Colony deal puts Highgate among biggest hotel owners

Privately held hospitality firm will have No. 5 portfolio in the U.S.

TRD New York /
Sep.September 29, 2020 01:35 PM
 
Highgate’s Mahmood Khimji (left) and Mehdi Khimji (Credit: Kelly Taub/BFA.com)

Highgate’s Mahmood Khimji (left) and Mehdi Khimji (Credit: Kelly Taub/BFA.com)

Highgate’s deal to purchase a $2.8 billion portfolio of hotels from Colony Capital will catapult the company into the upper ranks of the nation’s largest hotel owners.

The privately held hospitality firm, launched in 1988 by brothers Mahmood and Mehdi Khimji, will have the fifth-largest portfolio in the country when it finalizes its deal with Colony, which is scheduled to close early next year. Highgate owns more than 34,000 rooms, according to figures from Real Capital Analytics.

It represents a huge leap in scale for the company that — although it is the largest hotel owner and operator in New York City — was a relatively small player on the national stage. Highgate’s current portfolio of 11,500 rooms makes it the 25th largest hotel owner in the nation, according to RCA, although Highgate said it owns 17,000 rooms. The discrepancy may be explained by rooms Highgate manages for others while also having a small equity stake.

The acquisition of 22,676 rooms from Tom Barrack’s Colony Capital will roughly triple its room count. That puts the company in the ranks of such hotel powerhouses as the Blackstone Group, Extended Stay America, Starwood Capital and Host Hotels & Resorts.

But the deal comes as the pandemic has thrown the hotel industry into an unprecedented crisis.

Colony, which is divesting itself of its legacy real estate assets, announced last week an agreement to sell six of its seven hotel portfolios to Highgate. Colony will receive $67.5 million in the deal and Highgate will take over $2.7 billion in existing debt on the portfolio.






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