“The 2011 LIIC Top Ten”

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CEO and Founder HREC – Hospitality Real Estate Counselors

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2011

BRIDGING THE GAP AND FACILITATING THE

2011

THE LIIC TOP TEN

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Occupancy & ADR Fundamentals Continue to Improve:  94% of LIIC think tank believe that average room rate levels will grow in the next year (39% forecast over 5%).  89% of responders anticipate occupancy increases for the lodging industry.

2011

BRIDGING THE GAP AND FACILITATING THE

2011

THE LIIC TOP TEN

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Equity Return Rates Are Stabilizing:  More than half of respondents believe equity rates will be stable (remain the same).

 The remaining 50% of respondents are equally split between increases and decreases.

2011

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BRIDGING THE GAP AND FACILITATING THE Occupancy & ADR Fundamentals Continue to Improve

2011

THE LIIC TOP TEN

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Interest Rates to Rise:  58% believe hotel interest rates (senior debt) will increase over the next 12 months; with many concerned about interest rate increases impacting short-term/exit strategies.  Flip side, 68% of respondents believe loan/value ratios are also increasing.

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B Equity I N G T Rates Are Stabilizing C I L I T A T I N G T H E R I D G Return H E G A P A N D F A Occupancy & ADR Fundamentals Continue to Improve

2011

THE LIIC TOP TEN

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Acquisition Debt Returning?  Ability to acquire debt financing appears to be improving.  48% of respondents believe that they will be able to use acquisition debt financing to leverage deals over the next twelve months.

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Interest Rates to Rise B Equity I N G T Rates Are Stabilizing C I L I T A T I N G T H E R I D G Return H E G A P A N D F A Occupancy & ADR Fundamentals Continue to Improve

2011

THE LIIC TOP TEN
REIT Envy & Bitterness

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 For the first time in ten years of surveys, investors are split: REIT’s (public equity) vs. Private Equity.

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Acquisition Debt Returning? Interest Rates to Rise B Equity I N G T Rates Are Stabilizing C I L I T A T I N G T H E R I D G Return H E G A P A N D F A Occupancy & ADR Fundamentals Continue to Improve

2011

THE LIIC TOP TEN
It’s a New Ballgame!:

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 LIIC members solidly believe we are in the beginning of a new cycle.  51% of respondents say we are playing in innings 1 or 2.  46% of respondents say in innings 3 or 4.  Concerns: inflation, real job growth, escalating operating costs and oil prices.

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REIT Envy & Bitterness Acquisition Debt Returning? Interest Rates to Rise B Equity I N G T Rates Are Stabilizing C I L I T A T I N G T H E R I D G Return H E G A P A N D F A Occupancy & ADR Fundamentals Continue to Improve

2011

THE LIIC TOP TEN In regards to hotel asset sales volume for Budget 2011 vs. Forecast 2012:  39% believe volume will grow over 20%.  29% believe volume will grow 10% to 20%.  26% believe volume will grow 5% to 10%.
Lodging Transaction Volume to Increase Dramatically:

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It’s a New Ballgame! REIT Envy & Bitterness Acquisition Debt Returning? Interest Rates to Rise B Equity I N G T Rates Are Stabilizing C I L I T A T I N G T H E R I D G Return H E G A P A N D F A Occupancy & ADR Fundamentals Continue to Improve

2011

THE LIIC TOP TEN
Better Quality Hotel Product Available, If You Can Get It:  Sharp contrast to 2010:  46% believe quality of hotel product on the market is “excellent/above average”.  81% believe hotel real property on market is “average or excellent/above average” quality.  46% believe quantity of product is “below average or low”.
Lodging Transaction Volume to Increase Dramatically It’s a New Ballgame! REIT Envy & Bitterness Acquisition Debt Returning? Interest Rates to Rise B Equity I N G T Rates Are Stabilizing C I L I T A T I N G T H E R I D G Return H E G A P A N D F A Occupancy & ADR Fundamentals Continue to Improve

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2011

THE LIIC TOP TEN
Lodging Real Property Values Are Only Going Up:

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 98% of respondents believe that hotel real estate values will increase over the next 12 months, with 61% of total responders predicting a significant increase of over 5%.  Luxury hotel category appears to be poised for the greatest value growth in the coming year.

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Better Quality Hotel Product Available, If You Can Get It Lodging Transaction Volume to Increase Dramatically It’s a New Ballgame! REIT Envy & Bitterness Acquisition Debt Returning? Interest Rates to Rise B Equity I N G T Rates Are Stabilizing C I L I T A T I N G T H E R I D G Return H E G A P A N D F A Occupancy & ADR Fundamentals Continue to Improve

2011

THE LIIC TOP TEN
Hotel Investment Market to Peak in 2015:
 Investment market continues to trend upwards due to improving revenue fundamentals, increasing availability of debt financing, and continued strong interest from equity investors.  39% of respondents believe values will peak in 2015.  29% of respondents believe values will peak in 2014.  24% of respondents believe values will not peak until 2016 or beyond.

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Lodging Real Property Values Are Only Going Up Better Quality Hotel Product Available, If You Can Get It Lodging Transaction Volume to Increase Dramatically It’s a New Ballgame! REIT Envy & Bitterness Acquisition Debt Returning? Interest Rates to Rise B Equity I N G T Rates Are Stabilizing C I L I T A T I N G T H E R I D G Return H E G A P A N D F A Occupancy & ADR Fundamentals Continue to Improve

2011

THE LIIC TOP TEN
Hotel Investment Market to Peak in 2015
Lodging Real Property Values Are Only Going Up
Better Quality Hotel Product Available, If You Can Get It
Lodging Transaction Volume to Increase Dramatically

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It’s a New Ballgame!
REIT Envy & Bitterness Acquisition Debt Returning? Interest Rates to Rise
Equity Return Rates Are Stabilizing
Occupancy & ADR Fundamentals Continue to Improve BRIDGING THE GAP AND FACILITATING THE

2011

The 2011 LIIC Top Ten
For a copy of this survey presentation, please send an email to:

Mike Cahill mcahill@hrec.com
For more information on LIIC, please see our website:

www.liic.ws

2011

BRIDGING THE GAP AND FACILITATING THE

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