When the Hampton Inn & Suites in Port Arthur sold, we tracked down the seller’s rep, Marcus & Millichapâ€™s Michael Yu and Rahul Bijlani.
Michael and Rahul got the 72-room, three-story, 45k SF property in escrow within 30 days on the market and found a buyer willing to pay a significant premium to replacement cost. Michael tells us there was no real local interest, and the purchaser was a first-time buyer, which made securing financing that much more difficult. The pair helped the buyer by securing a good management company and coming up with â€œlots of positivesâ€ about the company. Michael says most of the popular hotel lenders have bad loans on their books and are not positioned to do loans, and itâ€™s particularly difficult to get loans over $2M, so he had to look elsewhere.
Michael predicts there will be a large number of properties going into short sell, REO, or foreclosure in the 12 to 18 months. His recommendation: If you have the cash to purchase a hotel, do so now. Lots of buyers are coming back to the market and pricing is jumping dramatically. Michael tells us he has two hotels currently in escrow; one is still under construction, which he says is the hardest to sell because thereâ€™s no proof the property will bring in good revenue. And he let us in on an interesting trend; lenders are taking a long time to put REOs on the market, preferring to foreclose and keep the properties. He works with some receivers who have 80 to 100 hotels now, which he believes is a mistake.