Call it an idea whose moment has arrived. Two high-profile organizations with deep experience in hospitality made nearly-simultaneous announcements this week about vehicles that intend to help lodging owners and operators steer through the distress landscape that the sector faces amid the COVID-19 pandemic.
In one announcement, San Francisco-based ACORE Capital said it had raised $1 billion to launch ACORE Hospitality Partners (AHP), an investment strategy backed by a group of institutions, It’s focused on providing North American hotel operators with rescue capital to navigate the ongoing pandemic.
AHP’s strategy is to originate and acquire structured hotel debt investments including senior and mezzanine loans, B-notes and preferred equity. It will invest across the entire spectrum of hotel types, ranging from high-end luxury resorts to smaller limited-service hotels, focusing on assets in high-barrier markets that evince “compelling rebound characteristics,” according to ACORE.
“The pandemic has had a disproportionate and historic impact on the lodging industry leading to unprecedented distress and liquidity issues for hotel owners,” said Warren de Haan, managing partner at ACORE. “We formed ACORE Hospitality Partners to solve this liquidity crisis by providing hotel owners with the capital they require to continue operations and keep people working.”
ACORE notes that its new strategy comes at a time when many experienced hospitality borrowers are suffering from dwindling cash reserves and significant current operating expense obligations. “We have been active hospitality lenders for more than 25 years and enjoy longstanding relationships with an extensive list of hotel owners,” said managing partner Boyd Fellows. “It’s been devastating to witness how the pandemic has impacted their businesses. We are confident it’s possible to lend support while still meeting our investment objectives.”
Along similar lines, New York City-based Highgate has augmented its hospitality investment and management platform with the formation of a dedicated team that brings decades of expertise as court-appointed receivers and operators for hotels with distressed assets requiring lender involvement. The platform will be led by industry veterans Richard Millard and Joseph Klam.
“Our team brings unparalleled experience to complex assets across all hospitality verticals and unique market situations, providing thorough counsel and execution throughout the process,” said Millard, managing director at Highgate. “In every stage of the asset lifecycle, we are a trusted partner to lenders, owners and other interested parties in recovering lost value and stabilizing properties.”
Highgate says that through its affiliates, it has developed a workout process that supports the asset as a result of having been both the receiver and operator for numerous banks, special services agencies, lenders, and federal agencies.
Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism.
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