Hospitality-focused investment firm HEI Hotels & Resorts has made its first acquisition for its $515 million fund, HEI Hospitality Fund III.
The Norwalk, Connecticut-based firm paid $27 million for the Hanover Marriott hotel located in Whippany, New Jersey. The firm said in a statement it bought the property from the REIT, Host Hotels & Resorts.
HEI closed its third opportunity fund in July last year, targeting full service, upper-upscale and luxury hotels in the US, Canada and Caribbean.
In February, Steve Mendell, HEI executive vice president of acquisitions and development, said valuations in the hospitality sector were increasingly “com[ing] in line with market expectations as the expectation gap narrows between buyers and sellers”.
HEI today said it planned to spend $20 million renovating the hotel. Mandell said the deal was the first transaction for Fund III. Roger Clark, HEI’s senior vice president of acquisitions and development, added that the hotel deal market was “loosening”.
“We have a number of hotels in our pipeline, and expect to acquire between $1 billion and $1.5 billion in hotels and resorts in the coming years,” he said.