Akin Gump real estate partner
David Phelps was interviewed by Metropolitan Corporate
Counsel on the transformation of the hospitality industry and
the challenges that these changes present for investors, from
private equity and sovereign wealth funds to entrepreneurs working
in the millennial market.
Among the topics Phelps covered in "Hospitality Investors
Adjust to Shifting Realities" are:
Finding growth in the
hospitality market: "Where we are seeing growth is in
the branded and unbranded focus on millennials. Products like
Starwood's Aloft, Moxy by Marriott, Canopy by Hilton and
Radisson Red are all examples of brands looking to capture
millennial demand. In addition, we're seeing new nonbranded
entries, like Bunkhouse and Basecamp, which are kind of the youth
hostel approach to hospitality. Overall, millennials are attracted
to lower priced hotels that are cool and communal, or are in cool
and different neighborhoods..."
Opportunities for real estate
PE funds: "For funds to deliver double-digit yields,
they have to focus on properties where significant value can be
added. As a result, we're seeing a lot of apartments, condos
and even office spaces, through renovation or ground-up
construction, being repositioned for hotel use in urban areas,
often in secondary and tertiary markets. We have a particular hotel
client, for example, whose main focus is repositioning historic
downtown buildings into hotels, and many fund managers whom I have
spoken to talk about a similar focus. The lack of product and the
need to see higher returns drives this."
Take-private transactions in
the hospitality sector: "There have been obvious and
noteworthy taking-private transactions in the lodging sector, most
notably Blackstone's acquisition of Hilton. Less obvious I
think is the spinning off of hard assets by the brands over time to
private equity buyers, sovereign wealth funds and other private
buyers. There has been this separation occurring between ownership
and operation of hotels for some time. The end result is the
privatization of the hard hotel assets. What we have been seeing
and will continue to see is a systematic long-term effort by the
brands to sell off their own hotels while maintaining their
long-term management and franchise and licensing agreements in
order to restructure their balance sheets to be more asset light
and less capital-intensive."
The word "defalcation" remains one of the more frightening terms in the title insurers' lexicon. But with the proper training, preparation, and response, defalcations can be managed, and the title insurers' exposure controlled.
Last month, the US DOJ filed a new FHA complaint in US District Court for the Eastern District of Missouri asserting that two landlords in St. Louis subjected female residents to sexual harassment and retaliation.
On September 12, the Third Circuit Court of Appeals held that the United States District Court for the District of New Jersey erred in dismissing a suit against Jersey City challenging its ordinance which required the use of union labor on certain construction projects which were subject to property tax abatements.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).