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HEI Hotels Third Private Equity Fund (HEI Hospitality Fund III, L.P.) Expected
to Deploy $500 million in Equity to Acquire Luxury Hotels in the U.S. in 2009

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NORWALK, Conn., February 5, 2009 – Officials of HEI Hotels & Resorts, the nation’s fastest growing private owner/operator of hotel real estate, today announced plans to deploy up to $1.5 billion from its third fund, HEI Hospitality Fund III, L.P., during 2009.  The fully discretionary fund has approximately $500 million in equity, and intends to acquire or develop between $1.5 billion and $2 billion in hotels and resorts over the next two years.

“We continue to actively seek hotels for our portfolio of full-service, upper-upscale hotels in areas with high barriers to new development,” said Steve Mendell, HEI’s executive vice president of acquisitions and development.  “For the first time in about 16 months, we are beginning to see hotel prices come in line with market expectations as the expectation gap narrows between buyers and sellers.  We expect this trend to continue, with prices becoming even more attractive as the year progresses.  Since we do have dry powder, we expect to be at the forefront of the acquisition wave, which we expect to begin in the near future.  Cash always is king in this part of the real estate cycle, which we believe will give us a competitive advantage, coupled with our ability to innovatively structure transactions and our track record of closing quickly at an agreed-upon price.”

The new fund will target full-service, upper-upscale and luxury hotels, resorts and premium select-service hotels in the U.S., Canada and the Caribbean affiliated with established leading brands.  Desired locations include downtown central business districts (CBDs) in urban, premium suburban and airport sites.  HEI also remains focused on complementing its property portfolio with independent upper-upscale and resort properties located in strong markets and select “takeout” opportunities to buy hotels upon completion of construction from third-party developers.
 

Managed Funds: HEI Funds
http://www.heihotels.com/

HEI Hospitality Fund III, L.P. ("Fund III"), July 2008, is a $515,350,000 discretionary private equity fund formed to acquire and/or develop hospitality related assets. Fund III is comprised of leading institutional investors and members of HEI's senior executive team.Similar to Fund I and Fund II, Fund III is primarily focused on investing in full service, upper upscale and luxury hotels across the U.S., Canada and the Caribbean.

HEI Hospitality Fund II, L.P ("Fund II "), February 2006, is a $425,000,000 discretionary private equity fund formed to acquire and/or develop hospitality related assets. Fund II comprises nine of the country's most prestigious university endowments (including seven Fund I investors) along with members of HEI's senior executive team. To date, Fund II has invested or committed capital in 14 full service, upper upscale, luxury hotels across the U.S. and the historic Equinox Resort & Spa in Manchester Village, Vermont.

HEI Hospitality Fund, L.P. ("Fund I"), May 2004, is a $274,300,000 discretionary private equity fund, formed to acquire full service, upper upscale, luxury properties. Fund I comprises eight of the country's most prestigious university endowments along with members of HEI's senior executive team. To date, Fund I has invested in 12 full service, upper upscale, luxury hotels across the U.S. and the famed Algonquin hotel in New York City.

HEI Prudential Joint Venture, August 2002, is a joint venture comprised of Prudential Real Estate Investors and HEI. HEI is the operating partner of the platform which owns 3 first class, full service hotels.

Our Properties

HEI has assembled one of the highest quality hotel portfolios in the United States. Our portfolio is unique…comprised completely of full service, upper upscale and luxury properties, all located in large metropolitan markets and representing the world's leading brands.

The objective of our private discretionary funds is to own our hotels for long periods of time. With this objective in mind, our funds provide readily available capital for us to continually invest in our hotels, and ensure we maintain the highest quality assets.

Portfolio Highlights:

  • Completely full service, upper upscale and luxury portfolio
  • 62% of hotels are in prime urban locations
  • World Renowned brands: Westin, Marriott, Hilton, Embassy Suites, Le Meridien, Sheraton, Renaissance, Crowne Plaza
  • Irreplaceable collection of independent hotels and resorts
  • $190 million reinvested in hotel improvements - further enhancing our products (2004-2007)

About HEI Hotels & Resorts
HEI Hotels & Resorts, headquartered in Norwalk, Conn., is a leading hospitality investment firm that acquires, develops, owns and operates full-service, upper-upscale and luxury hotels and resorts throughout the United States under such well-known brand names as Marriott, Sheraton, Westin, Le Meridien, Embassy Suites, and Hilton.  For more information about HEI, visit the company’s website, www.heihotels.com.

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Contact:

Jess Petitt
HEI Hotels & Resorts
203-849-2228
jpetitt@heihotels.com

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Also See: Owner/Operator HEI Hotrels & Resorts Has Three Properties in Various Stages of Development, 378 room Marriott in Bellevue, Washington, the 202 room Le Meridien Philadelphia and the W Hollywood Hotel & Residences / February 2008
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