What are the resilient assets in this Covid19 crisis?

What are the resilient assets in this Covid19 crisis?

CVD1080-1024x576 What are the resilient assets in this Covid19 crisis?

 

colour544x544-300x300 What are the resilient assets in this Covid19 crisis?As the World attempts to contain Covid-19 and hinder global escalation, markets have recalibrated in the face of a potential global recession whilst monitoring the shocks to supply and demand. Market sentiment is that we will see virus case escalation in the second quarter with cases rising until May. The subsequent months will see significant disruption to supply and demand before a rebound later this year.

For this rebound to occur, first we would have to see a substantial decrease in fatalities within red zones, and a slowdown in new cases across all major economies. Central banks would need to implement emergency interest rate cuts and coordinate to keep lending channels operating (the Federal Reserve has already made cuts and ECB’s TLTROs are set to be sub-zero), stimulus plans at national and international levels introduced (e.g. ECB’s €750billion Eurozone financial package and the US administration are to sanction more than $1trillion) and other fiscal authorities to bring about quantitative easing measures. These measures are intended to avoid a more dramatic scenario where the health problem will be followed by a severe economic recession with two or more consecutive quarters of negative growth and potentially thousands of bankruptcies. The indication is that once business resumes then the economy should see a speedy, sharp recovery. Fundamentally, periods of stock market corrections are often followed by markedly positive trends within six months of finding the bottom. Volatility in the meantime of course will be high.

What can investors proactively do?

 So, we should expect low growth and low interest rates into the second quarter and possibly the third quarter. There has already been a brutal repricing of assets so many are not from this point adopting a defensive stance feeling that the damage has already been done. Some sectors will prove to be more resilient, namely infrastructure and real estate, certain commodities may also perform well.

Infrastructure – typically regarded as a solid defensive investment with above average dividend yields. The benefit being that this sector is usually involved in long-term contracts often with governments providing reliable cash flows. China is expected to announce fiscal stimulus packages for infrastructure. Telecommunication towers should continue to see decent secular demand along with digital economies particularly those involved in remote office work, remote management tools, and remote networking. More data centres may be built and more fibre optic infrastructure put in place to cope with demand.

Real Estate – this sector has shown resilience in the past during uncertain economic times. The benefit comes from predictable and stable lease-based cash flow and would not be affected by near-term shocks to the global supply chain. Due to being less impacted by global economic conditions, healthcare, rental housing, net lease, and storage are among the most resilient within this sector. Hospitality will heavily be impacted and opportunities may arise for discounted assets in the coming months. Office demand will have to be reassessed as the confinement/lock down has obliged firms to quickly deploy business continuity plans sending their employees home. Employees will be more accustomed to working from home and even favour it – the individual and business standpoints could be aligned resulting in a decreasing demand for offices.

Commodities – gold of course is the typical safe haven investment. For base metals we know that there is an inventory overhang as demand from China halted. Once Chinese factories resume full operations base metals should recover. China also expected to introduce fiscal stimulus to autos and infrastructure which require vast amounts of base metals. Agriculture is to experience less impact than other sectors as consumption and production rates stay level.

For many this has been a time to restructure their portfolio to a more defensive stance, whilst others have identified great value in the market confident that once Covid-19 is under control by Q3/Q4 major economies will see a rapid recovery. Either way, proactivity means its business as usual despite operating under lock down conditions.

Finscoms helps funds and projects to tell their story to a wider investment network. In these unprecedented times our clients are looking for guidance. We would like to share with you our thoughts. Please contact us to hear about how we can help you.

Benoît Egée, Co-Managing Partner

[email protected]  

+353 1202 4444

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Increased Investment Activity in Florida Hotel Market

Increased Investment Activity in Florida Hotel Market

Miami1000-1024x602 Increased Investment Activity in Florida Hotel Market

BlogKMC-copy Increased Investment Activity in Florida Hotel Market

Investors continue to find attractive investment opportunities across the state, with Hotels changing hands at an increased rate over the last 18 months. Transaction activity appears healthier across Florida than other US regions currently. Transactions are buoyed by the state continuing a trend of consistent growth in its major markets.


Central Florida has more than 500 hotel properties with more than 125,000 hotel rooms but this still does not match the demand as industry is benefitting from regional attractions that draw a growing number of annual visitors. 2019 saw Orlando’s $70 billion tourism market attracted a record 75 million visitors.

