INVESTMENT
H : With so much capital on the sideline , shouldn ’ t it be easy to source capital with more traditional methods ? SP : The issue is that this capital is concentrated with large funds and institutions and there is a lack of flexibility with these sources in terms of placement and investment thesis . We have found that there are so many great sponsors with 30-plus years of experience in development and management but have never gone beyond friends and family to raise capital . This platform aims to connect those great groups with deep expertise in hospitality with investors that are looking for more than just a transaction but a platform that will help them build their real estate portfolio and educate them on the details of hospitality investing .
H : How much demand is there for this product ? SP : Based on the success of crowdfunding and its growth , I think there is tremendous opportunity for this type of investment offering .
Hospitality is a niche segment and while there is some exposure on the other crowdfunding platforms , Jali is looking to specialize in this space . Our team ’ s history of being hotel owners , operators and developers provides a unique and in-depth perspective on investment in this asset class .
In our history , we have always had friends and extended family ask us about investment opportunities . I can only imagine there are so many groups like ours where the same is true . Jali will provide the platform and mechanism to scale the equity raise capabilities of strong and experienced hotel sponsors that do not have the capacity or existing relationships with other capital partners to help capitalize their projects .
H : What is the makeup of Jali investors ? SP : The Jali investor will be someone that is accredited and looking for a balance of cash flow and long-term appreciation . One of the primary motivations for starting Jali was to provide the same access and opportunity to build a portfolio and generational wealth through real estate .
H : Why is the educational piece truly so important to Jali ? SP : We want to be beyond a transactional platform that allows for investment into deal flow . We also want to provide insight and education on the prominent topics pertaining to hospitality investment as this helps to engage the investor community beyond just one deal but allows them to truly understand the nuances of this asset class and allows better assessment of deals that meet their long-term planning needs as they build out their portfolio .
We also believe this will help investors understand their investment better not only at the onset when they commit and invest dollars but throughout the lifecycle as they start to see returns and get reporting from sponsors on performance .
H : What does the pipeline look like for the platform ? SP : As a starting point , we have a healthy set of deals within our network to be able to launch the platform .
We have tried to curate a variety of types of investment opportunities within hospitality for people to choose from , including a new development extended-stay hotel in the Midwest and a recapitalization of an existing asset in the Sunbelt region that is cash-flowing and performed well through the pandemic .
We hope to add some additional opportunities in the near future that also highlight tax efficiency ( Opportunity Zone or Delaware Statutory Trust deals ).
H : Is the bid-ask gap tightening up and what is your forecast ? SP : I think the bid-ask spread is certainly better than it was six to eight months ago as the debt market really tightens for lending – both in terms of dollars for hospitality as well as the rate .
There is still hesitancy from many lenders on too much exposure back into hospitality due to concerns over an economic slowdown due to inflation and high interest rates . Additionally , this has also led to many sellers holding off on going to the market . So , we are seeing a slowdown in deal flow . As such , while the gap between seller and buyer expectations seems to be getting smaller , there has been less deal flow to review over the past few months .
H : Do you expect to source distressed deals when CMBS starts coming due ?
50 hotelsmag . com Jan / Feb 2023