Electra America, AKA Team Up for Distress Hotel Fund
The opportunistic vehicle is in the process of raising $500 million in capital from investors for the acquisition of independent hotels in major gateway markets.
Electra America is stretching beyond the residential sector to team up with AKA to launch an opportunistic hotel investment fund focused on distressed assets in urban gateway markets.
Electra America, a platform specializing in the multifamily and residential sectors, and AKA, a leader in luxury hotel residences, have partnered to form Electra America Hospitality Group (EAHG). The fund is in the process of raising $500 million in capital from investors for the acquisition of independent hotels in major gateway markets.
Russ Urban will serve as CEO of the new venture. Over four decades, Urban has served in leadership positions at High Hotels, Destination Hotels & Resorts, HEI Hotels & Resorts and Marriott International.
EAHG will focus on acquiring, repositioning, and stabilizing well-located hotels with strong appreciation potential in urban gateway markets—where both partners have existing expertise. The venture will combine the existing on-the-ground platform of AKA with Electra America’s global financial strength, according to Urban.
“Our business plan assumes that a large number of the hotels that we buy will be closed. Our plan is to take advantage of downtime in the operating cycle to renovate,” Urban told GlobeSt.com.
It is no secret that hotels have struggled through the pandemic. At the end of 2020, the delinquency rate for hotels was 19.87%, according to DBRS Morningstar. That is an improvement from a high of 23.89% in June.
“We’re seeing opportunities right now, and we only anticipate that increasing in Q2 and Q3,” Urban told GlobeSt.com. “Our pipeline is robust.”
So far, most of those opportunities aren’t coming from lenders. “Currently, most of our opportunities are directly with owners, but we foresee more opportunities with lenders over the next six months,” Urban told GlobeSt.com.
This has been a busy week for Electra America. On Tuesday, the company announced it was partnering with Transcendent Investment Management to establish a fund, Transcendent Electra, to acquire newly built, single-family rental homes in suburban neighborhoods in Florida, Georgia, Texas, North Carolina, South Carolina and Tennessee.
Both Transcendent Investment Management, a private equity firm focused on the housing market, and Electra America, a private equity firm specializing in the multifamily sector, have existing footprints in the Southern suburban markets.