In Mixed Duration for Hotel Sector, Procaccianti Introducing REIT

Springhill Suites Wilmington Mayfair in Wilmington, NC, is one of two hotels on which the REIT has an option.
Springhill Suites Wilmington Mayfair in Wilmington, NC, is & one of two hotels on which the REIT has a choice. Rhode Island-based Procaccianti Cos.,

owner of TPG Hotels & Resorts, is forming a new nontraded REIT to broaden its hotel investments. The move comes at a time when lodging REITs have fallen a bit out of favor with investors, even as hotels continue to grow tenancy and room rates.

Inning accordance with its preliminary filing, Procaccianti Hotel REIT will look for to get a varied portfolio of existing select-service, extended-stay, and compact full-service hotel residential or commercial properties. It may likewise make financial investments in distressed debt and preferred equity with the intent to acquire the hotel properties underlying those financial investments.

The REIT’s optimum offering quantity is $552 million.

Through TPG, Procaccianti Cos. has a portfolio of more than 60 hotels with almost 18,000 rooms and consists of such brand names as Accor, InterContinental, Hilton, Hyatt, Marriott, Starwood and Wyndham.

Procaccianti Hotel REIT has an alternative to acquire a 51% joint venture interest in up to 2 select service hotels acquired by a Procaccianti affiliate this summer season. The hotels are the Staybridge Suites St. Petersburg Downtown in St. Petersburg, FL, and Springhill Suites Wilmington Mayfair in Wilmington, NC.

Today, hotel industry research company STR Inc. launched hotel efficiency statistics for August revealing a year-over-year improvement in RevPAR of 2.5% to $90.31; enhancement in occupancy of 0.9% to 70.7%; and improvement in the typical day-to-day rate (ADR) of 1.6% to $127.69.

Those results would have been even better were it not for the effect of Hurricane Harvey in Texas and Louisiana in the recently of August, STR noted.

“The industry offered 3 million more roomnights than any other August on record,” said Jan Freitag, STR’s senior vice president of lodging insights.

Freitag likewise noted that RevPAR has now increased year over year for 90 consecutive months in the United States

Meanwhile, the lodging REIT sector has not carried out also, publishing total returns this year through August of negative 2.81%, according to NAREIT. The REIT industry company group tracks returns for 18 openly traded REITs in the sector with a market capitalization of $53.1 billion. That negative return, however, need to be stabilized versus the sector’s strong returns in 2016 for an average of 24.3%.

According to United States Realty Consultants Inc.’s freshly launched its Mid-Year 2017 Hotel Financier Survey, total ADR development expectations are only a little higher than expenditure growth expectations for both full-service and limited-service hotels.

In its offering filing, Procaccianti Hotel REIT noted that as of year-end 2016, the market has posted seven consecutive years of growth, where demand growth outmatched supply growth, matching the 1939-1946 record for variety of years of growth in the hotel industry.

Though supply growth might a little exceed demand development over the next five years, the REIT stated, need growth stays strong, and it thinks yearly tenancy levels will likely stay well above the long-run average level of 62.2% in 2017 through 2021.

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