Though the number of distressed hotel transactions stemming from the COVID-19 pandemic is nowhere near the amount hoteliers expected, deals are still happening.

Whether it’s selling off one or a handful of properties to right-size a portfolio and lower debt levels, making an off-market acquisition or setting themselves up to buy as more assets come to market, executives at hotel real estate investment trusts are finding opportunities.

Here are some highlights of executive commentary from first quarter 2021 hotel REIT earnings calls.

“We acquired the Hyatt Regency Austin, the Four Seasons Resort Orlando at Walt Disney World Resort and nearly 300 acres of irreplaceable land adjacent to our Hyatt Regency in Maui, strategically investing approximately $800 million of capital at prices that are meaningfully below 2019 levels. Following these transactions, we have a substantial $1.5 billion of total available liquidity, including $131 million of [furniture, fixtures and equipment] reserves.

“We continue to focus on redefining our hotel operating model and positioning our renovated properties to gain market share, key long-term strategic objectives that we believe will position us to achieve best-in-class EBITDA growth through the lodging cycle. Beginning with our latest acquisition, the iconic irreplaceable Four Seasons Resort Orlando at Walt Disney World Resort. We completed this off-market acquisition on April 30 for approximately $610 million, $40 million less than the price quoted by Real Estate Alert.”

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"We're evaluating a number of opportunities now. We've evaluated a number of opportunities over the course of this year that we left out because we didn't think they were the right thing to propose for one reason or another.

"[We're] back on the road looking at assets. I'm back on the road looking; we've got someone on the road today and he's looking at assets, and we're hopeful we're going to be able to get some additional capital smartly deployed."

“On April 1, we announced we completed the sale of the Sir Francis Drake Hotel in San Francisco. We generated approximately $157.6 million of proceeds from the sale. Since the second quarter of 2020, we completed approximately $225 million of property dispositions. We intend to strategically reallocate this capital into new investment opportunities that we believe will provide enhanced returns and greater diversification for our portfolio as the opportunities become available.

“Turning to our balance sheet and liquidity, with the proceeds from the recent sale of the Sir Francis Drake, we have more than $920 million of liquidity. This includes cash of $279 million and $643 million available under our unsecured credit facility. Our net debt to book value is approximately 42%. And excluding our convertible notes, which can be converted to common equity when our common share price exceeds $25.47 per share, this ratio is 27%.

“We're proud of the tremendous progress we've made, strengthening our balance sheet, reducing near-term debt maturities and increasing our liquidity. This should allow us to take advantage of new investment opportunities as they become available.”

“On the capital recycling front, we are encouraged by the market interest and strong pricing we have received on assets that are currently being marketed for sale, further supporting the ongoing demand for quality institutional lodging assets. Accordingly, we recently announced the sale of the 97-Room W New Orleans French Quarter hotel for gross proceeds of approximately $24 million. We are pleased with the deal pricing, which translated into a 4.3% cap rate on the hotel's 2019 NOI inclusive of $8 million in anticipated CapEx.

“[The] transaction allowed us to pay down debt and it also reduced our exposure to a market in which we already have a strong presence. We have several assets in various stages of the disposition process and expect to report positive news in the coming weeks.

“As stated last quarter, we plan to sell upwards of $300 million to $400 million of non-core assets this year to reduce our overall leverage and continue with our portfolio evolution and we remain on track to achieve this goal.”

“There continues to be limited volume of high-quality assets we want to purchase. A number of conversations have increased. We’re very focused on off-market or limited-bid type of transactions. As you know, the type of assets we’re looking at are generally positive cash flow at this point, so there’s less pressure for those types of sellers. We’re seeing the opportunity has really shifted from level of discount to access to opportunities. We’re seeing conversations, whether it is an owner/operator, high-net-worth individual … we’re seeing it from a variety of different angles. Institutional owners who maybe feel like the asset even though it’s a great asset might not fit their forward plan. We’re seeing it from across the spectrum, and again, we’re encouraged by the increased number of conversations that we’re having.”

“The two announced transactions strongly demonstrate that we are strategically repositioning the portfolio to lean in to our long-held thesis the experiential hotels and drive to resorts will outperform over the next decade.

"First, the pending sale of The Lexington Hotel will reduce our overall urban exposure. Specifically, it will reduce our New York City exposure by more than 50%. The hotel is under contract for $185 million, which represents a 6.3% cap rate on 2019 NOI and a 5.8% cap rate on 2018 NOI. We received a nonrefundable $5 million deposit, and the transaction is expected to close before the end of the third quarter. In short, this sale allows us to right-size our New York City exposure at an attractive price.

“The second transaction involves the Frenchman's Reef development in the [U.S. Virgin Islands]. On April 30, we successfully completed a transaction, in which we received $35 million in cash plus a contingent participation in the hotel's future profits. This profit participation has the potential to be worth tens of millions of dollars if things go right. As many of you know Frenchman's has been a long saga. The hotel was essentially destroyed by sequential hurricanes in 2017. And after a long battle with the insurance company, we received nearly $240 million in insurance proceeds.

“This transaction does a number of positive things for us. One, it eliminates all future funding obligations thus freeing up more than $200 million of investment capacity for acquisitions with more immediate returns. Two, it allows us to receive cash now as well as part of the upside. And three, it eliminates the company's Caribbean hurricane risk, thereby, making DiamondRock an even better risk-adjusted investment option. These two transactions really helped to fuel our ability to go in offensive. We intend to target opportunities consistent with our experiential drive-to resort and urban lifestyle focus. We have a particular focus on hotels that are synergistic with our existing hotels in markets like Sonoma, Vail, Lake Tahoe and Sedona."

“Transaction volume in the hotel space remains relatively low, but we have seen an increase in deal flow and have been actively underwriting assets, both as a potential buyer and seller. As we move through the recovery, we expect opportunities and transaction volume will continue to increase. We intend to be active in the market, pursuing accretive transactions to maximize long-term value for our shareholders and that further grow and enhance our existing portfolio.”

“Relatively lower debt obligations and strong property-level performance, which generated positive corporate-level cash flow after G&A and debt service despite a global pandemic, enabled us to acquire five hotels for a combined total of $161 million since the onset of the pandemic, including the Hilton Garden Inn in Downtown Madison, Wisconsin, which we acquired during the first quarter for approximately $50 million.

“Since the beginning of the year, we have sold three hotels, including our Homewood Suites hotels in Charlotte, North Carolina, and Memphis, Tennessee, and our SpringHill Suites in Overland Park, Kansas, for a combined total of $24 million.”

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“I think there's an openness on our part to doing a larger transaction. … That said, we don't have a need to do that. And so, for us, the attractiveness of a larger scale transaction is wholly dependent on the pricing we're able to achieve for that. I highlighted that … managing our CapEx spend [is] an important component. As we look at our ability to generate outsized returns for our investors throughout the recovery and the sale of assets is one way to manage that, a more scaled transaction brings with it some efficiencies that these smaller transactions do not benefit from.

“Consistent with the discussions that we've had on past calls, we continue to entertain offers from and to actively look for opportunities with larger groups in markets and we'll pursue transactions [when] we feel pricing is appropriate.”