestyle and boutique hotels and greater investor interest into the Central, Latin, and South American markets.

Goulston & Storrs director John Ratino

The hospitality sector's recession, followed by the recovery in many markets, has created significant investment opportunities, says Goulston & Storrs director John Ratino, who expects hotel acquisition prices to continue their climb in top markets. It’ll be interesting to see if this recovery reaches some of the secondary and tertiary markets it’s so far missed, he says, adding that we may see some shovels in recovering markets as debt becomes available.

BLIS 2013
Tom Corcoran

Hear all about these trends—and much more—at the second annual national Bisnow Lodging Investment Summit (Nelson and John will be moderating) April 24-25 in Washington, DC. Register here for early bird pricing and click the video above to see why you don't want to miss this year's BLIS.


A resolution goes in one year and out the other. But don’t forget to send story ideas to amanda@bisnow.com.

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