Chicago-based First Hospitality has officially launched a dedicated hotel real estate investment platform known as First Investors, which it has opened up to qualified outside investors after it supported the firm’s acquisitions and development for more than four decades.
Concurrently, First Hospitality has also unveiled First Investors GP Fund, which expects to supply sponsor capital for a targeted $400 million in U.S. hotel investments over the next 12 to 36 months.
The platform is led by CEO David Duncan and governed by an ownership group: Sam Schwartz, executive chairman; Stephen Schwartz, founder and chairman emeritus. Collectively, the three executives have led more than $10 billion in hospitality transactions across value-add, ground-up, and adaptive-reuse strategies.
“First Investors benefits from direct alignment with our operating platform, providing early visibility into local market dynamics and operational trends well before they appear in public data,” David Duncan, CEO of First Investors, said in a statement. “This vertical integration provides a differentiated advantage for our investors, particularly in today’s market environment, where dislocation is creating some very unique investment opportunities.”
First Investors will focus on deploying the GP Fund alongside a select group of existing capital partners and other investors into a portfolio of six to 10 hotels, targeting 150 to 350-key, premium-branded or independent lifestyle assets located in growth markets with multiple demand generators.
The firm will apply its value-creation playbook, which includes proprietary sourcing; disciplined capital deployment; and integrated value creation, according to the company.
“Our GP Fund is all about alignment—approximately 20 percent of the fund will be our own capital, giving the firm and its senior leaders substantial skin in every transaction,” said Sam Schwartz.
“Bringing this platform to outside investors is the natural evolution of work we’ve been doing privately for 40 years through five lodging cycles,” added Stephen Schwartz.
Since 1985, First Investors and its affiliates have completed 45 hotel transactions, generating a 3.9 times multiple of invested capital with an IRR over 20 percent on realized exits and currently own significant joint-venture positions in 18 hotels totaling 3,100 keys.