PRIVATE PROPERTY
SA group Stonewood invests in US long-stay hotels
Privately-owned property investment and development company Stonewood Alchemy Real Estate has acquired 16 ‘extended stay type’ American hotels in states of Texas and Oklahoma
Another South African property company is making an investment in the US worth more than R1bn, using an American partner as that country’s economy continues its strong run and infrastructure spending plans kick into gear.
Privately-owned property investment and development company, Stonewood Alchemy Real Estate has acquired, together with its US partner and South African investors, 16 “extended stay type” American hotels in Texas and Oklahoma.
Stonewood was founded in Guernsey in 2011 to provide global investment opportunities primarily to high net worth families who wished to invest alongside Stonewood.
Eldon Beinart, a director at Stonewood said the investment deal was worth R1.2bn ($85m), and included the rights to build five additional hotels.
“This transaction augments our current American portfolio, which includes investments in the post-acute healthcare, memory care and assisted living sectors,” he said.
Beinart said Stonewood’s co-investment US partner was Denver-based EastSide Investment Partners LLC, and that their strategy was to acquire hotels that were under-performing and then add value to them.
“Our strategy has been to invest in properties in various countries, add value to them and then sell them on, often to real estate investment trusts,” said Beinart.
Another South African property company that has created a similar investment partnership is Emira Property Fund which, about a year ago, co-invested in shopping centres in Texas and Ohio, with Rainier Companies.
Beinart said the investment case for entry-level long stay hotels was strong, especially in Houston, Texas. He said Houston was set to enjoy a large multibillion-dollar infrastructure spend. Houston’s population, which sits around 2.3-million, is growing rapidly. Only New York, LA and Chicago have larger populations.
According to the 2018 Highland Group extended stay report, extended-stay hotel rooms accounted for about 8.5% of the total supply of US hotel rooms at the end of 2017.
Overall extended-stay hotel demand grew 8.4% in 2017, which was the fastest annual increase in demand since 2005, excluding the 2010 recovery, and extended-stay hotels achieved an occupancy that was 10.4% greater than the overall hotel industry.
“The extended stay sub-sector of the hospitality industry is also a play on the short- to medium-term accommodation sector. We believe multi-family yields in the US are at all-time low at the moment. This investment will tap into some of the key positive demographic trends supporting multi-family investments, at a very attractive entry yield,” Beinart said.