Fairwood Capital has launched its first fund, a $150 million vehicle targeting over-leveraged hospitality investors in metropolitan cities across the US.
The Memphis-based firm was set up by former REIT executives Robert Solmson founder of RFS Hotel Investors and Ed Ansbro, former senior vice-president of Equity Inns, in partnership with the chairman and founder of Georgica Advisors, Richard Reiss.
Speaking to PERE, Ansbro said the $150 million Fairwood Hospitality Investors fund had secured commitments from the firm's principals and two US institutional investors.
It will focus on selective and full-service Marriott, Starwood (such as Sheraton and Westin) and Hilton-brand hotels in US metropolitan cities, state capitals and university cities. The fund is expected to use 50 percent leverage, although Ansbro said the firm might consider all-equity deals in the light of the credit squeeze, before leveraging at a later date.
He added however that opportunities would arise from over-stretched owners who would need to “deleverage over the next 12 to 24 months.” The seven to 10-year fund has a three-year investment period, with Ansbro saying: “There’s no need to rush.” The fund is targeting returns in the mid to high teens.
Ansbro said the private real estate and capital markets “made more [investment] sense” in the current environment.
In a statement, Solmson added: “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.”
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