Attorney David Reina of Morris, Manning & Martin LLP’s Hospitality Practice already observes a clear uptick in acquisitions of distressed hotels for conversion into multi-family assets and expects to see more of the same in the next six to 12 months for some of the reasons mentioned below:
Existing demand.
“It doesn’t make much sense to buy a struggling hotel, thinking you can make it magically perform better, whereas there is demand now for multi-family housing.”
Leniency on the part of flags.
“Sellers and buyers have a unique opportunity to transact on underperforming assets that franchisors are willing to let out from long-term franchise agreements.”
Availability of capital.
“On the buy side, private equity companies looking to deploy the capital they have built up over the past nine months recognize the financial situation these hotels are in and are seeing opportunities.”
Editor’s note: Read more about conversion considerations here.
