NEW YORK—Hotel asset management has been a strong suit of Fulcrum Hospitality since its beginnings three and a half years ago. Now, the firm is ratcheting up its hotel ownership capabilities, too.
Earlier this month, the firm acquired the 811-room Hyatt Regency DFW International Airport in Dallas for an undisclosed price. The deal marks the fourth hotel investment for Fulcrum, which asset manages or advises on more than 10,000 rooms globally.
Steven Angel, a former Goldman Sachs executive who founded Fulcrum, said hotel investment has always been in the cards for Fulcrum, especially considering his previous experience at the investment bank. He said Fulcrum is willing to consider a wide range of hotel asset classes, including full service, select service and extended stay.
Cheryl Boyer, the firm’s COO, said executives are looking for properties where Fulcrum can add value.
“We’re looking for the right opportunity,” Angel said, adding, “If we find one or two (acquisition opportunities) a year, we’ll be happy.”
Fulcrum doesn’t have a specific number of deals that the company wants to hit. “What’s important to us is working with the right partner,” Angel said.
Deal climate
Angel said Fulcrum’s hunt for transactions is taking place in a crowded marketplace where deal volume is beginning to accelerate.
For example, two portfolio transactions earlier this month totaled approximately $1.7 billion, with a NorthStar Realty Finance Corporation and Chatham Lodging Trust joint venture taking part in a proposed $1.1-billion deal as well as a Lone Star Funds affiliate agreeing to pay nearly $600 million for a Hyatt portfolio.
Debt that is more easily available is bringing more buyers to the bargaining table. Also, the return of large group business is helping potential deals pencil out a little better than before.
“I think no question there’s still a tremendous amount of capital out there to buy hotels,” Angel said.
“There is a strong appetite for deals,” he said, adding he believes the industry is in the “middle innings” of the cycle.
“It’s a very competitive situation for us right now,” Boyer said. Angel added that his transaction experience at Goldman Sachs as a managing director helps Fulcrum cut through the increased competition.
While the firm is becoming more active on the acquisitions side, that doesn’t mean there will be a reduced focus on asset management at Fulcrum, which counts the Cosmopolitan in Las Vegas as one of the properties it asset manages, Angel said.
“Our core asset management business is extremely important to us,” he said. “That will always be a core element of our business.”