AKA forms JV to launch $500 million hotel fund

George Sell George Sell Uploaded 28 February 2021

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US: AKA has teamed up with multifamily investment firm Electra America to launch a $500 million hotel investment fund.

Called Electra America Hospitality Group, the joint venture recently closed on $100 million in capital and will focus on properties in New York City, Miami, Los Angeles, Washington DC, Toronto and London.

Russ Urban, CEO of the new partnership, said the target cities are “the deepest and most diverse markets” where it can take advantage of some level of distress.

“Anybody that’s selling a hotel in this environment today clearly is doing it for strategic liquidity issues. But I wouldn’t say all of our sellers are distressed,” he said.

The group will target hotels with 150 to 300 rooms that are independently run and managed, and will continue to operate the properties as hotels.

The JV currently has three deals in the works, and plans to purchase 10 to 15 hotels ranging from around $20 million to $100 million in price. AKA president Larry Korman told SAN that properties with hotel rooms and suites for weekly and monthly stays are likely to be branded as AKA properties; others could be branded Hotel AKA.

"There may be a few that don’t fit our brand identity where we leave its historical name or give it a new name, such as we did with the highly historical Ben Franklin house in Philadelphia, which we transformed and renamed The Franklin - more out of respect," said Korman. "But we still get the synergies of these properties plus our AVE brand collaborating strategically together."

Urban told The Real Deal he expects leisure travel to return to pre-pandemic levels in 2022, corporate travel a year later, with group bookings taking the longest to recover.

“There’s no doubt that the markets are all going to come back at slightly different paces,” he said.

Electra America, a partnership between the Lubeck family and a subsidiary of Israeli company Electra Real Estate, has more than $6 billion in commercial real estate and debt holdings in its portfolio.

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