Banyan Investment Group (BIG), a vertically integrated hotel investment company that acquires select-service hotels in the U.S., has revealed that its Banyan Lodging Enhanced Value Fund LLC, a fund vehicle that offers investors an opportunity to purchase hotels that have been impacted by the ongoing COVID-19 crisis, is now fully subscribed. The final participants were made up of domestic and foreign family offices.
“Interest in our BLEV fund has risen steadily since our original announcement earlier this year, as evidenced by how quickly the raise was completed, to the point where we now actually are over-subscribed,” said Rakesh Chauhan, managing partner/CEO, BIG. “We already have our sights on several respected hotels in strong markets with high barriers to entry and multiple demand generators to help offset any potential economic headwinds that could arise in the future. We look forward to a successful run with our partners and fully expect this to be a profitable endeavor for all involved.”
BLEV is structured to provide a superior return profile to investors versus a typical co-mingled fund, according to the company. The fund purposefully was created as a revolver, creating the ability to move and purchase quickly and backfill with external capital post-closing.
The fund is being used to form joint venture partnerships with institutional investors and/or syndicates of retail investors, implying total investible equity in the range of $350 million. BLEV focuses on high-barrier-to-entry hotel locations, targeting properties with significant discounts to replacement costs and/or historical sale prices. As the hospitality industry restabilizes, hotel sales prices are expected to rebound, which will provide superior, risk-adjusted returns for investors.
BLEV will pursue well-respected branded and independent hotels mainly in primary and secondary markets with multiple business and leisure demand generators. Targeted hotels will be highly transient-demand-oriented and range from 100-350 rooms. The fund allows for both individual property and portfolio acquisitions. BLEV will serve as general partner alongside institutional investors to acquire a collection of hotels—likely a dozen select-service, extended-stay, lifestyle or compact full-service hotels, segments which have clearly emerged as resilient performers in the post-pandemic environment.
“One of the many reasons we oversubscribed so quickly was due in no small part to the fact that hotels make a strong hedge against inflation,” said Andy Chopra, managing partner/CIO, BIG.