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News Release

London - Moscow

Hotel Investment Market EMEA: Transaction volume to increase in 2010

Providing Investment hotbed for opportunistic buyers


London - Moscow, 3rd of February 2010 – According to Jones Lang LaSalle Hotels the hotel investment volume in Europe, Middle East and Africa (EMEA) fell to €2.9 billion in 2009, reflecting the lowest volume of transactions since the late 1990s and a drop of 63% compared to 2008.

While 2010 is expected to remain challenging, by the year-end investment volumes could increase by almost 40% on the 2009 volume and reach €4.1 billion, driven by improving economic conditions, gradually strengthening investor confidence and an increase in stock on the market
Mark Wynne-Smith, CEO, Jones Lang LaSalle Hotels, EMEA, said: “The EMEA hotel market will continue to be difficult in 2010, albeit with some important signs of improvement. Transaction activity will be characterised by two types of investors, opportunistic buyers and secure income buyers. The former will be most apparent in the markets most severely impacted during 2009, including the UK, Spain and Ireland. The latter group will mainly constitute institutional investors, searching for properties with a solid income and sound covenants.”

The majority of hotel investment activity during 2009 was recorded on Continental Europe, with France, taking the lead. The strongest demand was apparent for key gateway cities such as London and Paris. The UK, normally the leading market in terms of volume, was ranked in second place as investment activity in the regions came to a virtual standstill and was followed closely by Germany and Spain. However, during 2010 the UK is expected to once again become the leading country in terms of volume, moving back towards a 30-40% share of investment into EMEA.

As lending capacity reached record lows in 2009, single asset transactions became the prominent type of deal in the hotel market accounting for 72% of total volumes, and portfolio activity falling by almost 80% compared to 2008. Wynne-Smith continued: “This trend is not forecast to change in the near future. Portfolio activity will remain limited as deals continue to require a high level of equity. The growing importance of single asset transactions severely impacted the average deal size - 81% of hotel property transactions recorded a sale price lower than €50 million.

The number of distressed hotel assets on the market is expected to slightly increase in 2010. Although many owners have faced refinancing challenges in 2009, distressed hotel sales have not been widespread. Distress was only slightly visible in the UK, as financial institutions generally decided to work with owners to avoid selling in the current market. During 2010 investment activity will be driven by the banks and their willingness to lend. Focus will remain on smaller deals and risk adversity. Moreover, the banking industry will be one of the main providers of stock in the market, in particular in the UK as banks increasingly focus on clearing their balance sheets and bring more distressed assets to the market.

Wynne-Smith concluded: “The hotel buyer base is expected to widen a little in 2010 attracted by stabilising trading conditions and opportunistic deals. We will see strengthening interest from high net worth individuals, such as Asian investors and sovereign wealth funds. The institutional market is also experiencing an inflow of funds. Generally speaking, buyers will remain risk adverse and focus on investing in prime assets in a good location at a distressed or discounted price with a view on capital appreciation in the coming years. Investment activity will continue to be concentrated in the western European markets, where buyers feel more comfortable investing their money.”

Marina Usenko, Head of the Russian office, Jones Lang LaSalle Hotels, said: “While Russia and the CIS territory continue to be perceived as less secure than any of the Western European markets, opportunist investors currently have a rare chance to enter the Moscow and St. Petersburg markets, formerly viewed as too expensive or difficult to access. Regardless of the current economic conditions, these two markets will continue to be attractive for hotel business in the medium- and long-term.”
 
 

About Jones Lang LaSalle Hotels
Jones Lang LaSalle Hotels, the first and leading global hotel investment services firm, is uniquely positioned to provide the depth and breadth of advice required by hotel investor and operator clients, through a robust and integrated local network. In 2009, Jones Lang LaSalle Hotels provided sale, purchase and financing advice on over $1.6 billion worth of transactions globally relating to 79 assets. In addition, advisory and valuation services were provided on more than 700 assignments.
The global team comprises over 200 hotel specialists, operating from 36 offices in 19 countries. The firm's advice is supported by a dedicated global research team, which produced over 80 publications in 2009 in addition to client research. Jones Lang LaSalle Hotels' services span the hospitality spectrum; from luxury single assets and large portfolios to select service and budget hotels, resorts and pubs. Their services include investment sales, mergers and acquisitions, capital raising, valuation and appraisal, asset management, strategic planning, operator selection, management contract negotiation, consulting, industry research and project development services. Jones Lang LaSalle Hotels' clients have access to the resources of its parent company, Jones Lang LaSalle (NYSE: JLL). http://www.joneslanglasallehotels.com
 
About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specialising in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2008 global revenue of $2.7 billion, Jones Lang LaSalle serves clients in 60 countries from 750 locations worldwide, including 180 corporate offices.  The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 1.3 billion square metres worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with more than $37 billion of assets under management.
In Russia and CIS Jones Lang LaSalle have offices in Moscow, St. Petersburg, Kiev and Almaty. Jones Lang LaSalle, Russia was voted Consultant of the Year in 2004, 2006, 2007, 2008 and 2009 at the Commercial Real Estate Awards, Moscow and Consultant of the Year at the Commercial Real Estate Awards 2009, St. Petersburg. For further information, please visit our Web site http://www.joneslanglasalle.ru