SAN FRANCISCO—Kimpton Group Holding, the parent company of Kimpton Hotel & Restaurant Group, has announced it has closed its fourth institutional real estate fund and its third fund within the Kimpton Hospitality Partners series. KHP Fund III, L.P. (“KHP Fund III”), has $203 million in committed equity capital with the goal of acquiring more than $500 million worth of hotels over the next three years.
Kimpton is the only branded hotel company with institutionally backed, fully discretionary, dedicated real estate investment funds for the acquisition and development of boutique hotels. The company’s first institutional fund, the $122 million Kimpton Development Opportunity Fund (“KDOF”), was established in 1997 and acquired/developed nine properties. Similar to KDOF, the three subsequent KHP Funds (the first of which closed in 2005) have been raised to acquire, develop and redevelop boutique/lifestyle hotel properties in select major metropolitan cities and resort areas across North America.
“Raising capital for real estate investment has been more challenging than ever over the past few years, which is why we are especially proud to announce the close of this new fund,” said Kimpton CEO Mike Depatie. “The discretionary nature of our fund provides us a distinct advantage in acquiring properties because we are able to offer sellers and developers a quick and certain close, something that few others can match.”
In line with the first two KHP funds, KHP Fund III will follow a multi-pronged strategy for making new investments. There will be a focus on acquiring non-hotel buildings that can be converted to Kimpton hotels, including “adaptive reuse” projects, such as KHP II’s new Hotel Monaco Philadelphia that opened in October 2012 in the city’s historic Lafayette building, which was previously an office building. The fund will also focus on acquiring existing hotels that fit the Kimpton model or seek out properties that are underutilized and reposition them as a Kimpton hotel. The company will also build new boutique hotels in targeted urban and resort areas in North America.
“Over the past eight years, we have built a solid track record with the KHP funds, acquiring excellent assets that meet our investment goals, while continuing to build and expand the Kimpton brand as well,” said Depatie.
KHP Fund III has already acquired a property in Savannah Georgia—The Mulberry Inn, a 145-room hotel in downtown Savannah, located in an historic site that once housed a livery stable, a cotton warehouse, and later a Coca-Cola bottling plant. The property was converted into a hotel in 1982. The Mulberry Inn is owned in a joint venture between KHP Fund II and KHP Fund III, and will undergo a major renovation in the latter half of 2013 to convert into a Kimpton hotel.