A-Rod Takes A Crack

Some investors have made a killing by swinging for the fences during the depths of the pandemic.

Now, 14-time MLB All-Star Alex Rodriguez is looking to get in on the action.

The WSJ announced yesterday A-Rod is teaming up with Miami-based private-firm GCI Merchant Group to pump more than half a billion into the hotel industry.

All Star Investor

The group is reportedly looking to raise $650 million to scoop-up distressed hotel properties in locales including Seattle, NYC, the Caribbean, and Miami.

Like A-Rod in the early 2000s – the venture is looking to juice performance. This time by capitalizing on the return to travel and hospitality in (knock-on-wood) a post-pandemic world.

• Rodriguez told the WSJ, “We believe we can acquire assets that are strategically positioned to be in the top-performing percentile once restrictions are eased.”

Hospitality Nuance: There is no disputing that the pandemic has decimated the hotel industry. Industry-wide occupancy last week was down nearly 40% vs. last year. But, interestingly, that reality hasn’t yet resulted in a rush to exit properties:

• Most hotel owners have been reluctant to cave to buyers expecting bargains, and the volume of hotel transactions is down 84% vs. last year.
• Amazingly, the price of hotels sold is down just 3.3% vs. last year.

Takeaway: Analysts say that over-leveraged properties could create opportunities should depressed occupancy persist for much longer. Could be a home run for A-Rod.