ACORE Capital Readies $1B To Invest In Beleaguered Hotels

ACORE Capital is betting that the hospitality industry, still beset by the coronavirus pandemic, is in the market for capital to survive until business returns to something like normal. The commercial real estate lender with about $17B in assets under management has raised $1B to lend to hotel owners in North America.

The lender is seeking owners who are having trouble obtaining more forbearance on existing debt, ACORE Managing Partner Warren de Haan told Bloomberg.

“We are here to say, ‘We like the rebound characteristics of your asset. We want to provide you with the recovery capital to get you to the other side,’” he said.

The new investment strategy, ACORE Hospitality Partners, will be backed by a number of institutions and will originate and acquire structured hotel debt investments, including senior and mezzanine loans, B-notes and preferred equity. It will invest in various hotel segments but focus on assets in markets with a high barrier to entry that are positioned to do well when demand for rooms rebounds, according to ACORE.

ACORE itself is no stranger to hospitality lending. Since its founding in 2015, the company has originated over $4.2B in hospitality investments.

Though in slightly better condition than early in the pandemic, the hospitality industry is still very much in the doldrums. U.S. hotel profitability fell 84.6% in 2020 compared with the year before, according to hotel data specialist STR.

“Lower demand in December coupled with fixed expenses for hotels meant profit declines on par with early in the pandemic,” STR Assistant Director of Financial Performance Raquel Ortiz said in a statement.

“That only worsened the overall 2020 figures, which showed an average profit level less than $15 per room after coming in at almost $95 in 2019," Ortiz said.

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