Title says it all. Curious how all of you in Hospitality are able to get deals done today (if at all…?)
- How have your equity partners reacted to you reaching out to raise on a new deal?
- How have your lending relationships responded to any new requests for financing?
- What new and creative capital structures are you pursuing to try to get new deals done?
Same as it always was. Some lenders say no immediately others that still are open are a bit higher on rate. See some more pref/mezz than may have been typical previously to fill out above the debt.
Bump
Specifically Hotel only guy here on the Institutional LP side.
We get pitched deals every other day. It’s really nothing much different than pre-COVID just a change in debt pricing and valuations. Hot products right now are resorts and premium select service, but per key values are getting crazier and crazier day by day, specifically resorts.
We have refinanced three of our assets during COVID. Two of them were with debt funds that we created new relationships with. This was early 2021 so there was still some hesitancy for the big banks to even submit a term sheet.
Do you have any intel to share on how the resort style hotels would price in the debt markets today? I have seen spreads for 10 yr money as high as 300bps on non-flagged resorts (amazing performance throughout COVID) and have heard spreads of 175-200 bps for flagged resorts (amazing performance throughout COVID).
You do hotel equity on the LP side? Let me know if you want to connect. Working with a group on the GP side focused on limited service acquisitions. Been struggling to find knowledgeable LPs in the hotel space for them. Everyone still thinks Covid is hurting hotels, which has clearly not been the case, but hard to overcome preconceived opinions.
Are you specifically working for the GP or is the GP a relationship of yours?
I'm not on the LP side but would love to pick your brain for personal reasons if you're open to it!
Sure. PM me.
work on GP side here, luxury product, ground up development.
Debt:
- was hard to raise debt early on in COVID (2020 thru early 2021). Any debt that we could find was likely a) low LTC (think around 50%) and b) expensive as hell
- lender appetite has changed recently, but it is largely location and comp dependent. Many areas (especially drive-to markets) have been KILLING it in terms of NOI and cap rate compression through late 2021 into early 2022. Lenders are becoming more comfortable with higher leverage once again.
Equity
- Appetite for hotel product was non-existent for a while
- Appetite has come back, but groups are looking for higher IRR hurdles post covid, often with more protective policies put in-place in the term sheet.
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