Berkadia Sells Individual Hotels in a Portfolio to Maximize Value

DALLAS—Berkadia’s hotels and hospitality team has found an opportunity in the individual sale of portfolio assets, beginning with its DoubleTree Dallas-Farmers Branch deal. It is the first sale of the team’s exclusive Glacier House portfolio listing, a portfolio of 15 hotels strategically located throughout the West and Southwest. With the closing of that sale earlier this year, Berkadia has embarked on a sales strategy focused on the assets individually, highlighting each property’s unique opportunity and building greater value for the seller and buyer alike.

In a Q&A with Hotel Business, we talk strategy with Berkadia Managing Director Kyle Stevenson.

What’s the backstory on the Glacier House portfolio? 

Glacier House is a hotel-specific developer, opportunistically developing in key markets throughout the western U.S. It’s been building and acquiring to create its 15-property portfolio over the last few years.

Why establish a portfolio, but sell the properties separately? 

Our client was open to whatever scenario made sense for the buyers and maximized proceeds for their investors. While the portfolio was offered in its entirety at the beginning, the unique nature of some of the properties—combined with the trends we were seeing in the transactional market—made it apparent that individual sales would maximize value. Sometimes investors in specific markets, or with specific needs, want to pay more for a specific single asset. This is how current sales are evolving.

Why did the DoubleTree Dallas-Farmers Branch property sell first?

The DoubleTree Dallas-Farmers Branch is a fully renovated property with an excellent location and tremendous upside from the demand generators and recent growth in the area. As a result, this property was extremely well received and sold quickly—in part because it is an existing asset (several of the others won’t sell until they are finished being constructed).

How many properties does Berkadia expect to sell by year-end? 

It’s possible a few more hotels will sell this year—depending on construction schedules and the potential rollout of additional properties in the portfolio.

Why is the market seeing a greater appetite for assets below $50 million? 

There are naturally more buyers able to execute below $50 million, and with debt markets extremely fluid, those groups have access to capital needed to buy hotels. If the debt markets become less fluid, the sales pipeline may stall.

How is this strategy different than what Berkadia has done in the past?

It’s not a change necessarily. We adapt our sales methods to the needs and wants of the clients and changes in the macro-economic environment. In this case, our client had tremendous flexibility and could sell at the time that was most opportune for them. This flexibility has had a significant impact on maximizing value here—as it was able to match exactly with the buyer’s needs. Timing is everything.

What does Berkadia’s future look like in terms of selling properties individually from portfolios?

Our investment sales pipeline is robust, with both portfolios and individual sales. As our clients come to us with flexible time frames and the ability to adapt to the market, I predict we’ll see the offerings match the needs of investors and clients alike. Sometimes the sum of all parts is better pricing than the whole.