KHP Capital Partners, a private real estate investment firm focused on acquiring and creating lifestyle hotels, has closed on $300 million of commitments for its sixth discretionary real estate fund.
KHP will continue to focus on the acquisition of hotels that can benefit from enhanced branding and management; renovation and repositioning of hotels in need of capital; and adaptive reuse of historic buildings. The company’s projects include the renovation of the Pan Pacific in Seattle, which will be relaunched as the 1 Hotel Seattle in May 2025, and the recent transformation of the Le Meridien in San Francisco into the Jay Hotel, which is now part of Marriott’s Autograph Collection.
KHP was formed in 2015 by Mike Depatie, Joe Long and Ben Rowe as the continuation of the hotel real estate private equity business they started while leading Kimpton Hotels & Restaurants. Prior to the sale of Kimpton to InterContinental Hotel Group (IHG) in January 2015, this team also oversaw the company’s hotel and restaurant management business.
Over the last ten years, KHP has grown to $1 billion of equity under management, and the KHP funds collectively own sixteen hotels, with an additional two investments in hotel credit. Today, the company is led by Managing Partners Rowe and Long, and Jeff Stulmaker, partner/chief investment officer.
“We are very pleased with the level of investor support for this new fund,” said Rowe. “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 new fund has made three investments to date. The first two deals include the ongoing adaptive-reuse conversion of a historic office building in Charlotte, NC, into a 240-room lifestyle hotel, and the acquisition of the first mortgage note on a lifestyle hotel in Seattle. The fund closed on its third investment, the acquisition of the Hotel Viking in Newport, RI, on April 17. The remainder of the fund is expected to be deployed over the next two years and, with co-invest equity and leverage, should translate into nearly $1 billion of buying power. KHP expects to invest in a total of eight to 10 projects through this fund, focusing on opportunities in major U.S. markets and select leisure destinations.
“The final closing of our sixth fund comes at the perfect time to capitalize on the lingering distress from COVID and the elevated interest rate environment,” said Stulmaker. “With our value-add strategies that focus on driving operational upside, the renovation and repositioning of under-capitalized hotels and conversion of distressed historic office buildings to hotel use, we are well-positioned to take advantage of the current environment to make compelling lifestyle hotel investments.”
