Investors’ appetite for hotel assets in the United States is growing and owner/operator Crescent Hotels & Resorts’ has formed a $US1 billion fund to buy upscale brands like Marriott, Hilton, Starwood and InterContinental.
The fund has attracted business development company Allied Capital and the LCP Group, a private real estate investment firm, which have become shareholders in Crescent.
Crescent’s president Michael George said the fund’s target is upper, upscale hotels and portfolios located in primary and secondary US markets, as well as resorts.
“The acquisition fund expects to acquire up to $US1 billion in hotel assets through direct investment or joint-venture arrangements with affiliated and unaffiliated partners.
"The fund will seek to acquire full-service hotels typically in the 200- to 500-room range that can benefit from an infusion of strategic capital and management, especially those properties that have repositioning and rebranding potential. We will focus on hotels of the upper, upscale brands of Marriott, Hilton, Starwood and InterContinental," he added.
Crescent Hotels & Resorts will operate the hotels acquired by the fund.
In its first transaction, the fund acquired the Detroit Marriott Livonia hotel. The hotel, which has 224 rooms and three suites, will undergo a $3.5 million upgrade.
The property is connected to the Laurel Park Place mall at 17100 Laurel Park Drive North and is proximate to downtown Detroit, Ann Arbor, and the Detroit Metro Airport. Molinaro Koger brokered the sale.
"Allied Capital has had a relationship with Crescent for several years and knows firsthand its ability to improve returns on hotels," Allied Capital managing director John Scheurer said.
Crescent’s second business strategy is to partner with institutional investors and provide sliver equity of 10 to 20 percent to acquire and manage upper select-service hotels.
"We have a growing number of strategic partners who have an appetite for hotels in this segment, and we believe we can acquire up to 10 to 15 hotels annually under this business model," Crescent’s chairman E. Robert Roskind said.
"We will look at the leading existing brands in this segment, as well as consider development of several new brands in this sector,” he added.
Crescent’s third business strategy will focus on third-party management of hotels, the previous company’s initial business model.
"While we have no quota, we would like to add 10 to 15 new third-party management contracts annually," George added. "We have the infrastructure in place with significant bench strength to expand. We will be disciplined in our growth so that we will continue to provide senior- management attention to every hotel we manage."
Crescent’s vice president of business development, Bill Driscoll, will be responsible for sourcing acquisitions.
Crescent is an independent, third-party operator of hotels and resorts. The company currently owns or operates approximately 35 upscale and mid-market hotels and resorts with approximately 5,400 rooms in 18 states.
By Nelson Yap
