Kimpton Closes Fund with $500M in Buying Power

Kimpton Hotel & Restaurant Group has been snapping up hotel properties left and right over the last year and the shopping spree will continue now that its parent company, Kimpton Group Holding, has closed KHP Fund III, with $203 million in committed equity capital.

Kimpton CEO Mike Depatie

Kimpton Hotel & Restaurant Group L.L.C. has been snapping up hotel properties left and right over the last year and the shopping spree will continue now that its parent company, Kimpton Group Holding L.L.C., has closed KHP Fund III L.P., with $203 million in committed equity capital. The investment vehicle will provide a leveraged total of more than $500 million for the boutique-hotel leader to play with over the next three years.

“In general the transition market is picking up and we believe that it is a great time in the cycle to invest,” Joseph Long, CIO and executive vice president of development for Kimpton, told Commercial Property Executive.

KHP Fund III will adhere to the tried-and-true approach to investing that has proven successful for the previous two funds in the Kimpton Hospitality Partners series. Activities will include the purchasing of non-hotel properties to be transformed into Kimpton-brand destinations, as well as the acquisition of existing hotels that would allow for an easy adaptation of the Kimpton model. And construction is on the table as well. KHP Fund III will also engage in the development of new properties.

Converting, buying, building–KHP Fund III is well-positioned to do it all. “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,” Kimpton CEO Mike Depatie said in a prepared statement.

In terms of location, no region in the U.S. is off limits, but there are certain areas that are of particular interest. “Major urban markets are still attractive to us, but we’re also seeing a demand in secondary markets like San Antonio and Savannah,” Long told CPE. It’s not just talk. KHP Fund III has already made its first acquisition, the 145-room Mulberry Inn in Savannah, Ga. According to Chatham County property records, the price tag on the transaction was $21 million.

Joseph Long, of Kimpton

“We continue to look for opportunities to expand in existing markets like Boston, New York City and L.A.,” Long added. “Expanding in our existing markets helps us to increase efficiencies, as well as gain greater awareness of the Kimpton brand. Kimpton’s portfolio has ballooned by seven properties since January 2012.