LOS ANGELES — San Francisco-based real estate private equity firm KHP Capital Partners has an affinity for complicated capital markets.
"This more challenging environment takes out some of those competitors that are really more of tourists in the hospitality industry," said partner and Chief Investment Officer Jeff Stulmaker during a video interview with Hotel News Now at the 2023 Americas Lodging Investment Summit. "This is all KHP does; we're just hospitality investors."
Stulmaker said having a loyal network of lenders to work with has given KHP confidence to remain active in the market despite what could happen in the broader economy.
KHP Capital Partners was formed in 2015 to take over the private equity fund engagement business that was formerly managed by Kimpton Hotels & Restaurants after the sale of the hotel management company to IHG Hotels & Resorts.
The team has overseen six discretionary private equity funds, totaling more than $1.25 billion of equity capital, focused on the boutique and independent hotel sector.
"We really like that upper-upscale part of the industry," Stulmaker said. "We recently acquired a hotel in Seattle that we're planning a big renovation and repositioning to," he said.
The firm bought the 153-room Pan Pacific Seattle hotel for $70 million, or about $475,000 per room, in October from real estate investment trust Hersha Hospitality Trust, CoStar News reported.
KHP is especially attracted to hotels in supply-constrained markets as well as ones in drive-to leisure destinations, Stulmaker said.
Ground-up development is not a core focus of KHP's business, as "we don't like to pay a dollar for a dollar," he said.
"We really like buying existing assets at a significant discount to replacement cost and manufacturing institutional real estate," he added. "We'll selectively do new development; it's really hard to make that pencil today. In those really high-barrier-to-entry markets, where maybe there's some type of public incentive, you can get those types of projects done. But overall, we're not focused too much on it."
For more from HNN's conversation with Jeff Stulmaker, watch the video above.