Pro-invest Group launches Distressed Hospitality Fund to capitalise on opportunity created by Covid-19
Pro-invest Group, a global asset manager and investment firm specialising in private equity real estate and real estate asset management, has launched the Pro-invest Asia-Pacific Distressed Hospitality Fund (Fund III).
Unprecedented market conditions created by Covid-19 have created an opportunity to make value-add investments into standing and income producing assets primarily in luxury, upper-upscale and upscale full-service hotels in Australia and New Zealand, as well as other secure markets in Asia.
Pro-invest Group is currently managing more than USD2 billion in real estate assets, including commercial assets as well as hotels operating under globally renowned brands such as Holiday Inn Express, Hotel Indigo and vocoTM.
“The strength of this offering is underpinned by the unique structure of the Pro-invest Group. Our integrated hospitality platform combines the opportunity for investors to tap into opportunities with our in-house team of experts in refurbishment/development, active asset management and day-to-day hotel operations to drive maximum returns,” says Ronald Barrott, Pro-invest Group Chairman and Co-CEO.
While all three Pro-invest funds are hospitality-focused, Fund III is structured to capitalise on the current opportunity, presenting a platform that allows investors to participate in travel recovery. Pro-invest is targeting to raise AUD500 million from institutional investors, sovereign wealth funds and established family offices.
“We are going through a period of significant economic and social disruption, but we remain confident that this is a temporary ‘bump in the road’ for the hospitality sector. In this time of operational difficulty, we see considerable repositioning potential – particularly for distressed assets in the full-service hotels segments – and Pro-invest is well positioned to optimise these opportunities,” says Pro-invest Managing Partner Dr Sabine Shaffer.
Fund III will also include opportunistic investment targets outside of Australia and New Zealand, specifically Singapore, Japan, South Korea and Thailand. In addition to the Group’s usual mid-scale focus, Fund III is also looking at opportunities within the full-service segments, as luxury, upper-upscale and upscale hotel assets typically experience higher revenue declines during market disruption and enjoy above-average growth during market recovery.
“Fifteen years in the Asia Pacific Region, most recently as CEO Asia, Middle East and Africa for IHG, gives us further insight into where opportunities in the current market will present themselves,” says Jan Smits, Pro-invest Deputy Chair and Co-CEO.
Fund III will focus on acquiring hotels in markets with high barriers to entry and attractive supply/demand fundamentals. While the Fund’s investment strategy is not reliant on distressed opportunities but its traditional value-add investment strategy, the possibility to acquire assets below replacement cost in the wake of the current hospitality disruption may provide further upside for investors.
To tap into these distressed opportunities, Fund III has the flexibility to invest by providing debt to distressed borrowers in addition to usual equity investments.
Similar to the hotels deployed under Fund I and II, Fund III’s hotel portfolio will feature industry-leading ESG practices and sustainability commitments.