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Fairwood launches $150m hospitality fund

Former REIT veterans Robert Solmson and Ed Ansbro have teamed up Georgica Advisors founder Richard Reiss to launch private equity real estate firm, Fairwood Capital. The first fund will target hospitality in US metropolitan areas.

Fairwood Capital has launched its first fund, a $150 million vehicle targeting over-leveraged hospitality investors in metropolitan cities across the US.

The Memphis-based firm was set up by former REIT executives Robert Solmson founder of RFS Hotel Investors and Ed Ansbro, former senior vice-president of Equity Inns, in partnership with the chairman and founder of Georgica Advisors, Richard Reiss.

Speaking to PERE, Ansbro said the $150 million Fairwood Hospitality Investors fund had secured commitments from the firm's principals and two US institutional investors.

It will focus on selective and full-service Marriott, Starwood (such as Sheraton and Westin) and Hilton-brand hotels in US metropolitan cities, state capitals and university cities. The fund is expected to use 50 percent leverage, although Ansbro said the firm might consider all-equity deals in the light of the credit squeeze, before leveraging at a later date.

He added however that opportunities would arise from over-stretched owners who would need to “deleverage over the next 12 to 24 months.” The seven to 10-year fund has a three-year investment period, with Ansbro saying: “There’s no need to rush.” The fund is targeting returns in the mid to high teens.

Ansbro said the private real estate and capital markets “made more [investment] sense” in the current environment.

In a statement, Solmson added: “The credit markets, together with the prospect of a recession, the depth and duration of which is unknown, will create compelling opportunities to acquire hotels.”