News for the Hospitality Executive
Insights and Advice from Tom Baltimore,
President of RLJ Development, LLC
|By Jim Butler, July 21, 2008
RLJ Development is one of the largest African American hotel companies in the U.S. RLJ Development is one of the many fruits of Robert L. Johnson's entrepreneurial labors started with only $15,000 dollars borrowed in 1980. Along the way he built Black Entertainment Television into a New York Stock Exchange company which he sold to Viacom in 2000 for $3 billion. With the proceeds, he launched a vast sports and entertainment empire, became the owner of the NBA Charlotte Bobcats and other sports franchises, founded RLJ Hotels and raised 3 lodging funds with several billion of assets.
In February 2006, RLJ announced and then closed on the purchase of 100
hotels from White Lodging for $1.7 billion. And, in February 2008, RLJ
announced the sale of 22 full and select service hotels from its first
fund, for about $900 million. Co-founded by Thomas J. Baltimore, Jr., RLJ
is the largest African American hotel investment company in the U.S. with
114 hotels valued at more than $2 billion.
What a difference a year makes!
Baltimore recounted that in 2007:
Baltimore also says that times like this have interesting opportunities.
Over supply of new hotel rooms is one of the chronic afflictions of the hotel business. Just when things start to get good, people build a lot of new hotel rooms and supply overwhelms demand, sending occupancies and rates into a downward spiral.
Baltimore shares this concern about over supply. He thinks that supply
growth will peak in 2009 and then decelerate in 2010 due to credit markets.
He says that of the top 25 markets in the U.S., 20 have more than 3% of
existing supply under construction. That is a concern.
Practical Advice and Insight
And here are some telling observations, Baltimore gave us:
This current environment continues to provide great opportunity and . . .danger. Fortunes will be made . . . or lost in the coming months.
About the Author:
Jim Butler is one of the top hotel lawyers in the world. GOOGLE “hotel lawyer” or “hotel mixed-use” or “condo hotel lawyer” and you will see why. He devotes 100% of his practice to hospitality, representing hotel owners, developers and lenders. Jim leads JMBM’s Global Hospitality Group®—a team of 50 seasoned professionals with more than $40 billion of hotel transactional experience, involving more than 1,000 properties located around the globe. In the last 5 years alone, they have brought their practical advice to more than 80 “hotel-enhanced mixed-use” projects, a term Jim coined to fill a void in industry lexicon. This term describes one of the hottest developments in real estate-where hotels work together with shopping center, residential, office, retail, spa and sports facility components to mutually enhance the entire project’s excitement and success. Jim and his team are more than “just” great hotel lawyers. They are also hospitality consultants and business advisors. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them. They are a major gateway of hotel finance, facilitating the flow of capital with their legal skill, hospitality industry knowledge and ability to find the right “fit” for all parts of the capital stack. Because they are part of the very fabric of the hotel industry, they are able to help clients identify key business goals, assemble the right team, strategize the approach to optimize value and then get the deal done. Jim is the author of the Hotel Law Blog, www.HotelLawBlog.com. He can be reached at +1 310.201.3526 or firstname.lastname@example.org.
|Also See:||Inland American Real Estate Trust Inc. Paying $920 million for an Affiliate of the RLJ Development LLC / September 2007|
|Privately held RLJ Development, LLC Acquiring 100 Hotels from White Lodging Services Corporation for Approximately $1.7 billion / February 2006|