Trinity Investments President and CEO Sean Hehir said his company expects to make significant investments in both transactions and new developments of hospitality real estate in Hawaii, Japan and Mexico in the near future.
HONOLULU—A $317-million joint venture with Oaktree Capital Management to purchase the long-term leasehold interest in The Westin Maui Resort & Spa could mark the start of an especially active period for Trinity Investments, said the company’s President and CEO Sean Hehir.
Speaking with Hotel News Now Monday, the same day his company announced the acquisition of the property previously owned by Starwood Hotels & Resorts Worldwide and more recently Marriott International, Hehir said the purchase is indicative of his confidence in the supply-demand dynamics of Hawaiian resort properties.
“Over the last 24 months, we’ve been reorienting the focus of the firm and have decided to make a real effort here in Hawaii,” he said, noting Trinity is based in Honolulu.
The company has roughly $1 billion invested among the Westin property, the recently acquired Ritz-Carlton, Kapalua resort on Maui and the in-development Makena Resort, also on Maui.
“There will be a few other acquisitions announcing shortly,” Hehir said. “We see a great supply-demand imbalance here in Hawaii.”
The majority of Trinity’s current investments are in the hotel space. Past investments in hotels have included resort properties in Japan and Hawaii, Europe and a few on the mainland U.S., including Turnberry Isle Resort in Florida and The Mark Hotel in New York City.
He said there are plenty of things to like about Hawaii right now, including a relative insulation from issues facing other resort destinations, such as the Zika virus and security concerns. It’s an area that draws visitors from a wide swath of feeder markets in both Asia and the Americas.
Hawaii also has an unrated pool of talent for the industry, Hehir said.
“We’re working hard on hiring young professionals who were born and raised in Hawaii, a lot of whom went to (the continental U.S.) for their university education and want to return home,” he said.
The draw of the Westin buy
In addition to the company’s faith in Hawaii overall, he noted the Westin property in particular boasts impressive scale with 759 rooms and a favorable location on the island of Maui.
Hehir said his company will maintain the current branding of the hotel, as it signed a long-term agreement with Marriott as part of the transaction and plans significant renovations for the property, including upgrades to the resorts Beach Tower. He said his company expects to nail down the full scale and cost of the renovation work at the property over the next three to six months.
On recent earnings calls, Marriott officials have indicated how the value of fees from long-term franchise and management deals play into their valuations when selling off their portfolio of owned assets that came via their acquisition of Starwood.
Hehir couldn’t say whether that played into the pricing of the Westin Maui deal, and he said he would stop short of calling it a steal, but said he believes the transaction was fairly priced from both sides. He also noted that the deal helps build what he hopes is a “long-term relationship” with Marriott.
Hawaii is one of three areas Trinity is targeting for growth in the hospitality space, Hehir said. The company also plans to grow in Mexico and Japan.
He said the growth in Mexico—where Trinity already owns the Le Méridien Mexico City—came as a natural extension of the company’s investment in Hawaii.
“We started investing in Mexico 17 years ago because that country’s resort market represents the single largest threat to Hawaii due to its proximity to U.S. demand markets,” he said. “We’re about to announce some exciting partnerships (in Mexico) that will help drive existing acquisitions and development.”
Hehir said he sees a “tremendous dynamic” in Japan, a country that is currently enjoying strong yearly growth in inbound visitors and is expected to maintain strong growth through the 2020 Olympics in Tokyo.
Trinity in the past has invested in other real estate classes, but Hehir said he plans to zero in on hospitality for the time being because of their confidence in the sector, particularly when it comes to resorts.
He said strong demand from Asia, U.S. and Canada will “allows us to move through cycles.”
Hehir said his long-term goal will be to maintain the momentum his company plans to build through the wave of investments he expects this year.
“Hopefully, going forward we’ll be good stewards of our assets for our investors and brands,” he said. “We should always be investing and divesting at the right time. And I think you’ll see us continue to refine and define our markets and building relationships in those markets.”