Most assessors fall back on the easy way to do things, and in the case of trying to value the real estate of an operating hotel, the easiest thing to do is to subscribe to “the Rushmore approach.” This is because Mr. Rushmore is known in the industry as the guru of hotel valuation. He literally wrote the book on it and no doubt Mr. Rushmore knows all the ins and outs of operating hotels and how to value operating hotels.
The forecast for U.S. commercial real estate sales has been cut by 12% to $748 billion through 2014 by the Urban Land Institute due to economic growth projections being down considerably. According to BloombergBusinessweek, commercial real estate deals are predicted to be $223 billion this year, $250 billion next year, and $275 billion in 2014, down from the $250 billion, $290 billion and $312 billion reported back in March.
Proposition 116 on this year's Arizona Ballot will give voters the chance to lower property taxes for businesses. According to the Arizona Daily Star, the proposition would give a break to businesses, dramatically reducing the amount of property tax they must pay on their equipment. This reduction would likely come at the expense of homeowners, who would have to make up for what businesses no longer pay. As it stands, businesses now pay property tax on all the equipment they own, land, and buildings.
A panel of REIT CEO's believes that the positive hotel operating cycle will be around for some time. According to Hotel News Now, speaking at the Bank of America Merrill Lynch 2012 Global Real Estate Conference, the top executives pointed to strong transient demand and a lack of supply as two reasons to be optimistic about how long the cycle will last. The positive cycle is being led by business travelers and groups, but leisure travel is having its say as well.
Regarding an appeal for the IBM Credit Corporation involving large amounts of personal property, the North Carolina Court of Appeals has taken the Property Task Commission to task for failing to follow instructions and ordered a decision at the value listed by IBM. According to the September 2012 IPT Tax Report, the North Carolina Tax Commission had three chances to get it right, the second two of which having come from increasingly explicit instructions.
Publicly traded REITs of the right sectors, markets and quality are currently outperforming the broader stock market. Over the past three years, REITs have seen nearly a 28% average annual return, compared to just 14% with the S&P 500. According to CNBC, favorable industry fundamentals, strong balance sheets and a stabilizing US economy have combined to make real estate an attractive asset for investors, whose portfolios should continue to benefit for some time.
In the Q2 2012 Bank CRE Default and Lending Report released by Chandan Economics, recent data is pointing to continued improvements in the commercial real estate market. According to the report, the default rate on commercial mortgages held by banks in the second quarter of 2012 had fallen to its lowest level since the middle of 2009 to 3.11%, a drop of 34 basis points when compared to the first quarter of 2012.