Brightside Investment Group is ready to hold a first close on its debut hotel fund, PERE understands.
Although representatives of the Atlanta-based private equity real estate firm declined to comment, sources familiar with the situation have revealed that Brightside Hotel Fund is expecting a first close of $100 million from one investor in early to mid-February.
Launched in June, Brightside Hotel Fund is a value-added vehicle seeking $350 million in commitments, with a hard cap of $500 million. The firm is seeking minimum commitments of $5 million from investors, which typically have been US institutions, although a number of foreign investors have shown an appetite for this type of vehicle. Family offices, private and public pension funds and high-net-worth individuals also are eligible to invest.
In terms of its investment focus, the fund is targeting select and limited service hotels, including those managed by Hilton, Starwood, Marriott, Hyatt and IHG. Since the fund is value-added in nature, Brightside is seeking hotel properties with some physical distress needing fresh equity. Geographically, the firm is seeking properties throughout US, with a preference for primary markets with populations of 500,000 or more.
Brightside is targeting net IRRs of 15 percent to 16 percent, with a 9 percent annual preferred rate of return. PERE understands that Brightside is not hiring a placement agent to raise the fund, rather the firm is raising the capital itself. Sources have added that a final close is expected in November.
According to the firm’s website, Brightside is led by chief executive officer James Ryan and chief financial officer Stanton Breon, who invested more than $1.6 billion of equity through five previous value-enhancement funds, including $560 million in hotels. Ryan was the founding partner, fund manager and CEO of the Value Enhancement Fund (VEF) series from its inception at Equitable in 1992 through its sale to Lend Lease Real Estate Investments and to its current sponsor Apollo Management. Breon was a partner and asset manager of the VEF series.