LOS ANGELES-Locally based Lowe Enterprise Investors, Allstate Investments and the Guardian Life Insurance Co. of America have formed an investment venture to acquire full-service hotels in major metropolitan markets throughout the US. The three partners "will look for three-star quality or greater hotels that can be repositioned to take advantage of the market’s recovery," according to Brad Howe, CEO of Lowe Enterprises Investors. “This is an excellent time to acquire a portfolio of top quality assets in major markets."
The venture is targeting well-located, full-service hotels that are financially distressed due to the recent economic downturn. Lowe will seek properties where it can improve performance through capital improvements, new marketing or management.
Sam Davis, senior managing director of real estate investments for Allstate Investments, said in the announcement regarding the venture: “The current environment provides an opportune time to make selective commercial real estate investments within our $100 billion investment portfolio. This venture with Lowe and Guardian is an important part of our larger real estate equity program to build a diversified portfolio that is positioned to benefit from a recovering market.”
Bob O’Rourke, head of Real Estate Investments at Guardian, echoed the theme, saying, "This venture leverages our investment in Lowe Enterprises Investors to invest in hospitality properties and capitalize on the improving market." It is anticipated that Lowe’s hospitality management affiliate, Destination Hotels & Resorts, will serve as the operator for a majority of the properties acquired.
The Lowe-Allstate-Guardian venture comes at a time when the hotel market has been showing signs of recovery, especially in top-tier markets, where a number of analysts' reports have pointed to rising RevPAR. A recently released report by by analysts David Loeb and Michael J. Bellisario of Milwaukee-based Robert W. Baird & Co., for example, cited their generally positive outlook on the hotel sector, based on meetings with REITs, brokers, lenders, operators and private equity managers. "Management teams are confident that fundamentals will remain strong despite a sluggish economy," the Baird report said.
Loeb and Bellisario favor asset owners with a concentration in major urban markets. "Our positive investment thesis is based on low supply, improving group trends, still-positive occupancy and accelerating rate growth," the analysts said.
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