We expect business travel to return in some sort of fashion this fall. Private equity firms, such as KKR, are betting on a rebound by buying up private planes after the halt in travel during quarantine has created attractive buying opportunities for them. What about hotels? Well, if dealmakers are flying again, they have to stay somewhere and that could mean hotels could be ripe for M&A.
Commercial real estate operator Flynn Properties has formed a joint venture with Värde Partners to acquire 11 Marriott and nine Hilton hotels for $211 million. Flynn will be in charge with day to day management of the portfolio. The deal will increase Flynn’s hotel portfolio to 26 properties, complementing the six existing Marriott hotels it currently owns. Flynn has previously invested in six Marriott Courtyards.
The pandemic has created buying opportunities across the entire real estate sector and Värde Partners recognizes that. “These properties have fared well through the pandemic, demonstrating the healthy demand for select service hotels and the strength of their brands,” says Francisco Milone, head of real estate special situations at Värde Partners. “The hotel sector has experienced an unprecedented shock, with extreme levels of cash-flow disruption driving a significant demand for capital. As the sector begins to recover from the pandemic, we believe there will be opportunities to invest selectively in high quality assets that are well positioned to capitalize on the return of business and leisure travel.”
Everytime a sector goes through a down cycle it comes back up. The question is not if the hotel sector will rebound, but how high will it bounce back? What do you think? Send me your thoughts at [email protected].
– Demitri Diakantonis