LOS ANGELES—Emboldened by a buyer’s market, Portman Holdings LLC is adding hotel acquisitions to its repertoire.
The company, historically a real-estate development, management and investment company, is adding an acquisitions team in an attempt to pick up hotels that have seen their values battered during the downturn.
“Acquisition is sort of the flavor of the day,” Jeff Warwick, Portman’s managing director of U.S. investments, said during a break at last month’s Americas Lodging Investment Summit. “We’re ramping up that line of business.”
Warwick, formerly a region/market executive for Bank of America Merrill Lynch, joined Portman in June 2011. Part of his role is to lead Portman’s acquisition efforts in the United States.
He said company executives realized the hotel sector is changing and that acquisition opportunities abound.
“It’s the right point in the lifecycle of the company,” he said.
Deal profile
Portman has a wide-ranging list of characteristics that fit the company’s deal profile. “Good real estate is good real estate,” Warwick said.
Included in Portman’s acquisition wish list:
• top five gateway markets;
• upscale, upper-upscale and select-service hotels;
• markets where macroeconomic fundamentals are forecast to be strong;
• “good, solid” infill urban locations;
• markets with low barriers to entry; and
• distressed and non-distressed properties.
The company doesn’t have a set number of deals it wants to close, though its deal pipeline is “robust,” Warwick said.
“Being private, we don’t have to post a (funds from operations) number every quarter,” he said.
There remains a disconnect between buyers and sellers of hotel real estate, Warwick said. “Sellers want to minimize their loss, buyers want to maximize their return,” he said. “There will always be that gap.”
Portman, founded nearly 60 years ago as an architecture firm, now owns US$1.5 billion in global real-estate, Warwick said. The company’s list of hotel developments includes:
• Hyatt Regency Atlanta (1,350 rooms), also the company’s first hotel that opened in 1967
• Hilton San Diego Bayfront (1,200 rooms)
• Le Méridien San Francisco (360 rooms)
• Westin Charlotte (700 rooms)
• Portman Ritz-Carlton in Shanghai (700 rooms)
• Westin Warsaw in Poland (361 rooms)
• Pan Pacific Singapore (784 rooms)
• Marina Mandarin in Singapore (640 rooms)
• Mandarin Oriental Singapore (592 rooms)
• Westin Peachtree Plaza in Atlanta (1,100 rooms)
• New York Marriott Marquis (1,892 rooms)
• Atlanta Marriott Marquis (1,675 rooms)
• Hyatt Regency San Francisco (802 rooms)
• Westin Bonaventure Hotel & Suites, Los Angeles (1,368 rooms)
• JW Marriott San Francisco Union Square (329 rooms)
Positive hotel fundamentals
Another reason Portman is choosing to get into the buying game now is the company’s optimism over where the industry is heading, Warwick said.
The outlook for hotels is “positive,” especially considering the sector’s low supply growth, Warwick said.
Continued improvement in the industry will be predicated on gross-domestic-product growth, he added. “We’re bullish on the sector,” he said.