San Francisco-based real estate private equity firm KHP Capital Partners closed on $300 million of commitments for its sixth discretionary real estate fund, KHP Fund VI.
In a news release, the company said it will use the funds to focus on acquiring hotels "that can benefit from enhanced branding and management, renovation and repositioning of hotels in need of capital, and adaptive reuse of historic buildings."
"We are very pleased with the level of investor support for this new fund," KHP Managing Partner Ben Rowe said in the release. "In addition to strong support from our existing investors, we've expanded our LP base with several new highly respected institutional partners. With this new fund, we are ideally positioned to take advantage of what should be a particularly favorable investing environment over the next few years."
The fund has already made three investments: an ongoing adaptive reuse conversion of a historic office building in Charlotte, North Carolina, into a 240-room lifestyle hotel; the acquisition of the first mortgage note on a lifestyle hotel in Seattle; and the acquisition of the Hotel Viking in Newport, Rhode Island.
KHP plans to use the remainder of the fund over the next two years, which should translate to about $1 billion of buying power, according to the release. The firm expects to invest in a total of eight to 10 projects through this fund.
At the recent Americas Lodging Investment Summit, Rowe said there has been a pull back in higher-performing leisure markets, with the cost of capital affecting valuations.
“I think that an entry point in the leisure side is starting to get a little more interesting,” he said. “But our primary focus today is more on those opportunities where there still is lingering distress from COVID, which is compounded by the capital market pressure and where you can buy it at that deep discount to replacement cost.”