Interstate Hotels & Resorts (NYSE:IHR), the nation`s largest independent hotel management company, and Northridge Capital, Inc., today announced that they had formed a hospitality fund to acquire up to $400 million of hotel assets.
Washington, D.C.-based Northridge Capital is a private real estate investment company with a total current real estate portfolio valued in excess of $300 million. Interstate will operate all of the acquired properties.
The fund will target upscale, full-service and selected premium-branded, limited-service properties in key urban and suburban markets that have strong investment potential and that can benefit from Interstate`s proven repositioning and turnaround programs.
The joint venture will be funded with approximately 50 percent equity and the balance in secured debt. Northridge will contribute up to $45 million of the equity, Interstate up to $5 million, and up to $150 million will come from other outside investors.
“We are beginning to see some positive movement in hotel real estate pricing and feel that properties are starting to become more attractively priced,” said John Emery, Interstate`s president and chief operating officer. “Hotel acquisition, primarily through joint ventures, is one of our principal growth strategies. We currently have more than $40 million invested in hotel real estate, and the partnership with Northridge represents an opportunity to significantly increase that investment.
“Interstate`s position as the premier hotel operator in the United States and its ability to provide significant side-by-side investment funding make them an ideal partner in this venture,” said David Jackson, president, Northridge Capital. “Based on our own experience, gained from the long and close relationship we have developed with Interstate working on our existing portfolio, we know that Interstate will bring management depth and expertise, proven operating systems and marketing programs, and excellent cost benefits and synergies due to their size and national distribution. We believe that the hospitality sector is poised to recover as the economy rebounds, and, therefore, this is an opportune time to acquire hotel real estate. We look forward to expanding our relationship with Interstate.”
Established in 1997, Northridge Capital is a Washington D.C.-based asset management firm responsible for managing the investment assets of private investors. These assets include hotel and office properties, as well as multi-family, retail and other types of real estate. Northridge`s current investment focus is on hotels in key urban and suburban markets with strong economic fundamentals and favorable competitive conditions.
Interstate Hotels & Resorts operates more than 380 hospitality properties with nearly 82,000 rooms in 44 states, the District of Columbia, Canada and Russia, including 55 properties managed by Flagstone Hospitality Management, a subsidiary of Interstate Hotels & Resorts.
BridgeStreet Corporate Housing Worldwide, an Interstate Hotels & Resorts subsidiary, is one of the world`s largest corporate housing providers, offering upscale, fully furnished corporate housing throughout the United States, Canada, the United Kingdom, France and 39 additional countries through its network partners. For more information about Interstate Hotels & Resorts, visit the company`s Web site: www.ihrco.com.
This press release contains “forward-looking statements,” within the meaning of the Private Securities Litigation Reform Act of 1995, about Interstate Hotels & Resorts, including those statements regarding future operating results and the timing and composition of revenues, among others, and statements containing words such as “expects,” “believes” or “will,” which indicate that those statements are forward-looking. Except for historical information, the matters discussed in this press release are forward-looking statements that are subject to certain risks and uncertainties that could cause the actual results to differ materially, including the current slowdown of the national economy, economic conditions generally and the real estate market specifically, the impact of the events of September 11, 2001, governmental actions, legislative and regulatory changes, availability of debt and equity capital, interest rates, competition, supply and demand for lodging facilities in our current and proposed market areas, and the company`s ability to manage integration and growth. Additional risks are discussed in Interstate Hotels & Resorts` filings with the Securities and Exchange Commission, including Interstate Hotels & Resorts` annual report on Form 10-K for the year ended December 31, 2002.
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