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When is it better to sell an entire portfolio vs. a single asset?

We are looking to sell three hotels in the northeast. One of the hotels has drawn positive offers, but the other two have not gotten the response that we had hoped for. We are open to all possibilities, including holding onto all three properties. What would be the advantages or disadvantages of trying to sell the entire portfolio to one buyer?

Answers
  • Donald Wen
    WenWinSolutions
    February 28, 2018

    I’d keep it simple: ask yourself where you think we are in the economic cycle, and whether new inventory will impact the 2 hotels that are not getting the offers. If you think there’s more room to run in terms of valuations and new supply won’t affect your hotels, then hold off. If you think we’re heading into the down cycle in the near term, and consumers are likely to choose the new inventory in your markets, then I’d sell now; taking a profit and wait for the right opportunity to buy has worked out well for lots of people.

  • Lipeng He
    Ernst Young
    February 27, 2018

    It is a difficult question to answer - that generally depends on your (as a seller) tax profile - i.e., domestic vs foreign, separate holdco or consolidation, tax loss situation and future exit alternatives.

  • Mark Drumm
    Managing Director, Regent Park Advisors
    February 27, 2018

    Portfolios can come at a discount or a premium depending upon the makeup of the assets. Feel free to contact us directly for more information.

  • Robert J. Ivanhoe
    Greenberg Traurig, LLP
    March 01, 2018

    There are many factors which would determine the best strategy. One would be total price: if one asset's price is very low or very high, it would skew the interest of potential bidders for the asset. Hotels are quite management intensive, so a small hotel or one at a low price will not attract a good number of buyers who will not look at a deal below a certain price. In general, a portfolio would attract more interest in most cases, but if one of the hotels has a lot of negatives, it may have too much of a negative effect on the entire portfolio so that it may be best to sell those that don't detract from overall value, and try to "fix" the problems with the weak asset.

  • Sheri Chromow
    SPC Advisors, LLC
    March 06, 2018

    With no information, it is impossible for me to give you a meaningful answer. Three is too few properties to gather attention as a portfolio sale as a general matter.

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