After Blackstone’s acquisition, private equity poised to play big in hotel investment market

December 07, 2012 05:30PM

Private equity players are likely to become the most active buyers in the hotel investment market, following Blackstone’s $1.2 billion acquisition this week of Apple, a hotel REIT that owns brands such as Hilton Garden Inn and Courtyard By Marriott, CoStar Group reported. The buy gives Blackstone a total of approximately 200,000 hotel rooms, or about 4 percent of the nearly 5 million hotel rooms in America. Nearly half of Blackstone’s rooms came from the firm’s $1.9 billion acquisition of the Motel 6 chain in May.

The buy has investment analysts predicting more of the same in 2013, as private equity firms take advantage of the improving debt market for hotels. Currently the hotel investment market is on pace to reach $15 billion this year and another strong rally of transactions are expected next year, according to Lauro Ferroni, vice president of research and strategic advisory of the Americas for Jones Lang LaSalle.

Debt availability for acquisitions is expected to reach its highest level since 2007, with loans available from a variety of sources, including commercial banks, CMBS, mortgage REITs and debt funds, Ferroni said, pushing private-equity buyers like Blackstone to increase their activity.

At least three other big hotel deals have been done this week with RLJ Lodging Trust announcing a $71.6 million deal for  the 231-room Hilton Cabana Miami Beach, Loews Hotels & Resorts agreeing to buy the 356-room Madison Hotel in Washington, D.C and the Washington, D.C.-based Modus Hotels’ acquisition of the 97-suite Brookshire Suites in downtown Baltimore. [CoStar]Christopher Cameron