Visitors Increased Investment Activity in Florida Hotel Market

With so many buyers interested in assets across Florida, it is still an opportune time to consider asset sales. Contact us to view our ‘Florida Portfolio’ or any of our other worldwide real estate investment opportunities.

Here is a sample of recent hotel sales in the region:

Shelborne South Beach Hotel Acquired for $120M

 The price works out to $542,986.43 per room. This is a joint venture between King Street Real Estate GP LLC, Westdale Properties and Cedar Capital Partners to acquire the Shelborne South Beach Hotel in Miami Beach, Florida. Rising room rates in Miami Beach appealed to the buyers. The property will continue to be managed and operated by Menin Hospitality. The 1940s Art Deco hotel with views of the Atlantic Ocean hotel will undergo extensive renovations to the tune of $500,000.

The Richmond Hotel, Miami Sold for $87.85M

Patti and Allan Herbert, who represent the third generation of the family that has owned the hotel since its inception, sold The Richmond, at 1757 Collins Avenue to New York developer Michael Shvo and his partners Bilgili Holdings and Deutsche Finance America in Autumn 2019. The hotel has 92 rooms in a four-story, nearly 52,000-square-foot building. The group paid $87.85 million for the Richmond Hotel.

InSite Group Acquires Orlando Holiday Inn & Suites (price TBA)

 South Florida-based InSite Group has purchased the Holiday Inn & Suites Across from Universal Orlando. Situated on 7.3 acres between Interstate 4 and Universal Orlando Resort attractions, the hotel has 390 guestrooms including 134 suites, along with more than 10,000 sq. ft. of meeting and event space. The hotel will be managed by Performance Hospitality, a lifestyle hospitality management company.

Meyer Jabara Acquires Residence Inn by Marriott Amelia Island (price TBA)

 Meyer Jabara Hotels (MJH) has acquired the Residence Inn by Marriott Amelia Island in Fernandina Beach, Florida. Operating under MJH leadership since it opened in 2009, the 133-room, all-suite hotel is a star Marriott brand performer and a firm favourite among travellers with a 97% guest satisfaction ranking.

Sales1 Increased Investment Activity in Florida Hotel Market

Sales2 Increased Investment Activity in Florida Hotel Market

Ken Carmody

[email protected]

+353 (0) 1202 4444

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Europe’s Hotel Industry Reports Positive Results

Europe’s Hotel Industry Reports Positive Results

Hotel-Report Europe’s Hotel Industry Reports Positive Results

BlogKMC-copy Europe’s Hotel Industry Reports Positive ResultsFinscoms looks at the latest information, analysis, and reports to correlate a picture of Europe’s hotel sector 2019 performance so far and outlook.

Overall, Europe’s hotel industry reported positive results across the three key performance metrics during Q3 2019, according to data from hotel industry trend analysts STR. Q3 2018 vs Q3 2019 hotel occupancy in Europe Q3 2018 vs Q3 2019 rose 0.6% to 79.1% in the third quarter while Average Daily Rate (ADR) increased 1.1% to €121.36 ($134.97) and Revenue per Available Room (RevPAR) rose 1.7% to €95.95 ($106.71).

Metrics-283x300 Europe’s Hotel Industry Reports Positive ResultsBased on year-to-date data to September, STR report that hotel accommodation performance in Europe was relatively positive across all regions. Occupancy rate growth has been relatively subdued as expected, albeit against a backdrop of higher average daily rates compared to the same period last year leading to 1.7% growth in European RevPAR. This growth comes despite concerns of slowing global demand and the fact that the European hotel sector has been able to grow ADR and occupancy presents a rather positive picture.

Europe-hotel-growth Europe’s Hotel Industry Reports Positive Results

As reported by the World Tourism Organization (UNWTO) international tourist arrivals to Europe were up 4% halfway through 2019 compared to the same period in 2018, in defiance of a slowing global economic environment and associated risks. Economic outlook summary below;

Economics-1024x391 Europe’s Hotel Industry Reports Positive Results

 

TopGrowth Europe’s Hotel Industry Reports Positive ResultsThe European Travel Commission’s (ETC) latest quarterly report for Q3 2019 also states that European tourism demand remains in positive territory, notwithstanding a slower expansion rate compared to the previous two years. External risks remain for now but destinations continue to grow at a modest pace and the predominant regional outlook remains positive.

