Brookfield Asset Management has purchased Annapolis, Maryland-based hospitality firm Thayer Lodging Group, marking the Toronto-based alternative asset manager’s first dedicated foray into the hotel sector. Financial terms of the transaction were not disclosed.
In the transaction, Brookfield has acquired Thayer’s investment management, asset management and property management businesses, bringing on its 20 employees and $1 billion in assets under management. Brookfield’s latest fund, Brookfield Strategic Real Estate Partners, has become a major contributor to Thayer’s recent vehicle Thayer Hotel Investors VI, which buys value-added hotels in major markets.
Due to tax structuring issues, Brookfield was unable to invest directly into Fund VI, so the two parties signed an agreement to invest side-by-side in the fund’s current and future assets. Fund VI held a final close on approximately $160 million in commitments on May 15. With Brookfield’s investment, which will match outlays made by the fund, the vehicle has approximately $320 million of total equity available. Currently, Thayer has made two investments on behalf of Fund VI: the Ritz Carlton San Francisco and the Hilton Los Cabos Beach & Golf Resort.
Prior to the acquisition, Brookfield had very limited access to the hotel sector. Previous investments came from acquiring debt positions during the global financial crisis. Meanwhile, Thayer was founded in 1991 by former Marriott executives Frederic Malek and Leland Pillsbury and, since its inception, has completed 43 hotel investments at a total cost of approximately $2.5 billion. Brookfield declined to comment on the deal to PERE.
The news is the latest in a string of big announcements from Brookfield. Earlier this month, the firm discussed plans to launch its next global real estate fund in a letter to shareholders and, in late April, PERE
broke the news that Barry Blattman
, former co-head of global real estate opportunistic investments, had switched roles, moving from the company’s property unit in order to build a corporate credit business within Brookfield’s private equity platform.
For additional analysis on the Thayer acquisition, check out the upcoming June issue of PERE magazine.