REPORT FROM THE U.S.—Following its joint-ventured acquisition, Lane Hotels is ready to begin growing its portfolio anew.
AWH Partners, a joint venture between August Group Ventures LLC and Winston Harton Holdings LLC, acquired Lane Hotels, as well as individual hotels held by Lane Hospitality, for an undisclosed amount last week.
Lane, which owns and manages properties, now has 17 properties in its portfolio comprising approximately 2,900 rooms. Lane’s president and CEO Bill DeForrest said the company has at least partial ownership in nine properties. Seven of the hotels are 100% owned. Eight hotels are third-party managed by Lane.
Bill DeForrest, president and CEO at Lane Hotels
At its height in 1998, Lane had approximately 45 hotels in its portfolio, DeForrest said.
But with the infusion of capital from the deal—the joint venture has tapped an undisclosed institutional equity source—growth, again, is in the cards.
“It’s a great opportunity for us and our management team,” DeForrest said.
He added, “We certainly think we want to grow … but grow at the right pace.”
Russ Flicker, a managing partner with Winston Harton Holdings, said Lane could make “hundreds of millions of dollars” in real-estate acquisitions, though company officials said they did not have a specific growth target number in mind.
DeForrest said Lane is pursuing deals in secondary, suburban U.S. markets near major cities that are branded under InterContinental Hotels Group, Hilton Worldwide or Marriott International flags.
The company also is looking for value-add situations where a property might need to be up-branded or go through a renovation, officials said.
A challenging transactions market
The hotel transactions market is still “very challenging,” said DeForrest, who will remain as the company’s president and CEO post acquisition. It’s difficult to close deals in a timely fashion, he said.
Flicker said submarkets have yet to see deal volume pick up to the level seen in primary U.S. markets. In the markets that have been performing strongly, there is caution as well.
Russ Flicker, managing partner at Winston Harton Holdings
“Some markets today have been so hot, there’s not nearly as much room to move up,” Flicker said.
With portfolio restructuring being on trend, DeForrest said this is one facet of the deals environment that brings hope for Lane. He referenced FelCor Lodging Trust’s ongoing attempts to restructure its portfolio. The real-estate investment trust earlier this month said it had six properties comprising 1,527 rooms under contract to be sold.
DeForrest reiterated he was mentioning FelCor’s efforts as an example of portfolio restructuring and did not mean Lane was chasing any of the hotels FelCor has on the market.
Flicker said the combination of Lane’s and AWH’s expertise will aid in the transactions search.
“The exciting part of this deal is the ability to see and source new deals on Bill’s team and (AWH’s) ability to see deals (quickly) and strongly underwrite deals,” Flicker said.