Hotel Management — March 2012
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Wells Fargo bullish on hotel acquisition lending
Flagged hotels in top 25 markets with multi-demand generators garner attention
National Report–Much has been made of the tight credit markets and dearth of bank lending, particularly for hotel projects. There is one lender, however, that is slowly but surely opening its vaults: Wells Fargo & Co.
In January, Hotel Management hosted and sponsored the Lodging Industry Investment Council roundtable, which ran concurrent with the Americas Lodging Investment Summit, in Los Angeles.
While many topics were discussed, from hotel market fundamentals to the varied plays of real estate investment trusts and private equity [watch for full coverage next issue], top of mind was the question of whether financing for hotel projects and acquisitions is available.
While the answer still may be ‘not so much,’ Wells Fargo seems less afraid than others to commit financing for hotel projects lately.
Anne Hampton, VP of Wells Fargo Bank Hospitality Finance, was part of the LIIC roundtable, and made it clear that the bank was open to the idea of lending funds for hotel development.
why now?
“We think we’re in the ultimate spot to be making loans right now,” she said. “We think now is a great opportunity.”
She also enumerated the types of hotel projects Wells Fargo is interested in underwriting. “We like upper-upscale, limited service and upscale full-service hotels,” she said, adding that the properties should be flagged by top brands, in top 25 markets and be multi-demand generators. “We stay away from one-demand-generator markets,” Hampton said.
Although Hampton said Wells Fargo is in a position to lend now, don’t be surprised if you get turned down for a loan that deals with ground-up construction—acquisitions are more their speed.
“We’re not looking at construction,” she said. “It just doesn’t pencil out. Construction is more work. There are many more cash-flowing assets in key markets.”
Ultimately, Wells Fargo will remain vigilant and unafraid to commit toward hotel financing. “We are bullish,” Hampton said. “We originated nearly $2 billion in hotel loans in 2011. We’re looking at 2012 being strong. We’re a short-term balance lender, three to five years in gateway markets. Our sweet spot is $40 to $60 million, and we’ll go as low as $20 million. Our pipeline for existing hotel loans is strong.”
results
The proof is in the pudding. In January, Atlanta-based Access Point Financial closed on a senior secured credit facility with Wells Fargo Capital Finance that will help finance hotel development. Access Point reportedly used the revolving debt facility, which started at $150 million, in partnership with its $100-million equity, to place $1 billion in loans for improvements and bridge financing for the next 26 months.
In February, Apple REIT Eight received a $40-million loan from Wells Fargo, secured by two hotels owned by the investment trust, the Residence Inn San Diego Oceanside and Residence Inn Burbank, Calif.
The New Year brings good news to the travel industry as budgets rise
Southlake, Texas–Even though many consumers are still wary of the economy’s condition, they plan to increase travel by 53 percent more in 2012 than in 2011, according to Travelocity’s annual “Traveler Confidence Report.”
Compared to 2011, it is an 18-percentage-point year-over-year increase. The report revealed that about two thirds of respondents plan to increase their travel budgets in 2012.
“The travel industry should be encouraged by our findings and take this as a vote of confidence,” said Carl Sparks, president and CEO of Travelocity Global, in the report. “While increases in spending are being driven by higher prices, travelers are taking more vacations and trips that are longer and farther away this year compared to last.”
Wells Fargo bullish on hotel acquisition lending
Flagged hotels in top 25 markets with multi-demand generators garner attention
National Report–Much has been made of the tight credit markets and dearth of bank lending, particularly for hotel projects. There is one lender, however, that is slowly but surely opening its vaults: Wells Fargo & Co.
In January, Hotel Management hosted and sponsored the Lodging Industry Investment Council roundtable, which ran concurrent with the Americas Lodging Investment Summit, in Los Angeles.
While many topics were discussed, from hotel market fundamentals to the varied plays of real estate investment trusts and private equity [watch for full coverage next issue], top of mind was the question of whether financing for hotel projects and acquisitions is available.
While the answer still may be ‘not so much,’ Wells Fargo seems less afraid than others to commit financing for hotel projects lately.
Anne Hampton, VP of Wells Fargo Bank Hospitality Finance, was part of the LIIC roundtable, and made it clear that the bank was open to the idea of lending funds for hotel development.
why now?
“We think we’re in the ultimate spot to be making loans right now,” she said. “We think now is a great opportunity.”
She also enumerated the types of hotel projects Wells Fargo is interested in underwriting. “We like upper-upscale, limited service and upscale full-service hotels,” she said, adding that the properties should be flagged by top brands, in top 25 markets and be multi-demand generators. “We stay away from one-demand-generator markets,” Hampton said.
Although Hampton said Wells Fargo is in a position to lend now, don’t be surprised if you get turned down for a loan that deals with ground-up construction—acquisitions are more their speed.
“We’re not looking at construction,” she said. “It just doesn’t pencil out. Construction is more work. There are many more cash-flowing assets in key markets.”
Ultimately, Wells Fargo will remain vigilant and unafraid to commit toward hotel financing. “We are bullish,” Hampton said. “We originated nearly $2 billion in hotel loans in 2011. We’re looking at 2012 being strong. We’re a short-term balance lender, three to five years in gateway markets. Our sweet spot is $40 to $60 million, and we’ll go as low as $20 million. Our pipeline for existing hotel loans is strong.”
results
The proof is in the pudding. In January, Atlanta-based Access Point Financial closed on a senior secured credit facility with Wells Fargo Capital Finance that will help finance hotel development. Access Point reportedly used the revolving debt facility, which started at $150 million, in partnership with its $100-million equity, to place $1 billion in loans for improvements and bridge financing for the next 26 months.
In February, Apple REIT Eight received a $40-million loan from Wells Fargo, secured by two hotels owned by the investment trust, the Residence Inn San Diego Oceanside and Residence Inn Burbank, Calif.
The New Year brings good news to the travel industry as budgets rise
Southlake, Texas–Even though many consumers are still wary of the economy’s condition, they plan to increase travel by 53 percent more in 2012 than in 2011, according to Travelocity’s annual “Traveler Confidence Report.”
Compared to 2011, it is an 18-percentage-point year-over-year increase. The report revealed that about two thirds of respondents plan to increase their travel budgets in 2012.
“The travel industry should be encouraged by our findings and take this as a vote of confidence,” said Carl Sparks, president and CEO of Travelocity Global, in the report. “While increases in spending are being driven by higher prices, travelers are taking more vacations and trips that are longer and farther away this year compared to last.”
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