Scott Real Estate Investments
Call (206) 264-7735
Lodging valuations in primary and interstate markets are improving. This uptick is being driven by increased travel and fewer new rooms being built causing upward pressure on occupancies and average rates. Secondary and tertiary market valuations are improving but at a slower pace. . The availability of new loans is improving & continues to originate at the private investor, SBA 504 and SBA 7A levels. Conventional loans in lodging continue to require low loan to value ratios. The current increase in revenues and available financing is sparking buying and selling opportunities. However, investors have not forgotten the lessons learned from the "Great Recession". The current economy is viewed with guarded optimism and is being closely monitored for signs that it will continue to improve. Consequently and despite increasing revenues and lender competition, informed buyers remain cautious and their buy decision is based on current ROI performance. The "heady" days of 2007 have disappeared and successful sales require sellers' acceptance of current market investment parameters.
Foreclosures are down from 2013 and debt and interest coverage ratios are up with SBA loans. Inventory of available lodging properties is down especially in the the Pierce, King and Snohomish markets.
As 2015 progresses, the signs for increasing interest rates are diminishing leaving expectations of marginally higher rates in the mid to late fourth quarter. The Loan to Value (LTV), Amortization period and interest is currently very attractive. However, motivated buyers and sellers should consider the impact of slightly higher interest rates in the near term will have on buy/sell options.
**(Published In Hotel Business Feb. 2015)