Rendering of the four-building Gabriel on South Beach intelligence to how we approach our investment criteria for each of the opportunities , operational issues , marketing , everything across the board of how we want to manage these assets . We have the ability to interface very closely with the Hilton organization and lean in to that support in a very unique way .
H : Will there be more funds coming ? RT : Hospitality is a core theme to what we do . We ’ ve invested in hospitality for the last 10 years – more on a selective basis . But this is certainly going to be a programmatic venture for us , with fund one being the first .
H : What is the exit strategy ? RT : The good news is that this particular fund and future funds , given the cycles within hospitality , are set up with long durations . So , this fund has a 10 plus two years , so you ’ re looking at 12 years in before we have to start thinking about exit strategies . But there will be numerous opportunities at that point for us regarding going into a more perpetual public structure like a REIT or moving into a different structure . Some of the assets that we are acquiring are legacy assets . So , we would want to see how we can optimize those in the best way at the exits .
H : What ’ s your take on your ability to acquire at a greater discount than has been the case as of late ? RT : We have done very well offmarket as a firm and that puts us in a unique position to access that type of pipeline . But it also demonstrates that we ’ re very good in working with sellers . So , in some cases , there may be and we ’ ve seen it here , a joint venture opportunity where a seller takes a hit at a lower basis , but rides with us as part of a fund long term , and able to recoup some of that investment .
So , we are very creative in looking
at structures that do not preclude us from striking an opportunity to deal with a seller that ’ s reluctant to dispose of assets at a significant discount , but can recapture value in partnering with us . So , I think that ’ s opening a door that ’ s just very opportunistic and very beneficial .
The second piece is that I do believe that there is still a lot of pain to come . Some of these ultra-luxury hotels were built at the height of a very strong hospitality market and in that you saw a capitalization that I don ’ t believe will sustain over the next three to four years . We probably won ’ t stabilize until more like 2023-2024 . So , we see the first two quarters of next year being exciting times for us to deploy more capital . That ’ s why we ’ ve been very disciplined .
We ’ re looking at upscale , upper upscale and luxury because we think that they have the most opportunity for us to find things within our parameters .
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