webinar, the hardest hit of the five major food groups by the downturn is the hotel sector, so it may come as a surprise to some when an investment company chooses to enter it. To Stoneridge Capital Partners, a private investment company focused on acquiring assets with potential for significant increases in value, it was "an extremely appealing investment opportunity." GlobeSt.com recently caught up with Orange County, CA-based Greg Merage, CEO of Stoneridge to discuss Stoneridge's investment strategy, and its forecast for the hotel market.

GlobeSt.com: Tell me a little bit about your recent acquisition of the Hotel Highland in Phoenix. What made it an appealing investment in this market?

Merage: The Hotel Highland represented an extremely appealing investment opportunity for us due to its attractive pricing and outstanding location within Phoenix's Camelback Corridor, an affluent commercial district near Scottsdale that is home to approximately nine million square feet of office, hotel, shopping and dining destinations. The hotel recently underwent an extensive renovation and is ready to compete within this prominent submarket. After touring the property, we had it under contract within six days and closed shortly thereafter.

GlobeSt.com: Why did Stoneridge decide to enter the hotel market?

Merage: Hotel acquisitions have always been a core component of our investment strategy and represent a product platform we will continue to build over time. Despite the current challenges associated with the hospitality market, we believe hotels provide an opportunity for outstanding returns and historical data suggest that hotels are among the first product types to rebound following a recession.

GlobeSt.com: In what other markets is Stoneridge evaluating potential hotel investments and why?

Merage: We are actively evaluating hotel investment opportunities within sizable metropolitan areas in the Western US, including California, Phoenix, Las Vegas, Denver and Hawaii. Our strategy is to acquire well-located, moderate-to-upper-tier hotel properties that are positioned for significant growth when the overall economy rebounds.

GlobeSt.com: In addition to hotels, what other real estate property types is Stoneridge actively looking to acquire?

Merage: We are seeking to acquire and operate a diverse portfolio of property types, including retail, office, multifamily, self storage, industrial and residential land. Most recently, we have acquired retail centers on Oahu, Hawaii and in Indian Wells, CA, in addition to a luxury apartment community in Orange County, CA. Our ability to successfully acquire such a broad array of product types stems from the depth of expertise and experience of our team and advisory board.

GlobeSt.com: What is Stoneridge's overall investment strategy for the next two years?

Merage: We plan to aggressively expand and diversify our portfolio of assets. In the past year, we have completed more than $150 million in transactions and we believe outstanding investment opportunities will continue to surface through 2011. During this time-frame, we expect to place approximately $400 million in cash.

GlobeSt.com: What is your forecast for the hotel sector?

Merage: There is clearly a great deal of distress in the hospitality industry and until the economy shows sustainable improvement, which will lead to an increase in overall business and leisure travel, this sector will continue to feel the effects of the recession. Additionally, the number of potential acquisitions within this sector will continue to be dictated by the willingness of lenders to write down the loan balances and dispose of the bank-owned properties. If the volume of foreclosures expands, attractive pricing should exist on solid, well-located properties. Investors with a strong cash position should have a significant advantage versus the competition.

Instant Insights /

Stoneridge Capital Partners' Merage

Related Stories

Recommended For You