Three former Pro-invest Group executives, Phil Kasselis, Luke Sullivan and Ed Faraguna, have teamed-up to launch Hospitality Private Equity Partners (H-PEP), a new firm targeting acquisition opportunities across the region.
The trio were most recently in leading roles at Pro-invest Group – Kasselis was a co-founder and Managing Director of Pro-invest Hotels, Sullivan the Managing Director of Pro-invest Hospitality Asset Management and Faraguna the Group Chief Financial Officer – and will use their extensive period working in senior roles in leading Asia-Pacific hotel investment platforms to uncover opportunities across the region.
Kasselis said they bring to the sector substantial expertise in funds management, hotel deal origination, active asset management, development, operations, debt and structuring and the firm would provide its investors access to hotel investment opportunities through a fund structure, separately managed accounts, or direct investment.
He said H-PEP is in discussions with investors regarding raising US$500 million for Asia-Pacific hospitality opportunities and the company has been established to take advantage of the current market cycle in Asia-Pacific, targeting hotel investment opportunities “with the potential for adding value through refurbishments, rebranding and revitalisation to optimise performance in the most competitive market environment in decades”.
Kasselis said the COVID-19 pandemic has accelerated consumer trends in the tourism sector with astute investors expected to benefit from select hotel assets increasing their market share post pandemic.
“There is no doubt that COVID-19 has adversely impacted the performance of many hotels and resorts located across Asia Pacific,” he said.
“The current market cycle presents enormous opportunities to acquire underperforming assets, implement value enhancing asset management strategies, and take advantage of a post-COVID travel recovery in one of the world’s most dynamic regions.
“We are already seeing strong investor appetite in the hotel sector with prominent investment groups such as GIC, Blackstone, Partners Group and KSL Capital Partners active in Asia-Pacific.
“Preqin’s June 2021 report on alternative assets highlighted that from the end of December 2018 to the end of September 2020, dry powder for Asia-Pacific real estate grew by 39%.
“This points towards continued capital inflows to the Asia-Pacific real estate sector and pressure on pricing. As travel recovers, we anticipate capital values in the hotel real estate subsector will benefit from increased capital flows to the region.
“Cushman Wakefield identified in April 2021 that there was $5.4 trillion in excess savings globally (6% of 2019 global GDP).
“An increasing consumer preference to spend their disposable income on experiences rather than ‘things’ is expected to lead to strong pent-up demand for travel and hotel accommodation, with Asia-Pacific destinations slated to be a significant beneficiary.
“Launching a private equity real estate platform solely dedicated to investing in hospitality assets is a natural evolution for the three of us.
“Our experience with leading fund managers including Pro-invest Group, Ascendas (now CapitaLand), Colonial First State and Mirvac Group has given us a proven track record in hospitality operations, investment management and asset management.
“We see the time as being ripe to establish a dynamic and agile company such as H-PEP to enable investors to take advantage of once-in-a-generation circumstances and build value in the hotel sector,” he said.
Kasselis said the company, which has already established a presence in Singapore, will focus on hotels in the upscale, upper-upscale and luxury segments, in gateway cities and resort locations in markets throughout the region.