NASHVILLE, Tennessee—Jamie Schwartz of HVS San Francisco presented the following analysis of historical and first-year projected capitalization rates during the recent Hotel Data Conference.
The analysis covers selected full-service hotels.
Click to enlarge.
Cap rate based on historical net operating income was 6% thus far in 2011, same as the heady days of 2007. And the cap rate based on first-year projected NOI ticked up slightly to 5.6% so far in 2011, which is up from 5.4% in 2010, but down from 6.4% in 2009.
As cap rates have fallen, so too has the free-and-clear discount rate and equity yield. The free-and-clear discount rate was 11.3% in 2011, down from 11.8% in 2010 and 13.7% in 2009.
Equity yield, meantime, dropped to 15.1% in 2011, down from 15.9% in 2010 and 20% in 2008.
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