Jim Butler

The Ashford Hospitality Trust joint-venture acquisition of Highland Hospitality’s 28-hotel portfolio earlier this month reveals how far the hotel transaction market has come. The $1.28 billon deal alone was more than half the $2.1 billion transacted in the Americas through all of 2009, according to Jones Lang LaSalle Hotels, which tracks asset sales $10 million and higher.

The hotel investment services firm forecasts the deal volume to reach at least $13 billion this year after a fivefold increase to $11.9 billion last year. Attorney Jim Butler, a partner and the head of the global hospitality group for Los Angeles-based law firm JMBM, calls Jones Lang LaSalle’s prediction “unbelievably low” and believes the total could double last year’s volume and reach $24 billion.

Ashford Hospitality’s acquisition of 19 full-service and nine select-service hotels came through a consensual foreclosure. The Dallas-based REIT’s contribution of $150 million in cash and the assumption of $786 million in debt secured a 71.7% interest in the venture with an unnamed institutional partner.

The $158,000 per-room purchase price represents a significant discount from the $244,000 price in 2007 when the portfolio was acquired in a privatization of then publicly traded Highland Hospitality.

Butler believes more portfolio sales like this are coming as the lodging sector regains its footing. He recently discussed why the transaction market is poised for a big turnaround and how recapitalizations are becoming an answer for much of the hotel distress remaining.

Stoessel: Are you optimistic about the hotel industry’s recovery?

Butler: I still have some concerns, but yes, at this point there really is a consensus the worst is behind us. The biggest problems are in the rear-view mirror. Fundamentals are continuing to improve. And despite the slow recovery of average daily rate, values have also improved.

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