Markets to Watch as Hotel Investment Outlook Remains Strong in the US

Jones Lang LaSalle Hotels Issues Global Hotel Investment Outlook Report

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. October 14, 2008

CHICAGO, IL, July 18, 2005. According to Jones Lang LaSalle Hotels, investor interest in US hotel assets is set to continue through the second half of 2005. The firm's recently released Hotel Investment Outlook report confirms that in the US, investors are looking to take advantage of the positive risk-return characteristics relative to other forms of real estate, as well as a generous debt and equity environment. Jones Lang LaSalle Hotels advises that the top markets to watch in the US are as follows:

New York City

Leading US in capital market and trading environment; Greatest demand diversity.

Hawaii Exceptional capital market and trading market dynamics; Especially favorable supply outlook, low cost of capital and rebounding corporate incentive demand.

Los Angeles

Strength of diversified economy, limited new supply, rebound of corporate travel and foreign demand.

Miami

Robust RevPAR growth, strong demand for hotel condos, available debt.

Washington, D.C.

Continued RevPAR growth, limited availability of product and stability of government generated demand.

San Francisco

Extremely favorable capital market environment, very limited product on the market, projected occupancy rate of 75% for 2005.

Chicago Key 24-hour market; significant improvements in the city's convention calendar; strong RevPAR gains.

"Low interest rates and extreme compression of interest rate spreads remain a primary driver of investment for leveraged buyers," said Arthur Adler, managing director and CEO-Americas for Jones Lang LaSalle Hotels. "Investor appetite has never been stronger for hotel assets. In addition, a significant number of funds have formed, each with at least $200 million in equity to commit to hotel investment, translating into $500 million of buying power per fund. Many have unspent allocations from last year."

In the US, hotels provide strong comparative returns plus a good annuity income stream. The spreads on investment yields of hotels against both office and 10-year Treasuries are at a 10-year high. "This indicates that the hotel sector is competitively prices and values remain favorable relative to earnings and outlook and provide a favorable risk adjusted return relative to other forms of real estate," said Adler. "When observing hotels against other asset classes, on a yield basis, hotels exhibit a strong current leveraged yield with strong upside."

During 2005, six single-asset hotel transactions valued at more than $100 million have closed in the U.S., totaling $1.069 billion. "We expect the market will remain active with hotel sales in 2005 approaching the record level that was experienced during 2004," said Adler.

New supply additions in the top 25 US markets have decreased, thereby boosting industry-wide operating results. The nation's 25 largest lodging markets dipped to a cyclical low in 2004 with only 16,126 new hotel rooms brought to market (122 hotels), a 38.5% decrease from the prior year with 26,277 new rooms (147 hotels). The Lodging Econometrics forecast for new openings in 2005 calls for a slight increase to 18,061 rooms (140 hotels) and 19,239 rooms (152 hotels) in 2006. Future development is likely to remain tempered by sharp increases in construction cost.

For a copy of the Hotel Investment Outlook 2005 global report, visit the research section of our Web site: www.joneslanglasallehotels.com.