RLJ Development’s next investment frontier could have decidedly foreign flavor

BETHESDA, MD—Given the size of its most recent investment vehicle, RLJ Development, LLC principals Robert Johnson and Thomas Baltimore, Jr., have b?egun to set their sights beyond the U.S. Launched in January, the privately-held firm’s RLJ Real Estate Fund III has $1.2 billion in equity commitments, giving the investment fund total purchasing power of nearly $4 billion. “We’ve begun to discuss the possibility of reaching out to the international market. We believe the skills we’ve developed here in the U.S. are transferable and could be effective in markets outside of the country,” said Johnson, who is chairman and CEO of RLJ. As an example of this potential strategy, Johnson cited the strong relationships the firm already has in place with key decision makers in the Caribbean. “We think the Caribbean is one area we ought to keep our eye on for investment opportunities. It’s certainly a market that’s going to continue to grow as people start traveling closer to home, in part out of concern about rising airfares,” he explained. More and more Caribbean governments are being headed by individuals who understand economics and development, Johnson added. “Furthermore, in many cases these government officials want to see African-Americans involved in development projects in their countries,” he said. Johnson cited Barbados and the Dominican Republic as countries that, while very different in terms of culture and history, are among the areas that are attracting significant development interest. He mentioned as well Costa Rica in Central America. Unlike its two earlier investment funds, the prospectus for RLJ’s Real Estate Fund III allows for the acquisition or development of mixed-use projects as well as traditional lodging assets. Mixed-use projects, particularly those incorporating lodging and residential components, have become increasingly popular throughout the Caribbean and in select Central American markets like Costa Rica. As RLJ considers broadening its geographical focus, the firm has expanded its in-house expertise accordingly. “We’ve created a team of 55 professionals, half of whom are women and minorities,” noted Baltimore, who serves as president of RLJ. “We have all the key disciplines in this industry represented—from development capability to underwriting and finance as well as asset management. Clearly, as we expand our development platform further, it’s prudent to add talented individuals where appropriate.”