With hospitality as its sweet spot, Trinity Investments, Honolulu, is lighter than usual in hospitality asset holdings with just four in the fold as of early August. That is about to change, according to sources close to the firm. Two focused platforms are set to launch in Japan and Mexico.
Sources suggest that with investments from its local, American and Middle East sovereign wealth private equity partners, the portfolio could grow to 12 hotels by the end of the year.
Trinity already has deep roots in Japan, and with tourist arrivals booming (inbound visitors are exceeding outbound for first time and are projected to double prior to the 2020 Olympics) it has been looking at the most appropriate way to invest there. “We’ve been in Japan for 18 years and use local banks and partners,” says Sean Hehir, Principal, President and CEO of Trinity Investments. “We feel good about the cycle and hospitality is an interesting asset class in Japan now. But you need local relations and access to deal flow, which we have.”
In regards to its experience in Mexico, Hehir notes, “We’ve been in Mexico since 2000 when we viewed Cabo San Lucas as a threat to Hawaii. Again, partners give you access to opportunities and developing relationships there led to this new platform. It’s a unique opportunity most other investors wouldn’t have much immediate access to.”
At the same time, Trinity remains active in its home court of Hawaii with a few deals in development, as well as the ongoing development of its Makena mixed-use project on Maui.
Based on his exposure to Japan and Mexico over the long haul, Hehir says he would implore investor and operators to spend time there as opportunities are “almost limitless” at this point. “If we [U.S. investors] had invested in Mexico as much as in Middle East during the past 15 years imagine where it would be today,” he says. “It is one of our greatest trading partners and tourist destinations, and we should be doing more in collaboration with Mexico.”
Hehir also points to Canada, another great trading partner with the U.S., as another interesting market. He suggests that in a world fearful about safety and security, investing within North America is a great place to be active.
When asked what has surprised him about the investment climate as of late, Hehir says he is amazed at how quickly markets change. “When Hurricane Odile hit Cabo in 2014 it reminded me how quickly markets recover as just yesterday I saw 15 cranes up and down the Cabo corridor.”
Hehir adds that considering the unchartered territory the U.S. political arena is in, he is pleasantly surprised about how business is carrying on, as usual. “I’m surprised how quickly the debt market changed,” he says. “In Q1, a lot of deals stalled given uncertainty in debt market, but it has corrected. Investors are resilient and I am surprised that things keep going.”