FORT LAUDERDALE, FL— In a bold move given the softness of the economy and market, REH Capital Partners plans to start a private real estate fund in an effort to aggressively expand its hospitality portfolio. Specifically, the company is in the process of setting up the private real estate fund so it does not have to try to get funding for each property one by one. The fund would consist of $70 million to $80 million in equity supplied by pre-established private investors, some institutions and some wealthy individuals, which the company would then match with another $70 million to $80 million of debt, bringing the fund up to about $150 million in total. “It is our intention to run the fund as an REH fund where we would manage it and seek out larger deals going forward once it’s in place,” REH Chairman Frank Nardozza told HOTEL BUSINESS®. “Were working hard now to get it off the ground before December 2003. Realistically well likely launch it toward the end of the year.” But REH is not waiting around to finalize its fund before it acquires new properties, as it has recently bought Lake Cecile Suites and Resort in Orlando. “As a result of the decline in business travel, were looking to acquire properties that primarily cater to the leisure market, which has recovered nicely,” said Nardozza. “So, well focus our attention on those hotels and resorts that are tour and travel oriented.” REH became involved with the Lake Cecile property back in February of 2002 when the property was hurting as a result of Sept. 11. “We saw this deal as a 9/11 play because the property performed well historically but suffered a great deal after travel fell out directly after the attacks,” said Nardozza. “As a result, we were able to come in and strike a deal at a great price.” The firm bought the 144-key property for $4.7 million, but it was not only the price tag that attracted the company to this hotel. “Another thing that prompted us to aggressively go after this hotel was its location,” Nardozza said. “The county had been planning to put up a new convention center in the area,” Nardozza said. “In total there were three sites being considered, two of which were very close to this property. As it turns out, the site that was selected is directly across the street.” New convention center aside, the hotel is situated in the middle of the Central Florida Tourism Corridor, placing it only three miles from Disney World and 15 minutes from Universal Studios. It also has a beachfront situated directly on Lake Cecile. The property is made up of 10 buildings that all surround the lake, which affords the customer great views and allows REH to offer a variety of water sports as well. Since the company has acquired the property, it has invested $1.6 million in a renovation that it expects to be completed this April when the hotel plans to open its doors again to the public, this time under the new name MainStay Suites and Resorts Lake Cecile. “As part of the renovation, we have completely gutted each guestroom to add all new furniture, appliances and layouts,” said Nardozza. “In addition, we have expanded the food and beverage offerings to include a restaurant that will offer casual dining as well as a large snack facility/bar in the pool area.” Going forward the company is looking to complete like deals in which it buys distressed properties at a reduced price and turns them around. “Were looking at a deal now that includes four hotels all located in Florida,” shared Nardozza. “At present were also looking at another deal in South Florida and two in the Northeast, one in New York and one in Connecticut. “Our focus is the East Coast right now because its easier for us being that we have three offices in that area, one in New York City, one in Stamford, CT and the other in Fort Lauderdale, FL,” he said. “By the end of the year wed like to have three or four more deals done, one being that four-property deal previously me
Frank Nardozza