The Real Deal New York

Tribeca Associates’ Mark Gordon launching $500M hotel investment fund

Intrinsic Hotel Capital aims to buy 10 U.S. hotels over next two years
By Katherine Clarke | June 20, 2017 03:43PM

Tribeca Associates’ Mark Gordon and the Baccarat Hotel and Residence at 20 West 53rd Street

Sensing an opportunity in existing hotels that could earn more with just a few tweaks, Tribeca Associates’ TRData LogoTINY Mark Gordon is looking to raise about $500 million in debt and equity for a new hotel-focused fund, he told The Real Deal.

“We see opportunity in acquiring existing, income-producing hotels that are already performing well but where we can effectuate enhanced cash flow …. through a combination of change of management, brand, physical improvements, creative food and beverage concepts and the like,” Gordon said. “The acquisition strategy is all about minimizing risk while generating core-plus returns.”

The fund, named Intrinsic Hotel Capital, will be independent of Tribeca Associates. Gordon’s partner on the new venture is Joe Vassallo, formerly of Deutsche Bank and Natixis.

The partners hope to buy about 10 U.S. hotels over the next two years, and will look at both select-service and full-service hotels.

β€œIt’s really an asset-specific hotel strategy,” Gordon said. β€œI’ve found that there are good opportunities in bad markets and bad opportunities in good markets.”

While the New York hotel market has suffered from low RevPAR and escalating expenses over the past couple of years, the national landscape remains more robust. There were 191,832 new rooms under construction nationwide as of May, a 16.4 percent increase year-over-year, according to research firm STR. Still, the industry is facing a variety of challenges, including serious competition from short-term rental company Airbnb, which is backed by more than $3 billion in venture capital. In April, leaked documents revealed how the hotel industry has systematically pushed for anti-Airbnb legislation.

Gordon, a veteran of Sonnenblick-Goldman who went on to run Cushman & Wakefield’s hotel practice, launched development firm Tribeca Associates with Bill Brodsky and Elliott Ingerman in 2010. The company developed the Baccarat Hotel and Residence at 20 West 53rd Street, which it completed with Starwood Capital Group. Chinese insurer Sunshine Insurance Group paid $230 million, or $2.1 million a key, for the hotel component in 2015, setting a record price for a U.S. hotel at the time.

There are only two condo units remaining on the residential side. Gordon still has four active projects with Tribeca, including the renovation of two office buildings at 30 Broad Street and 130 West 42nd Street.

(To view more of Tribeca Associates’ financing transactions, click here)