Hong Kong’s Alta Capital Real Estate Announces a New Hospitality Portfolio Fund

Main Photo: A greenfield development in Galle, Sri Lanka

Date: November 2020

Location: Asia Pacific

Name: The Alta Hospitality Fund Asia

No. of Keys: TBA

Who: The Hong Kong-based private equity company, Alta Capital Real Estate, has announced its first hospitality fund, Alta Hospitality Fund Asia. The total value of the fund will be USD50 million and is expected to generate 15 to 25% internal rate of returns (“IRR”) over the six years period.

The fund has already started the fundraising process and target its first closing by January 2021 with the final closing in October 2021. Alta Capital will target family offices, private banks, and high net worth investors to invest into the fund. The fund has set the plan to invest in undervalued assets across Asia Pacific region including Thailand, Vietnam, Indonesia, Sri Lanka, Malaysia, South Korea, and Japan. The focus will be on boutique hotels, wellness retreats and villa communities with 50 to 150 keys.

The firm plans to conduct repositioning, rebranding and redevelopment to deliver solid returns post-COVID. Their first two projects are: In Galle, Sri Lanka – a prime hilltop greenfield development with unobstructed sunset views of the Galle Fort UNESCO heritage site and the Indian Ocean. The development will include a premier wellness retreat with comprehensive facilities and luxury pool condominiums. With a six-year base, the target unlevered IRR is over 25% and target a Multiple on Invested Capital (MOIC) of 1.9.

In Bali, Indonesia – a brownfield acquisition of a 2.5-star boutique hotel with 90 keys located five minutes from the beach and 20 minutes from the airport. The development would reposition the hotel as a 4-star property with a target unlevered IRR of 20% and MOIC of 2.4.

Alta is managed by Rakesh Patel, an experienced real estate investor and formerly HSBC’s Head of Equities for Asia-Pacific, who to date has managed a real estate investment portfolio with an average project equity Internal Rate of Return (IRR) of 32% over the last 16 years. The Fund’s Advisory Board also includes leading figures in the fields of real estate, hospitality and sustainability, including Michael Davies, who has worked at leading global property companies and is the Founder and Chairman of Teardrop Hotels; Brian Williams, former Managing Director and Deputy Chairman of Swire Hotels in Asia; and Dr. Calvin Lee Kwan, an Associate Professor in the Environment and Sustainability Division at The Hong Kong University of Science and Technology, and Head of Sustainability at Link Asset Management Limited.

Mr. Patel’s decision to launch the Fund reflects a conviction that this is an attractive entry point in the market cycle, as well as a passion for wellness that he has shared with his family since childhood. Driven by these two factors, the Fund’s investments seek to benefit investors, consumers, local communities and the environment through a distinctive focus on sustainable properties that serve the growing wellness hospitality market.

The wellness tourism market is forecast to achieve a compound annual growth rate of nearly 7% between 2020 and 2025, reaching USD1.1 billion in revenues by 2025. Research from the Global Wellness Institute also indicates that international wellness tourists on average spent $1,528 per trip, 53% more than the typical international tourist.

“Consumers are looking for more meaningful travel that incorporates traditional and modern wellness practices as well as authentic local experiences,” said Rakesh Patel, CEO and Founder of Alta. “They are increasingly mindful of the approach that brands take to the environment, their employees and the communities in which they operate. That is why wellness and sustainability are at the core of Alta’s investment strategy. We believe they can drive attractive returns for investors, create memorable experiences for guests and add value to local communities and the environment.”

Alta will invest in assets that are close to replacement cost to protect capital as well as to establish a solid foundation for value creation, with a diversified portfolio of assets and locations that offer liquidity for an optimal exit strategy.

Alta’s commitment to sustainability will be reflected at each stage in the lifecycle of its projects. The impact of the Fund’s investments will be monitored and benchmarked through an independent third-party framework.

Mr. Patel, who is LEED-certified, targets for each Alta project to incorporate smart building design elements – such as water recycling, energy efficiency, proper site orientation – to boost operating efficiency and keep C02 emissions at a minimum. Hospitality properties designed this way have a ROI of 25-50% over a conventional build. Additionally, the World Business Council for Sustainable Development certifies that green buildings cost on average 2% more to design and construct but yield 20% cost savings over the life of the building.

Today’s travellers are more committed to social and environmental responsibility than those in prior generations. Research shows that 72% of global travellers intend to stay in an eco-friendly or green accommodation and 40% are willing to pay more for a hotel that is environmentally friendly.

Aligning with this trend, Alta’s properties will support local supply chains, which will also enhance the resilience of its operations to external shocks such as the pandemic. By investing in local employees’ skills and providing them with hospitality training, Alta will also help drive their career progression and retain talented employees.

THPT Comment: An investment fund aiming at good returns and sustainability…Fab…we wish them well.

First Seen: Travel Daily News Asia

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