With a goal of deploying $1 billion of capital over the next few years, this partnership seeks to serve high-performing, growth-oriented hospitality borrowers, the companies said in a Wednesday (Oct. 25) press release.
The joint venture will primarily focus on originating new loans and refinancing existing debt within the hospitality space across primary and secondary markets in the United States, according to the release. Additionally, Bain Capital and Smith Hill Capital will seek to acquire debt and provide rescue capital to high-quality borrowers.
The current market conditions, characterized by rising interest rates and lender pullback in the real estate debt capital markets, have created an opportune moment for flexible financing solutions in the hospitality sector, David DesPrez, managing director at Bain Capital, said in the release.
“We believe our joint venture with Smith Hill Capital is tailor-made for this moment in hospitality because it combines decades of industry and capital markets experience with a highly attractive market opportunity,” DesPrez said.
Brendan McCormick, managing principal at Smith Hill Capital, added that the two companies share a conviction for the hospitality space and that they aim to “originate loans and provide liquidity to investors of institutional-quality hospitality assets in demand-driven growth markets throughout the U.S.”
Smith Hill Capital, an affiliate of Procaccianti Companies, one of the largest privately-held real estate investment and services firms in the United States, was established to build upon the successful track record of Procaccianti Companies in the hospitality sector, according to the press release.
Bain Capital has a history of supporting the growth of global hospitality companies, having made investments in Apple Leisure Group, Hard Rock Hotel Marbella, Hotel Don Carlos, Marriott International’s EDITION brand, Ooedo Onsen Holdings and Pyramid Global Hospitality, the release said.
PYMNTS Intelligence has found that Main Street small- to medium-sized businesses (SMBs) in the hospitality sector are more optimistic about the economy than other SMBs. While nearly 60% of all Main Street SMBs foresee the economy entering a recession within the next 12 months, a smaller share — 54% — of those operating in the hospitality sector have that expectation, according to “Main Street Health Q1 2023: Using Finance to Ease Recession Fears,” a PYMNTS and Enigma collaboration.