Baseball superstar-turned real estate investor Alex Rodriguez and New York finance veteran Adi Chugh are joining a $650 million fund targeting hotel opportunities in the US and Caribbean markets.
CGI Merchant Group announced Rodriguez and Chugh, founder of Maverick CP, among the starting lineup of investors backing the firm’s $ Hospitality Opportunity Fund (H-Fund).
The H-Fund will focus on acquiring and developing hotel properties throughout North American and Caribbean markets and target more than 20 hotels over the next three years. H-Fund assets will be repositioned to form a “first-of-its-kind” hospitality portfolio.
The assets will be housed within the Hilton portfolio of brands, adding to the hospitality industry leader’s portfolio, consisting of more than 6,300 properties in 118 countries and territories worldwide. Hilton will not be a financial partner in any of the deals.
“Continuing to earn the trust and partnership from sophisticated investors, such as Alex Rodriguez and Adi Chugh, is a testimony to our track record and contrarian approach. Their support will be crucial as we execute on key strategic initiatives for the firm,” said CGI Founder and CEO, Raoul Thomas.
“Alex and Adi will not only increase the depth of our business relationships but also broaden the social impact of our investments, which we hope will spur a more conscious approach to investing across the entire commercial real estate industry.”
A-Rod Corp and Maverick CP joined forces earlier this year to expand their portfolios and build a large commercial real estate platform across various asset classes.
As part of this new agreement, Rodriguez and Chugh will support CGI’s investment strategies, expanding the firm’s debt capital markets capabilities, and assisting in the acquisition of upcoming trophy investments for the H-Fund.
The New York pair will also take an active role in advancing the firm’s co-investment platform and expanding its flexible and multi-use office portfolio.
“CGI’s visionary and conscious approach to business has the potential to transform the commercial real estate industry, bringing in untapped voices that can inject new energy and ideas to ignite vast opportunities,” said Rodriguez. “I’m proud to be involved with a company that is as focused on advancing the communities it calls home, as it is on financial returns.”
Founded in 2006, CGI Merchant Group currently holds assets across multiple alternative investment strategies, including value-add and opportunistic funds.
” CGI is an industry disrupter,” said Chugh. “As other commercial real estate funds are shedding assets, CGI is gaining ground, all while changing the definition of thoughtful investing. I am looking forward to working alongside CGI to blaze a new path of innovation in real estate investing.”
The hospitality sector has been battered by the coronavirus pandemic and distress in the sector has pushed sales up two percent on last year, according to Real Capital Analytics. The lodging delinquency rate for September came in at 22.94 percent, while the lodging special servicing rate came in at its all-time high, 26.04 percent, according to Trepp, which believe the numbers illustrate a sector that is rife with distress and has yet to find a real source of respite.