Leading hospitality investment managers Phil Kasselis, Luke Sullivan and Ed Faraguna have teamed up to create a private equity real estate company dedicated to investing in value-adding hotel properties as the tourism sector expands in Asia Pacific region recovers after Covid-19 pandemic.
The highly experienced trio have teamed up to form H-PEP (Hospitality Private Equity Partners) after having held senior positions in major hotel investment platforms in the Asia-Pacific region for a long time had worked.
They bring extensive know-how to the industry in the areas of fund management, hotel deal origination, active asset management, development, operations, debt and structuring.
The company will offer its investors access to hotel investment opportunities through a fund structure, separately managed accounts or direct investments. H-PEP is in discussion with investors to raise $ 500 million for hospitality opportunities in the Asia-Pacific region.
Established to capitalize on the current Asia Pacific market cycle, H-PEP targets hotel investment opportunities with the potential to add value through renovations, rebranding and revitalization to optimize performance in the most competitive marketplace in decades. The Covid-19 pandemic has accelerated consumer trends in the tourism sector, with savvy investors expected to benefit from select hotel properties as they increase their post-pandemic market share.
The company, which has already established a presence in Singapore, will focus on hotels in the upscale, upscale and luxury segment, in gateway cities and resort locations in markets across the region.
When announcing the launch of H-PEP, Phil Kasselis said that Covid had caused the most profound change in the tourism and hotel landscape in decades.
« There is no doubt that Covid has affected the performance of many hotels and resorts in the Asia-Pacific region, » he says. “The current market cycle offers tremendous opportunities to acquire underperforming assets, implement value-adding wealth management strategies, and benefit from a recovery in Covid travel in one of the world’s most dynamic regions.
“We are already seeing strong investor appetite in the hotel sector with prominent investment groups such as GIC, Blackstone, Partners Group and KSL Capital Partners operating in the Asia-Pacific region.
Preqin’s June 2021 alternative investments report highlighted that dry powder property for Asia Pacific grew 39 percent from late December 2018 to late September 2020. This suggests continued capital inflows into the Asia-Pacific real estate sector and price pressures. With travel recovering, we assume that capital values in the hotel real estate subsector will benefit from increased capital flows into the region.
“Cushman Wakefield noted in April 2021 that there was $ 5.4 trillion in excess savings worldwide (7 percent of 2019 global GDP). The increasing preference of consumers to spend their disposable income on experiences rather than “things” is expected to result in a strong backlog in travel and hotel accommodation, with Asia Pacific destinations being a major beneficiary.
“The introduction of a private equity real estate platform dedicated exclusively to investing in hospitality assets is a natural development for the three of us. Our experience with leading fund managers such as Pro-Invest Group, Ascendas (now CapitaLand), Colonial First State and Mirvac Group has given us a proven track record in hospitality operations, investment management and asset management.
« We see the time as ripe to found a dynamic and agile company like H-PEP to enable investors to take advantage of the unique circumstances and create value in the hotel sector. »
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