Highgate acquires Trust Hospitality portfolio

NEW YORK—Real estate investment and hospitality management company Highgate recently assumed management of Trust Hospitality’s portfolio assets, comprising 22 hotels and resorts— approximately 3,100 rooms—throughout the U.S., Caribbean and Latin America.

It’s the third portfolio transaction this year for Highgate, based here, and follows the acquisition of Heavlin Management Company’s 11 properties in February and 197 hotels from Colony Capital in September. Pro forma for the Colony and Trust transactions, Highgate will own and/or manage approximately 350 hotels comprising approximately 65,000 rooms, according to Zach Berger, principal at Highgate.

Rich Russo, also principal at Highgate, noted of the trio of transactions, “We’ve been on a strong growth trajectory over the past few years; however, that growth has been very targeted and deliberate. Our growth strategy is to continue to add share in markets that we are already operating in, expand into a handful of new markets each year and grow share in those markets.  The portfolio additions that we have made have provided us the ability to scale quickly in target markets—Arizona for Heavlin and Caribbean and Latin America for Trust—or target segments, with Colony representing a national portfolio of select-service and smaller full-service hotels. 

“Over the years, we have found this targeted approach to scaling allows us to attract and retain the highest quality talent; increases expense savings through complexing of employees and leveraging our national and local buying power; and allows us to work with our sales teams and various distribution partners to drive significant market share to our properties,” he added. “We will continue to pursue opportunities to collaborate with talented management teams who can benefit from integrating into the Highgate platform, and contribute to our objective of providing best-in-class services, innovative operating capabilities, and a compelling value proposition for our partners and key stakeholders.”

The Trust transaction enabled Highgate to become the leading hotel manager in the Caribbean and Latin America region across both branded and independent hotels, noted Russo, who added, “We were attracted to the portfolio as it provided an opportunity to instantaneously scale in multiple countries throughout the Caribbean, which is a market that has broadly similar demand characteristics to markets in which Highgate has been successful.”

According to Russo, it was Trust that was looking for a deal. “In the early days of COVID, Trust had been looking for a management company partner that could provide the tools and resources needed to both execute on the portfolio that it had amassed over the years and also provide an owner-minded, entrepreneurial environment for the  team to continue expanding its presence in the Caribbean and Latin America,” he said. “By offering management companies like Trust a highly reliable, customized approach, we were able to create a structure that dramatically enhances both organizations.”

Besides the Caribbean and Latin America hotels, the Trust portfolio also included properties in select markets such as Milwaukee, Miami and Orlando, FL.

“The portfolio includes a combination of existing and under development hotels and resorts. In development are a few highlighted properties including Amrit Ocean Resort & Residences on Singer Island, FL; Bianca Sands in Turks and Caicos; Anichi Marriott Autograph Dominica; and Dos Santos Marriott Autograph in Playa Del Carmen, Mexico,” said Russo. “Highgate now boasts one of the largest hotel portfolios in the region spanning 15 Caribbean and Latin American countries including Mexico, Dominican Republic, Puerto Rico, Turks and Caicos, Jamaica and Panama, among others.”

As part of the deal, two Trust executives—CEO Richard Millard and Michael Register, partner/head of development—will join Highgate to lead business development and owner relations efforts in the Caribbean and Latin America region.

“Richard and Michael have built a tremendous organization over the past three decades. When deciding who to merge Trust into, they chose Highgate because we offered them a highly customized structure that provided the infrastructure and support to help them continue to grow throughout the Caribbean and Latin America,” said Russo. “Both Richard and Michael have a deep knowledge in these markets and we are thrilled for them to join our team and leverage their extensive experience to help further grow the portfolio. As we continue to scale through select M&A, we prefer to partner with the principals and executives that have built the organization.”

Both the Trust and Colony Capital transactions took place in the middle of the pandemic, and Berger pointed out that “Highgate has a longstanding track record of investing and expanding its activities during periods of market dislocation. While the pandemic has driven unprecedented disruption in the hospitality industry, Highgate remains bullish on the prospects for lodging fundamentals over the long term, and will continue to seek out opportunities to acquire well-positioned assets and partner with strong management teams in the space.”

The flurry of acquisitions may not be over for Highgate, according to Berger, who said, “[We expect] to continue to be active over the near term, with a particular focus on opportunities where we see an ability to add value through operational improvements, business plan repositionings and partnerships with talented management teams.” HB