The ETC report highlights Europe’s top growth destination and Montenegro has maintained growth momentum at 18% as it welcomed a rising influx of Western European holidaymakers. In Turkey the depreciation of the lira continued to play a vital role in its tourism performance with an equally impressive 15% increase in tourist arrivals. Eduardo Santander, ETC Executive Director said: “this latest report highlights that travel demand in Europe is in a good place, with steady increases in tourism numbers across the board. Despite very real challenges, such as the looming threat of a ‘no deal’ Brexit, and the collapse of several airlines, European destinations continue to post healthy rates of arrivals, which of course is to be welcomed. Meanwhile, European tourism needs to focus on developing long-term sustainable management solutions to enable tourism to flourish, rather than just merely grow.” 

According to Statista, Paris and Zurich remain a league ahead of others with respect to ADR and RevPAR. Swiss cities have some of the highest hotel rates in Europe, although this is in part due to Switzerland’s elevated economic situation. Occupancy rates are relatively high in Zurich and Geneva but London and Amsterdam had the highest occupancy rates of the main European destinations. The two Swiss cities earned the highest revenue per available room, with Geneva on par with Paris.

ADRPAris Europe’s Hotel Industry Reports Positive Results

American and Chinese tourists continue to visit Europe Destination

Understandably, intra-regional demand plays an important role in increasing tourist numbers in Europe, large long-haul source markets continue to make a substantial contribution. Visitors from the US are taking advantage of the strong dollar against many other currencies. Interestingly the ETC Q3 report illustrates that several European destinations are witnessing increased arrivals from the US with significant interest in South-Eastern Europe (Turkey (+32%), Greece (+21%), and Cyprus (+27%)).

Regarding Chinese tourists, the ETC describes the continuation of a strong demand amid a relative decline in the economy with almost all destinations seeing an upsurge in Chinese arrivals or overnights (or both).

The Likely Effect of Brexit for the London Hotel Sector

The ETC quarterly reports the combination of the economic and non-economic factors associated with a ‘no deal’ Brexit would result in a 7% drop in UK outbound trips in 2020 and an 8% drop in 2021, relative to baseline projections. More pointedly, the report states that a ‘no deal’ Brexit would have a long-lasting downward effect on UK outbound travel numbers. The falling value of sterling has seen many UK tourists assessing the benefits of a staycation.

The fall-out of this reduced UK outbound travel will not, however, be experienced evenly across European destinations. Spain will be the most affected European country per traveller volumes with an estimated 1.3 million fewer UK arrivals to the country in 2021 relative to baseline projects. After Spain it is suggested by the ETC that Ireland will be the next the most impacted in percentage terms (-5%) in 2021.

In London, PWC’s UK Hotels Forecast 2019-2020 asserts modest growth next year, buoyed by international tourism. PWC expect London will hold on to growth for the rest of 2019, which is an impressive achievement considering the persistent supply of new rooms. Maintaining the growth will be more difficult in 2020. PWC anticipate occupancy growth to slip into negative territory in 2020, however they still forecast 1% growth in RevPAR.

A portion of PWC’s supposed incremental growth forecast for 2020 in London is driven by ADR uplift from the Farnborough International Airshow, as well as football demand from the seven UEFA Euro 2020 games (including the final) at Wembley. The weak pound should also continue to reinforce leisure demand.

With occupancy levels just over 84% this year, PWC expect a marginal decline of -0.3% in 2020, to 84%. 2019 will see around 2% ADR growth to £151.5. In 2020, it is expected by PWC that rates will grow 1.3% to £153.4. Combined occupancy and ADR drive 3% growth in RevPAR in 2019 to £127.7. A further 1% growth in 2020 pushes up RevPAR to £128.9.

New2020 Europe’s Hotel Industry Reports Positive Results

Record levels of occupancy and ADR will ensure London RevPAR reaches new heights. It is an extraordinary performance against high supply additions and only demonstrates “why London is the darling for many investors, owners, operators and brands.” (PWC’s UK Hotels Forecast 2019-2020).

The general consensus for the European hotel sector is that it is robust and resilient despite the backdrop of global economic uncertainty. Please sign up below for our next quarter review of the hotel market.

Ken Carmody COO

 

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