$1B JV Formed To Buy Value-Add, Distressed Hospitality and Housing

Värde Partners and Hawkins Way Capital will be targeting these assets in major US cities.

A joint venture to acquire more than $1 billion of value-add and distressed hospitality and housing assets in major US cities has been formed by global alternative investment firm Värde Partners and Hawkins Way Capital.

The assets will operate under a Hawkins Way affiliate.

The joint venture makes sense because there is a significant opportunity to acquire properties at attractive prices with the market of unfulfilled and growing consumer demand and the limited supply of affordable lifestyle hospitality and residential products in the center of US gateway cities, Francisco Milone, partner at Värde Partners said.

Hawkins Way Managing Partner Ross Walker said there is a window of opportunity to acquire certain hotel and overlooked housing assets properties which have been financially damaged by the pandemic at a discount to intrinsic and potential value, with a view to repositioning them for higher, better uses.

Through an affiliate, the joint venture recently purchased 569 Lexington Avenue in the heart of Midtown Manhattan, New York from RLJ Lodging Trust. Currently a non-operating 764-key hotel, the 19-story, 349,280 square foot building was previously a DoubleTree-branded hotel focused on corporate and business travel.

The joint venture will also be seeded with operating properties in San Francisco, Oakland, and two in Brooklyn.

Another recent hotel endeavor by Värde Partners was a $211 million joint venture with Flynn Properties to purchase 20 Marriott and Hilton select service hotels.

The companies said that the hotels will undergo capital improvements “over time.”

“These properties have fared well through the pandemic, demonstrating the healthy demand for select service hotels and the strength of their brands,” said Milone. “The hotel sector has experienced an unprecedented shock, with extreme levels of cash-flow disruption driving a significant demand for capital. As the sector begins to recover from the pandemic, we believe there will be opportunities to invest selectively in high quality assets that are well positioned to capitalize on the return of business and leisure travel.”