Financing In Australia And Asia/Pacific On The Rise

NEW YORK— Global Hotel Networks reports that the Australia and Asia/Pacific markets are at, or close to, the bottom of the cycle, with investment activity on the rise once again. Investment activity is increasing and required yields are dropping, indicating not only a willingness to take on a higher risk profile, but also a resurgence in competition for specific assets stated the analysts at Global Hotel Networks. Lenders are exhibiting a slightly more aggressive approach to Loan to Valuation Ratios and activity in the corporate ownership sector has increased markedly since this time last year analysts concluded. The financing view appears to be that the time is opportune to be participating in the sector, given the widely held belief that other real estate asset classes are “topping out”. However, a major financing issue is the reluctance of most major lenders to increase their exposure to single assets, with the preference being for the funding of cross-collateralised, geographically diverse portfolios according to Global Hotel Networks. Also, the major lending banks throughout the region have recently awoken, and are actively pursuing opportunities to participate in the hotel investment financing analysts reported. Margins are being squeezed by competitive bidding and whilst LVRs of between 50-55% are the norm for debt funding on a “non-recourse” basis, there are clear signs that these prudential limits may be pushed by up to 15% in the short to medium term concluded Global Hotel Networks.