In 2022, NewcrestImage acquired nearly 90 hotels. Managing Partner and CEO Mehul Patel expects to top that number in 2023. To date, the Dallas, Texas-based company is well on its way to acquiring 100 properties this year: In March alone, NewcrestImage announced two joint venture (JV) acquisitions with Phoenix, Arizona-based Hospitality Capital Partners (HCP), adding a 16-hotel portfolio spanning nine states and an 11-hotel portfolio spanning seven states.
HCP and its principals have owned nearly 50 hotels in the western United States. Patel says NewcrestImage strengthened its partnership with HCP following a hotel sale last year, and the recent JV acquisitions build on that relationship. “We have a good dynamic,” he says. For the 11-hotel JV acquisition, NewcrestImage executed the deal as the lead partner, handling capital, operations, and asset management. “That’s where NewcrestImage’s expertise is—larger portfolios,” he adds. The 11-hotel portfolio comprises 10 Courtyard by Marriott hotels and one Residence Inn by Marriott hotel in Georgia, Massachusetts, New York, Oklahoma, Pennsylvania, Texas, and Virginia. After transferring the management to Aimbridge Hospitality, of which NewcrestImage became a minority shareholder in 2022, Patel says, “We were able to reinvent the operational model and really bring efficiency to each hotel.”
The 16-hotel portfolio, which NewcrestImage and Hospitality Capital Partners jointly acquired from Service Properties Trust for $137.3 million, totals 13 Courtyard by Marriott hotels and three Residence Inn by Marriott hotels in Georgia, Massachusetts, New York, North Carolina, Oklahoma, Pennsylvania, South Carolina, Texas, and Virginia—11 of which have been recently renovated in 2018 or 2019.
Large portfolio transactions are NewcrestImage’s bread and butter. Since forming in 2013, the company has closed deals involving nearly 275 hotels valued at more than $3 billion. Today, its total hotel portfolio consists of 70 properties in more than half of states nationwide. While Patel says the company is actively reviewing opportunities to transact single properties, its strategy remains primarily focused on portfolio acquisitions of anywhere between five and 50 assets.
“We’re really bullish on buying more properties this year,” Patel says. “I think that there is no better time to acquire real estate than today.” He points to rising interest rates, inflation, and the need for sellers to offload properties as their debt matures and financing dries up. “We have a strong balance sheet, so we’re able to buy these properties, and we have a longstanding relationship with our lender; they’re able to finance us because we underwrite 12 months interest risk,” Patel says. He expects that in 2024, inflation and interest rates will normalize.
In terms of the company’s current portfolio performance, Patel estimates that 92 percent has recovered to 2019 levels. “When you are in 26 states, that’s a very good stat,” he notes. “We’re bullish on our portfolio and the lodging industry. Regardless of what’s happening in the marketplace—how stock is behaving, how interest rate is behaving—people are still traveling,” Patel says. “For us, it’s business as usual, and we’ll continue on this path.”