Stonewood Alchemy Real Estate adds 44 properties to US portfolio
SA group will own R4.53bn of long-stay hotel assets in the US
SA property group Stonewood Alchemy Real Estate (SARE) is making its second investment in the world’s largest commercial property market, the US.
After the success of its initial R1.15bn investment into the extended-stay hotel sector, made in 2018, SARE will expand its portfolio by adding 44 additional properties in the country. This will take its total portfolio to 61 properties, with a total value of R4.53bn.
The total value of the properties to be purchased will be about R3.36bn. The group said the acquisition programme had commenced and would be completed in June 2020.
Most of these new properties are located in the “Smile States”, in particular Nevada, Texas, Oklahoma, Arizona, Colorado, New Mexico and Florida.
SARE and its investors, together with its US partner ServiceStar Capital Management, would provide the equity for the transaction.
SA commercial property investors have traditionally not been active in the US, but in the past three years some groups have started to make moves. Initial success achieved by listed real estate investment trust Emira Property Fund has inspired other unlisted entities.
SA companies had avoided the country in the past because of factors such as time-zone differences, having insufficient capital to make significant investments in a market worth more than a trillion US dollars, and a lack of market knowledge.
SARE is not yet open to the SA public. It was formed for high-net-worth SA investors and has found opportunities in specialised property. It invests in long-stay hotels with the help of US partners.
“At present, the investment is not open to the public but to high-net-worth family offices and small institutions that have the capacity to analyse an illiquid, offshore, long-term investment,” said SARE founder and director Eldon Beinart.
“Based on the performance of our 2018 portfolio and the entry of institutions and private equity into the extended-stay hotel sector, we feel our timing is very good to aggressively build our current footprint,” he said.
Beinart said extended-stay hotels in the US provided good long-term cash returns and plugged into the appetite for clean, safe and affordable long-term accommodation.
“The majority of guests are cost-conscious consumers with specific professional or lifestyle circumstances that benefit from an affordable home-like living space. We define a long-stay guest as someone that takes a room for 30 days or more. We have a large number of guests that stay with us for more than six months,” he said.