REAL ESTATE NEWS

KHP Capital Partners has closed another hotel fund, raising $300 million, which will be invested in several projects in the asset class. While the private equity real estate firm did not reveal the specific investors, it did note in a statement that it got backing from existing partners, while receiving new commitments from "highly respected institutional" ones.

Since the close, KHP Fund VI has already made three moves. These include investing in a 240-room office-to-lifestyle hotel conversion in Charlotte, North Carolina, and purchasing Hotel Viking in Newport, Rhode Island, which reportedly has 208 rooms.

KHP estimated that it will pour the capital into between eight and ten projects. While it did not reveal any specific regions it would focus on, KHP said it plans to explore investments in "major U.S. markets." The San Francisco-based firm intends to finalize the moves under the fund within the next two years. It forecasts the "buying power" to be almost $1 billion using leverage and co-investing equity.

"The final closing of our sixth fund comes at the perfect time to capitalize on the lingering distress from COVID and the elevated interest rate environment," said Jeff Stulmaker, partner and chief investment officer of KHP.

"With our value-add strategies that focus on driving operational upside, the renovation and repositioning of under-capitalized hotels and conversion of distressed historic office buildings to hotel use, we are well-positioned to take advantage of the current environment to make compelling lifestyle hotel investments."

KHP, which invests mainly in lifestyle hotels, has committed $1.1 billion over the past five funds and has purchased and developed 42 hotels over the past twenty years.

While the CRE industry battles through the uncertainty ahead in the economy with tariffs and inflation, hotel loyalty programs appear to be working for the hospitality asset class. According to an analysis by CBRE, these memberships surged by 14.5% last year to 675 million. That helped push users per room up by 7.4 percent to 137.

Source: GlobeSt/ALM