No matter how many deals, recapitalizations or repositionings Gencom accomplishes in a year, Alessandro Colantonio said his team never feels like the company has done enough.
“As soon as we close the deal, it’s like, all right, ring the bell and then, what’s next in the pipeline?” he said. “That’s just because we’re all deal junkies, and we love what we do.”
Historically, Miami-based Gencom has always been a net buyer regardless of the capital cycle, said Colantonio, the real estate investment and development firm's executive vice president and chief investment officer. Part of what sets the company apart from the competition is that it can home in on opportunities, whether it’s through brand relationships, unique angles in a market or its patience and staying power to work through more complex transactions.
In the early to middle stages of the pandemic, Gencom's executive team got into the mindset of being an active buyer, he said. They saw the opportunity but knew they would have to be targeted. They wouldn’t bid on everything in the broker community. They wouldn’t stray from their core acquisition strategy.
Gencom executives sought deals with underlying real estate that they liked in markets that required some patience because that’s where the opportunities were on the buy side, Colantonio said. They bought at a good basis or with good structure in place to help weather the remainder of the pandemic.
“It has continued post-pandemic where we’ve seen this sort of hockey stick, especially on the higher-end segments, but we’re still finding those unique opportunities where it is a good basis, there is a good story,” he said. “We don’t have to get caught up in heavily brokered processes and overpay or pay retail.”
Being patient
During the pandemic, Gencom made three key purchases, Colantonio said. One was its acquisition of the real estate from Provenance Hotels in Seattle and Portland, through which its management affiliate, then-Pyramid Global Hospitality, acquired the operations for all 12 Provenance properties.
The second was buying the St. Regis Chicago in May 2023 for $93.99 million. The other was the acquisition of the Hyatt Regency in downtown Miami in December 2021 for $12.54 million, which is now part of a $1.8 billion Miami Riverbridge complex development in partnership with Hyatt Hotels Corp. and the city of Miami.
“Those three deals were pandemic vintage and really trying to find opportunity in the midst of that kind of global crisis,” he said.
Since then, Gencom has been an active buyer, including the Thompson Central Park acquisition in September, he said. The company bought the hotel, its first in New York City, for $308 million. It also recapitalized its 593-key Fairmont Southampton resort in Bermuda for $550 million, funding a major redevelopment and expansion of the property.
In May, Gencom and its affiliates refinanced the Rosewood Bermuda, planning a $17 million renovation of the master-planned community at Tucker’s Point.
At the time of the interview, Gencom had one deal about to be put under contract that Colantonio hoped would close by the end of the year. There are another two structured transactions that will push into the first quarter of 2025.
“I would say we have not seen a slowdown, and we continue to just find good real estate, good stories, good relationships that we can put together between brands and lenders and partners,” he said.
The company is also in the late stages of developing the Nekajui, Ritz-Carlton Reserve in Costa Rica, which is scheduled to open in January.
“It’s been everything from acquisitions to recapitalizing to new development,” he said. “There’s a common thread and strategy in there. It’s really that we continue to see opportunities with the right level of patience and just really being targeted in how we approach deals.”
Deals appetite
Given what Gencom was able to accomplish during the pandemic and recovery, Colantonio said he hopes the hospitality transactions pace continues and even picks up. The company is not a hit-and-run owner, buying properties to flip them a few years later, he said. The team understands the business, and that’s recognized by the brands.
“They know we will put the right capital into these properties, we will improve the quality of the asset,” he said. “We will add keys to the brand by new development and conversions.”
Colantonio said the executive team hopes this track record comes back to benefit Gencom when the competition for deals increases. Executives want the hotel brands to remember that Gencom was there when times were tough and translate that to better structure on a deal or better credit enhancement.
The cost of capital is much better than it was a year ago, so the company will look at opportunities to refinance where it can in its portfolio, he said. The lower cost of debt also helps the company be more efficient in putting the capital stack together for new deals.
Gencom looks at a lot of brokered processes, but it’s difficult to pay retail, Colantonio said. Its three major deals during the pandemic were all off-market, coming directly through the owner, developer or brand.
“That's really where we were able to go in work through complex situations, outside of a brokered process, and direct with the counterparty,” he said.
At the same time, the Thompson Central Park deal was brokered by Eastdil. Even within that process, Gencom was able to find more opportunity because of its relationship with Hyatt, he said.
Some of the opportunities that Gencom is looking at have significant capital requirements, Colantonio said. The Thompson Central Park is an example of a deal that came with renovation needs.
“For us, the opportunity there was much simpler with a market play on New York,” he said. “The work has been done. It’s now being a good owner and steward of the asset, working with Hyatt.”
There are situations, however, where Gencom goes in knowing there will need to be capital infusions, but that’s a value-add given the company’s experience with renovations and repositionings, he said. The company recently bought out its partner, Brookfield Asset Management, for full ownership of the Ritz-Carlton Key Biscayne, for which it’s planning a significant renovation and repositioning.
“We recognize that even when you have one of the most beautiful pieces of real estate in a high-barrier-to-entry market like Key Biscayne, you still need to take care of these properties, and you need to renovate, you need to refresh, you need to put in capital regardless of where you are in a cycle,” he said.