MEMPHIS, Tennessee/NEW YORK, New York—Three senior hotel executives have launched what is believed to be the first hotel investment fund formed specifically to acquire hotels since the recent credit and equity market upheaval. Fairwood Hospitality Investors, LLC is capitalized with $150 million in equity contributed by the principals of Fairwood Capital LLC, a newly formed private equity fund, and two institutional investors.
Fairwood Capital’s principals are hospitality and real estate veterans, including:
• Robert Solmson, the founder, former chairman and CEO of Memphis-based RFS Hotel Investors, Inc., a publicly held real estate investment trust (REIT), listed on the NYSE. The company was the first hotel REIT formed in 1993 and was acquired by CNL Properties for approximately $700 million in 2003;
• Ed Ansbro, former senior vice-president of Equity Inns, Inc., a Memphis-based REIT, listed on the NYSE. The company and its portfolio of 130 hotels was acquired in 2007 by Whitehall Street Global Real Estate Limited Partnership for $2.2 billion; and
• Richard Reiss is chairman of New York-based Georgica Advisors and a number of other private investment entities. Reiss was previously a RFS board member.
"We believe the turmoil in the credit markets, together with the prospect of a recession, the depth and duration of which is unknown, will create compelling opportunities to acquire hotels at historically attractive prices,” Solmson said. “Assuming moderate leverage of approximately 50 percent, we will have up to $300 million in buying power and plan to invest this sum over the next few years. We intend to acquire an institutional grade portfolio of premium-branded select-service and full-service hotels that will be diversified by brand, geography and market segment. Initially, we will focus on Marriott, Starwood (including Sheraton and Westin) and Hilton-branded products.”
Solmson noted that the company has flexibility in structuring transactions. “We intend to be entrepreneurial in our approach and creative in structuring transactions, and we have the ability to move quickly. We will work directly with owners, developers, brokers and management companies to source transactions. It is anticipated that all of the hotels will be operated by third-party management companies.”
The company will have offices in Memphis and New York City.
850 Ridge Lake Blvd.
Memphis, TN 38120