CGI plans $500m fund for distressed hotels

Miles Hurley Miles Hurley Uploaded 25 August 2020

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US: Miami based private equity firm CGI has announced a $500m fund to acquire a variety of distressed hotels in North America and the Carribean.

The group hope to capitalise on the rising trend of delinquent hotels in the US, with 25 per cent of commercial-backed security loans for hotels delinquent. 

According to CGI Merchant Group founder Raoul Thomas, the group is planning on acquiring about 20 properties in the next few years across the US and Carribbean markets. The group would brand these properties as Hilton going forward. 

Thomas told The Real Deal: “We’re very, very bullish on the long view of the hospitality sector.  We think that values will be significantly depressed.”

Hilton is notably not a financial partner in any of these various deals, as the company faces a $432m loss in Q2. The group hopes to rebrand these new acquisitions as part of a socially conscious branding, focusing on health, community issues and sustainability. 

Hotel value has taken a major hit as the pandemic has led to potentially historic levels of foreclosures. Certain properties selling now have sold for discounts up to 30 per cent.  

CGI is not the only group eyeing up potential pandemic purchases. In May, Starwood Capital’s Barry Sternlicht said that his firm was on the hunt for pandemic related deals, with a recent company fund looking to raise $11 billion for real estate and distressed assets.

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