Tribeca Associates' Mark Gordon has announced plans to launch a new hotel-focused fund. According to The Real Deal, Gordon is looking to raise nearly $500 million in debt and equity for the fund.
“We see opportunity in acquiring existing, income-producing hotels that are already performing well but where we can effectuate enhanced cash flow…through a combination of change of management, brand, physical improvements, creative food and beverage concepts and the like,” he told The Real Deal. “The acquisition strategy is all about minimizing risk while generating core-plus returns.”
Gordon has partnered with Joe Vassallo, formerly of Deutsche Bank and Natixis, to head the new Intrinsic Hotel Capital fund, which will be separate from Tribeca Associates. They plan to purchase about 10 U.S. hotels within the next two years in both the select- and full-service sectors. “It’s really an asset-specific hotel strategy,” Gordon said. “I’ve found that there are good opportunities in bad markets and bad opportunities in good markets.”
The U.S. hotel market has remained strong although New York has experienced low RevPAR and escalating expenses over the last few years. As of May, 191,832 new guestrooms were under construction nationwide, according to a recent STR report—a 16.4-percent increase year-over-year. However, the industry continues to struggle with various challenges, including serious competition from short-term rental company Airbnb, which is backed by more than $3 billion in venture capital. In April, various documents were leaked showing that hotel industry has been pushing for anti-Airbnb legislation.
Gordon launched the Tribeca Associates development firm with Bill Brodsky and Elliott Ingerman in 2010. The developer is known for constructing the Baccarat Hotel and Residence in New York City with Starwood Capital Group. Chinese insurer Sunshine Insurance Group acquired the hotel component in 2015 for $230 million, $2.1 million per key, a record price for a U.S. hotel at the time. Gordon also held a position at Sonnenblick-Goldman. Afterward, he led Cushman & Wakefield's hotel practice. The property only has two condo units remaining on the residential side. Gordon still runs four active projects with Tribeca, including the renovation of two office buildings at 30 Broad Street and 130 West 42nd Street.