Carlyle launches $100m US hotel venture

The private equity firm is committing $100m to a joint venture with Williamsburg, Virginia-based hotel REIT MHI.

Washington, DC-based private equity firm The Carlyle Group is committing $100 million (€73 million) to a joint venture with publicly listed lodging REIT MHI Hospitality. The joint venture will acquire and develop hotel assets and is targeting transactions valued at more than $30 million.

“We are excited to partner with a group as experienced and dedicated as MHI Hospitality Corporation,” Robert Stuckey, the head of Carlyle’s US real estate funds, said in a statement. “MHI has a proven track record of successful hotel investing, which will only be enhanced by our partnership.”

MHI will identify investment opportunities for the venture, while Carlyle’s latest US property fund, Carlyle Realty Partners V, will commit a total of $100 million in equity to the projects. Carlyle will fund up to 90 percent of the acquisitions, while MHI will provide 10 to 25 percent of the capital. Washington, DC-based Perseus Realty Capital is credited with arranging the joint venture.

So far in 2007, Carlyle has been bullish on the US hotel sector. In February year, the firm acquired the Sheraton College Park in suburban Washington, DC from Boston-based Pyramid Advisors for an undisclosed amount. The firm plans to renovate the property. In January, it acquired the Houston Sofitel Hotel from Paris-based Accor Worldwide. That property will be converted to a Crowne Plaza hotel and undergo a $12 million renovation.

Carlyle’s fifth US-focused real estate fund has a target of $1.5 billion and has received commitments from LPs like the New Mexico Public Employee Retirement Board, the Teacher Retirement System of Texas and the Pennsylvania Public School Employees’ Retirement System, the latter of which agreed to commit up to $300 million to the fund last fall.

MHI, which is listed on the American Stock Exchange, has 1,723 rooms in its portfolio and a market value of $72 million.