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Alta Capital Real Estate launches new fund targeting hospitality developments focused on sustainability and wellness

Alta Capital Real Estate_Pipeline_Galle in Sri Lanka (rendering)

The Alta Hospitality Fund Asia will invest in undervalued real estate assets in a disrupted market, repositioning them to capture growing consumer demand for travel experiences built around wellness and sustainability as the market begins to recover.

HONG KONG – Alta Capital Real Estate announced the launch of the Alta Hospitality Fund Asia, which will invest in undervalued sustainable and wellness hospitality assets across Asia-Pacific.

Alta is managed by Rakesh Patel, an experienced real estate investor and formerly HSBC’s Head of Equities for Asia-Pacific, who to date has managed a real estate investment portfolio with an average project equity Internal Rate of Return (IRR) of 32% over the last 16 years.  The Fund’s Advisory Board also includes leading figures in the fields of real estate, hospitality and sustainability, including Michael Davies, who has worked at leading global property companies and is the Founder and Chairman of Teardrop Hotels; Brian Williams, former Managing Director and Deputy Chairman of Swire Hotels in Asia; and Dr. Calvin Lee Kwan, an Associate Professor in the Environment and Sustainability Division at The Hong Kong University of Science and Technology, and Head of Sustainability at Link Asset Management Limited.

Mr. Patel’s decision to launch the Fund reflects a conviction that this is an attractive entry point in the market cycle, as well as a passion for wellness that he has shared with his family since childhood. Driven by these two factors, the Fund’s investments seek to benefit investors, consumers, local communities and the environment through a distinctive focus on sustainable properties that serve the growing wellness hospitality market.

The wellness tourism market is forecast to achieve a compound annual growth rate of nearly 7% between 2020 and 2025, reaching USD1.1 billion in revenues by 2025.  Research from the Global Wellness Institute also indicates that international wellness tourists on average spent $1,528 per trip, 53% more than the typical international tourist.

“Consumers are looking for more meaningful travel that incorporates traditional and modern wellness practices as well as authentic local experiences,” said Rakesh Patel, CEO and Founder of Alta. “They are increasingly mindful of the approach that brands take to the environment, their employees and the communities in which they operate. That is why wellness and sustainability are at the core of Alta’s investment strategy. We believe they can drive attractive returns for investors, create memorable experiences for guests and add value to local communities and the environment.”

Investment with a higher purpose
At the heart of Alta’s investment approach is the manager’s personal commitment to bringing together attractive investment returns with a sense of higher purpose.

In a disrupted market for hospitality real estate assets, the Fund focuses on opportunistic investing in undervalued hospitality assets in key urban and resort locations around Asia-Pacific including Thailand, Vietnam, Indonesia, Sri Lanka, Malaysia, Korea and Japan. Across a balanced portfolio of brownfield renovations and greenfield developments, Alta will reposition, rebrand and redevelop assets for the post-Covid world in order to deliver solid returns.

Alta will invest in assets that are close to replacement cost to protect capital as well as to establish a solid foundation for value creation. With a diversified portfolio of assets and locations that offer liquidity for an optimal exit strategy, the Fund aims to create a portfolio value of US$50 million and deliver an IRR between 15% to 25% over six years. Mr. Patel has made a significant personal investment in the Fund, which has also already attracted meaningful commitments from other investors.

Targeting assets that are too small for global players and too large for individual investors, the Fund will focus on acquiring boutique hotels, wellness retreats and villa communities with 50 to 150 keys.

Property Pipeline
Alta has already identified a number of attractive investment opportunities, including:

  • In Galle, Sri Lanka – a prime hilltop greenfield development with unobstructed sunset views of the Galle Fort UNESCO heritage site and the Indian Ocean. The development will include a premier wellness retreat with comprehensive facilities and luxury pool condominiums. With a six-year base, the target unlevered IRR is over 25% and target a Multiple on Invested Capital (MOIC) of 1.9.
  • In Bali, Indonesia – a brownfield acquisition of a 2.5-star boutique hotel with 90 keys located five minutes from the beach and 20 minutes from the airport. The development would reposition the hotel as a 4-star property with a target unlevered IRR of 20% and MOIC of 2.4.

Sustainability first
Alta’s commitment to sustainability will be reflected at each stage in the lifecycle of its projects. The impact of the Fund’s investments will be monitored and benchmarked through an independent third-party framework.

Mr. Patel, who is LEED-certified, targets for each Alta project to incorporate smart building design elements – such as water recycling, energy efficiency, proper site orientation – to boost operating efficiency and keep C02 emissions at a minimum. Hospitality properties designed this way have a ROI of 25-50% over a conventional build. Additionally, the World Business Council for Sustainable Development certifies that green buildings cost on average 2% more to design and construct but yield 20% cost savings over the life of the building.

Today’s travellers are more committed to social and environmental responsibility than those in prior generations. Research shows that 72% of global travellers intend to stay in an eco-friendly or green accommodation and 40% are willing to pay more for a hotel that is environmentally friendly.

Aligning with this trend, Alta’s properties will support local supply chains, which will also enhance the resilience of its operations to external shocks such as the pandemic. By investing in local employees’ skills and providing them with hospitality training, Alta will also help drive their career progression and retain talented employees.

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