ACORE invests $ 225 million in hotels for graduates of AJ Capital – Commercial Observer
A few months after raising $ 1 billion in capital to deploy in the struggling hotel sector, the Los Angeles-based real estate financier ACORE Capital invested $ 225 million in preferred shares in AJ Capital Partners‘ Graduate hotels.
The preferred stock investment served to support loan repayments in exchange for maturity extensions, and it added some liquidity to the platform in anticipation of any operating deficit, according to marketing materials researching the provider. equity capital obtained by CO which detailed the purpose of the financing. Equity will also help to cross the finish line to a number of ongoing and unfinished development projects.
A source close to the deal said the investment was structured to ensure that AJ Capital does not need to sell the equity stake or associated residual value in its extensive portfolio of graduate hotels – which includes 35 properties in the US and UK and is rated at about $ 1.9 billion, according to the marketing memorandum.
Bloomberg first reported new of investment.
Graduate Hotels invests and operates boutique hotels near major universities, targeting clients who visit these universities. The company is headquartered in Nashville, Tennessee and its portfolio consists of 5,841 rooms, according to marketing materials.
ACORE launched its $ 1 billion rescue capital fund earlier this year to deploy a mix of debt and equity to hotels in the United States as the hospitality industry emerges from the depths of the pandemic COVID-19. It was reported that the company will target opportunities to acquire or create new first mortgages, mezzanine loans and preferred stocks.
Newmarkof Jordan roeschlaub, Dustin Stolly, Mark Schonholtz, Larry wolfe, Nick scribani, Miles spencer and Adam etra were approached by AJ Capital to secure the investment in equities. A team member confirmed Newmark’s involvement, but declined to comment on the preferred stock investment itself.
In February, Bloomberg reported that AJ Capital was seeking up to $ 300 million into debt and / or equity from a capital partner to grow the business and repay existing debt on its Graduate Hotels collection, which has likely suffered significant stress from school closures and resulting travel restrictions of the pandemic.
An ACORE Capital official declined to comment on the deal. AJ Capital could not be contacted immediately.