First Hospitality opens investing platform to outside capital

CHICAGO — Chicago-based First Hospitality is introducing its long-standing hotel investment platform, First Investors, to outside investors. The firm also unveiled First Investors GP Fund, which expects to supply sponsor capital for a targeted $400 million in U.S. hotel investment over the next 12 to 36 months.

The platform is led by CEO David Duncan and governed by Sam Schwartz, executive chairman and Stephen Schwartz, founder and chairman emeritus. The three executives have collectively led more than $10 billion in hospitality transactions across value-add, ground-up, and adaptive-reuse strategies.

Since 1985, First Investors and its affiliates have completed 45 hotel transactions, generating a 3.9x multiple of invested capital with an IRR over 20% on realized exits. They currently own significant joint-venture positions in 18 hotels, totaling 3,100 keys. Current investments include the Hilton at McCormick Place (Chicago), Hotel LeVeque, Autograph Collection (Columbus, Ohio), Tempo by Hilton Louisville Downtown NuLu (Kentucky) and the newly opened Hotel Ardent, a Tapestry Collection (Dayton, Ohio). 

“First Investors operates with a national scope, favoring regions with strong demographic trends and markets with diverse demand drivers. That said, one of our differentiators is a flexible, opportunistic approach to geography in which we place greater emphasis on the asset-level story than on fitting within a predefined market thesis,” Duncan told Hotel Investment Today via email. “We're especially drawn to assets where the demand fundamentals align with our operational strengths, regardless of location.”

Duncan also told Hotel Investment Today that First Hospitality remains highly active in the market, with several deals currently in underwriting. He said over the past two years, First Hospitality has reviewed more than 300 deals.

“We remain committed to a disciplined and patient approach,” he said.  

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. Duncan said First Investors will focus on deploying the GP Fund alongside a select group of existing capital partners and other sophisticated investors.

“Our GP Fund is all about alignment — approximately 20% of the fund will be our own capital, giving the firm and its senior leaders substantial skin in every transaction,” said Sam Schwartz.

Stephen Schwartz added: “Bringing this platform to outside investors is the natural evolution of work we’ve been doing privately for 40 years through five lodging cycles.”