Electra America, AKA launch $500M hotel fund

JV plans to target NYC, Miami, LA, DC, Toronto and London

National /
Feb.February 26, 2021 02:15 PM
Larry Korman and Joe Lubeck (iStock)

Larry Korman and Joe Lubeck (iStock)

A multifamily investment firm and a luxury hotel residences company have partnered to launch a $500 million hotel investment fund, seeking to take advantage of opportunities created by the pandemic.

Electra America Hospitality Group, a joint venture between Electra America and AKA, plans to focus on properties in New York City, Miami, Los Angeles, Washington D.C., Toronto and London, said Russ Urban, CEO of the new partnership. The joint venture recently closed on $100 million in capital.

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

Urban said the cities that the fund is targeting are “the deepest and [most] diverse markets” where it can take advantage of some level of distress and where the fund feels confident the market will return to pre-pandemic levels.

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. It’s in the market for properties that cater to business and leisure travelers.

The group currently has three deals in the works, and plans to purchase hotels ranging from just under $20 million to nearly $100 million, with a total of about 10 to 15 hotels.

The hospitality industry was among the hardest hit during the pandemic. Owners across the country have struggled to survive, with some losing their hotels via foreclosure or handing the keys back to their lenders, and others selling at deep discounts.

On an earnings call this week, Starwood Property Trust Chairman and CEO Barry Sternlicht predicted that big-box hotels won’t return to normal occupancy levels until 2024 or 2025.

Urban expects leisure travel will return to pre-pandemic levels in 2022, and corporate travel fully rebounding a year later. He believes group bookings will take 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.

AKA is a division of Korman Communities, a Pennsylvania-based investment firm. The company focuses on luxury extended-stay hotel residential properties. Several of the New York City hotels that the firm partnered on with Prodigy Network have closed or faced foreclosure as part of the broader collapse of the real estate crowdfunding network.

A number of funds have launched over the past year. Alex Rodriguez’s A-Rod Corp and joint venture partner Adi Chugh of Maverick Commercial Properties recently joined CGI Merchant Group’s $650 million Hospitality Opportunity Fund.





    Related Articles

    arrow_forward_ios
    Watson Hotel at 440 West 57th Street (Google Maps)
    Manhattan hotel trades in biggest distressed lodging deal of pandemic
    Manhattan hotel trades in biggest distressed lodging deal of pandemic
    The gains accounted for nearly a third of overall job growth. (iStock)
    Construction, leisure & hospitality jobs rebounded in March
    Construction, leisure & hospitality jobs rebounded in March
    Holiday Inn at 37-10 114th Street in Corona, Queens (Google Maps)
    Holiday Inn next to LaGuardia Airport faces foreclosure
    Holiday Inn next to LaGuardia Airport faces foreclosure
    84 William St, NY and 1400 N. Orleans St, Chicago (Google Maps, iStock)
    Prodigy Network files for bankruptcy as lawsuits mount
    Prodigy Network files for bankruptcy as lawsuits mount
    Lightstone Group CEO Mitchell Hochberg and Marriott International CEO Anthony Capuano with a rendering of The Moxy Williamsburg (Getty, Lightstone, iStock)
    Marriott, Lightstone Group bet on hotel recovery
    Marriott, Lightstone Group bet on hotel recovery
    (iStock/Illustration by Kevin Rebong for The Real Deal)
    Travel roars back — and summer rentals book up
    Travel roars back — and summer rentals book up
    City Council member Justin Brannan (Getty, Justin Brannan via Facebook)
    Council member wants to take up office-to-resi conversions debate
    Council member wants to take up office-to-resi conversions debate
    PMG principals Kevin Maloney (middle), Ryan Shear (left) and Dan Kaplan with a rendering of Waldorf Astoria Miami (PMG, Muse Residences, Rendering via ArX Solutions)
    Waldorf Astoria Miami, planned as the tallest resi tower south of Manhattan, launches sales
    Waldorf Astoria Miami, planned as the tallest resi tower south of Manhattan, launches sales
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...