Regal Partners has announced its latest alternatives acquisition, taking a 50 per cent stake in real estate and advisory platform Ark Capital Partners.
Ark was established in 2021 and looks to source, secure and reposition hotel accommodation in Australia and New Zealand. Since launch, it has deployed over $350 million in strategic acquisitions and value enhancements across the premium hotel sector.
Regal chief executive Brendan O’Connor and Merricks Capital chief executive Adrian Redlich will join the Ark board, while hotel industry finance specialist Ed Faraguna will also join the firm as chief financial officer. They will sit alongside Ark’s existing directors Rahul Parrab, Mark Bullock and Sarah Townson.
Regal paid $3 million in cash which was funded from Regal’s existing cash and investments on the balance sheet.
The fund manager said the addition of a hotel offering will be highly complementary to its existing commercial real estate debt capabilities within Merricks Capital, which it acquired in June 2024, as well as expand its alternatives offering.
“The partnership with Ark represents a notable expansion of Regal’s existing alternative investment platform to include a direct alternative real estate investment capability focused on value-add equity investments in the hotel accommodation sector,” it said.
As well as this, Regal has acquired the five-star Mayfair Hotel for $75 million. Located in Adelaide’s CBD, the deal is set to complete in August 2025, and the hotel will represent the seed asset for the Regal Partners Australian Hotel Opportunities strategy.
Subject to certain covenants being met, the Mayfair debt facility will allow up to an additional $23 million to be drawn to fund refurbishment works and/or for equity release purposes.
O’Connor said: “The partnership with Ark represents a highly attractive opportunity for Regal Partners to further extend our existing investment capabilities across the real estate investment sector, supported by an attractive seed asset purchased at a significant discount to prior valuations that we anticipate will have the ability to generate strong risk-adjusted returns for our clients. We believe it is the right time in the investment cycle to be looking to expand into equity real estate.”
Parrab, Ark Capital co-founder and CEO, said: “The Ark team is delighted to be partnering with Regal Partners to further grow and expand our existing pipeline of attractive acquisition opportunities across the ANZ hotel accommodation sector.
“Following a period of significant price dislocation in the wake of the COVID-19 pandemic and broader economic slowdown, we believe the Australian hotel sector now offers investors the unique opportunity to benefit from compelling economic tailwinds and attractive supply-demand dynamics at a time when valuations remain highly attractive.”
Last July, the firm announced a minority stake acquisition in specialist asset manager Argyle Group which manages Australia’s water entitlement portfolios and now sits within Regal’s real and natural assets portfolio.
It also offers a range of alternative strategies covering long/short equities, private markets, real and natural assets and credit and royalties across eight fund management businesses, including PM Capital, Merricks Capital, and Kilter Rural.
