Upscale tier to drive hotel demand growth in 2023; BREIT to sell Texas resort

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Upscale hotels are expected to lead the industry's demand growth in 2023, according to market data provider STR.

Hotel demand in the first four months of the year improved 4.3%. Most of the gains were concentrated in the more upscale segments, which are associated with business travel and groups, STR President Amanda Hite said in a statement.

STR and global travel data provider Tourism Economics project revenue per available room (RevPAR) for US hotels in 2023 to come in at $97.95, 1.3% higher than the previous forecast released January. The projection for average daily rate was raised 1.5% to $154.28, while occupancy projection was lowered 0.2% to 63.5%.

"Despite the upgrade, economic uncertainty underlines our forecast for the remainder of this year and into 2024," said Hite, adding that growing operating expenses continue to pressure profits.

CHART OF THE WEEK: US REITs green bond issuances slow in 2023 YTD

⮞ Real estate investment trusts in the US have made just three green bond issuances so far in 2023, totaling $1.6 billion in gross proceeds.

⮞ Issuances have moderated due to the rise in interest rates and cost of debt.

⮞ In the largest offering thus far this year, Boston Properties Inc. issued $750 million in green bonds carrying a coupon rate of 6.5%.

Property transactions

– Ryman Hospitality Properties Inc. agreed to pay $800 million to acquire the 1,002-room JW Marriott San Antonio Hill Country Resort & Spa in San Antonio from Blackstone Real Estate Income Trust Inc. The asset features a total of 268,000 square feet of indoor and outdoor meeting and event space.

– A partnership including Tredway, ELH Management and Gilbane Development Co. acquired an affordable housing community in Coney Island in Brooklyn for $150 million, Multi-Housing News reported.

– A partnership between Rosenthal Properties LLC, FarmView Ventures and HIG Realty Partners purchased four grocery-anchored shopping centers aggregating 592,000 square feet in the Richmond, Va., area for $110 million, the Commercial Observer reported. The assets include Stonehenge Village Shopping Center on 12501-12715 Stone Village Way in Midlothian, Va.; Staples Mill Square on 8943-9097 Staples Mill Road in Henrico, Va.; Parham Plaza on 1502-1532 North Parham Road and Ridge Shopping Center on 1503-1567 North Parham Road, both in Richmond, Va.

Financing

– Harbor Group International LLC secured $440 million from KKR & Co. Inc., Freddie Mac and Fannie Mae to refinance 25 multifamily properties within its portfolio across the US. The portfolio comprises Empire Portfolio featuring eight properties totaling 915 units in Indianapolis; Florida Cardinal Portfolio, a nine-asset portfolio totaling 1,119 units in Florida; the 908-unit Alesio Urban Center in Dallas; and Piedmont Portfolio in the Southeast, offering seven properties with 2,322 units.

– Nuveen Real Estate and WS Development secured $190 million from Wells Fargo to refinance Legacy Place, a 675,000-square-foot, grocery-anchored, lifestyle center at 300 Legacy Place Blvd. in Dedham, Mass., Commercial Property Executive reported.

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