Investcorp acquires US hotel portfolio for USD450 million

This US Hotel Portfolio comprises nine hotels from the Marriott, InterContinental, Hilton and Starwood hotel groups, located in five US States: Illinois, Oklahoma, Florida, Texas and Virginia. Eight of the hotels have been purchased and the purchase of the ninth hotel is scheduled to be completed in July.

Three hotels, the Marriott Schaumburg, the Crowne Plaza and the Holiday Inn Express, are located in Illinois. Two hotels, the Holiday Inn Select and the Marriott Palm Beach, are located in Florida and a further two, the Doubletree and the Marriott Waterford, are located in Oklahoma. The remaining two hotels, the Marriott Waterside and the Westin DFW are located in Virginia and Texas respectively. Combined, these nine hotels supply 2,828 rooms and 252,514 square feet of meeting space.

The Procaccianti Group, which has retained a small equity stake in the portfolio, will act as property manager for the US Hotel Portfolio. Procaccianti is one of the top five privately held owner operators of hospitality assets in the United States and currently owns 50 hotels supplying 12,993 guest rooms in 17 states, and employs 6,000 people across the country. The company is one of a small number of ''A list'' operators approved by Marriott, Hilton, Starwood and Intercontinental and over the past five decades has owned or developed real estate valued at over $4 billion. Proccacianti is recognized in the United States as a leading hotel operator.

Andrew Charlesworth, Investcorp's Bahrain-based real estate specialist, said:

'The acquisition of these hotels was well timed as there is considerable current momentum in the US hotel industry. The boom in the US residential construction market has resulted in a constricted hotel supply pipeline which has resulted in increased occupancy and room rates. These nine hotels have attractive locations within five state capitals and, as a result, have high occupancy rates of around 70%. Each of the hotels has undergone a significant recent upgrade and benefits from an affiliation to an internationally recognized brand.'

Investcorp's New York-based team of real estate professionals invests in all major real estate asset classes throughout the United States with investment profiles ranging from core-plus to opportunistic for mid- to long-term holding periods targeting top tier risk-adjusted returns. Investcorp currently makes common equity investments in properties within two areas: core plus and opportunistic. Core plus properties are geared towards conservative investors and aim to produce current yield, based on strong occupancy rates and good tenancy, as well as solid capital gains. Opportunistic properties aim to produce higher capital gains by investing in slightly higher risk projects involving renovation, refurbishment, conversion or ground-up development. In addition, Investcorp recently formed the Investcorp Real Estate Mezzanine Fund, which invests in structured real estate investments such as mezzanine debt, high yielding debt, and preferred equity in US residential and commercial real estate.

The team oversees a portfolio with a current value in excess of $3.5 billion in selected urban and suburban markets in the United States. Over the past decade, Investcorp has acquired real estate with an initial capitalization of approximately $6.5 billion.