Why Trinity’s CEO is bullish on the current deal environment

While Trinity Investments has sold a majority stake of the 374-key Hyatt Regency Greenwich in Connecticut to Certares, that doesn’t mean the company is exiting the property. It just means Trinity added an institutional partner later than it normally does.

“With Greenwich, it was a very exciting opportunity for us when we bought it a few years ago, and we elected to buy it on our own through our fund,” said Sean Hehir, managing partner, president and CEO of Trinity.

“We executed on the renovation and as we were exiting the renovation, we decided that was the time, once the opportunity was de-risked, to bring in a capital partner… We have a long history with the principals at Certares… So, they were logical partners.”

Hehir said Trinity retained a 25% equity stake in the property and will continue to be the general partner and will still operate the property on a day-to-day basis. He said Trinity would love to partner with Certares on more deals.

“We are constantly talking to Certares about acquisition opportunities. They are one of our favorite joint venture partners,” he said. “We see the world in a very similar way and have several successful investments together. So, we’d love to do a lot more with them.”

Hehir talked to Hotel Investment Today about other notable transactions this year for Trinity, the company’s pipeline and why the leisure market is still looking strong this summer.

Trinity’s sale in Phoenix

Earlier this year, Trinity sold the 950-key JW Marriott Phoenix Desert Ridge Resort & Spa in Arizona to Nashville-based REIT Ryman Hospitality Properties for $865 million, one of the largest hotel transactions of the year.

Trinity purchased the property for $602 million in 2019 and in 2023 put nearly $100 million in capital investments into the resort, including renovating its rooms, lobby, adding a new water complex and reimagining its F&B outlets.

Hehir said it was the perfect time for Trinity to divest and find a buyer that wanted to take the property to the next level.

“Once our assets hit stabilization, that’s really the time for us to start looking to exit. With that property coming out of the renovation, it came flying out of COVID with really strong performance,” he said, noting that Ryman is a logical buyer for the property because it matches a property it bought in Texas in 2023 (the 1,002-room JW Marriott San Antonio Hill Country Resort & Spa in San Antonio, Texas, which it bought from Blackstone for $800 million).

“They’ll be terrific stewards of Desert Ridge, and they were a truly phenomenal firm to work with, their professionalism, the way that they executed on their due diligence and underwriting and ultimately the purchase,” he said.

Despite Trinity already doing a lot of renovations on the Desert Ridge property, Hehir said there are still plenty of opportunities for the new owner.

“There continues to be upside. There’s a lot of excess land, so there are ways to look at monetizing that. There’s the ability to expand the size of the hotel by a couple of hundred rooms. The meeting space is under renovation right now,” he said. “It’s always good to leave a bit for the next owner to do and to realize upside through.”

Hehir said Trinity has a robust pipeline right now.

“We do not develop. We only focus on high-barrier-to-entry markets, irreplaceable real estate, under-renovated, under-appreciated, under-asset managed, and there is a whole plethora of those opportunities out there,” he said. “The capital markets and the debt markets are cooperating. We’re obviously raising capital through our funds that allow us to have the equity to execute on these opportunities.”

Hehir also said he thinks the deal environment is starting to pick up right now.

“There was obviously a dislocation between buyers and sellers in terms of cap rates and sales prices, but there seems to be a convergence now occurring where they’re converging around what the right cap rate is, which is holding in the 7% to 8% range on average,” he said. “There’s a lot of credit capital out there, so debt financing is attainable for the right sponsors. I see transaction activity picking up going through the second half of this year into next year.”

Leisure ‘really strong’

From what he saw with his family in Europe this summer and what he’s seeing at Trinity’s properties, Hehir said the leisure traveler seems robust right now.

“We’ve seen it be really strong,” he said. “I was in Europe with my family for a couple of weeks over the summer, and everybody seemed to be there. Then I look at the performance of our hotels in Florida, Texas, Arizona, Southern California, Hawaii and Cabo. They all seem to be there as well.”

The experiential travel trend that started during COVID continues to be strong, Hehir said.

“Technology can’t replace experiences and people are traveling for those experiences,” he said. “I know it’s not true with all assets and all markets, but those destination-oriented resort markets seem to be holding very well…. We just hope that continues and we don’t see any reason why it shouldn’t continue.”

Trinity’s focus continues to be on TRevPAR (total revenue per available room) at its properties, Hehir said.

“Especially when we have a group base, or the ability to have a group base in our hotels, [the goal is] how do we capture as much revenue from all of the different departments on site and in-house as possible?” he said. “Even with your leisure guests, how do you keep them on property? The way to keep them on the property is to provide the amenities that they’re looking for… It’s really our job as the owner to make sure that we have that amenity offering, to ensure that the guests are happy to stay on property and to spend their discretionary dollars with us at the hotels.”

By Rob Schneider