From Our Desk: Michael BernathAs Vice President/Partner of Hotel AG, Michael Bernath adds significant investment knowledge to our excellent corporate team. With a background in hotel finance and industry economics, Michael provides his clients with an incredible experience and savvy market awareness, regardless of whether they are buyers or sellers. We recently sat down with Michael to discuss his current client list, what he defines as his "sweet spot" in the market, and the one trend he thinks will greatly impact the 2012 transaction market. Who do you currently work with? "I have been working a lot lately with banks and special servicer's on disposing of their REO assets; I have direct relationships with some of the larger special servicer's in our market."
What is your "sweet spot" in the select service market? "The bank/servicer REO assets. There are a lot of quality bank owned assets currently, and we are seeing a steady wave of these assets coming to market, whether it be through large note sales (both performing and non-performing) or through the sale of the actual owned real estate. All of our REO assets can be found on our Hotel AG website. What one trend in the market do you see impacting the transaction process in 2012 more than it did in 2011? "One trend that I think will impact the market, that has not happened as of yet, is the return of conventional lending to the hotel space. While transaction volume in the upper-tier of the select service space has been dominated mainly by private equity, and, at the same time, REITs has been quite vibrant for several months, stagnancy has entered the middle tier subsequently leaving deals on the market that would have been purchased by smaller hotel groups or owner operators in the past. In these scenarios, the buyer would put down 25 – 35% and would receive a 65 – 75% full recourse conventional loan from a local bank, or a national lender who would keep the loan on their balance sheet. These type of loans are non-existent in the market today, and therefore good deals are sitting on the market for much longer than they typically would. I think if and when this type of lending comes back into the market, we will see a tangible and positive effect on the transaction volume of the middle tier select service space." For more information about Hotel AG or to speak with Michael Bernath, please call him at (770) 692-1605 or email him at [email protected]published: 03-27-2012