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WASHINGTON, DC-Hotel management company Interstate Hotels & Resorts has joined forces with asset management firm Northridge Capital Inc. to create a new hospitality fund with the goal of snapping up as much as $400 million in hotel properties around the country. The companies, both based in the Nation’s Capital, will contribute equity to the fund, while the remaining monies will derive from secured debt. Interstate is bringing $5 million to the table, while Northridge is contributing $45 million of the equity.

The two companies are expected to complement one another in their acquisition endeavors. “We know that Interstate will bring management depth and expertise, proven operating systems and marketing programs, and excellent cost benefits and synergies due to their size and national distribution,” says Northridge president David Jackson. “We believe that the hospitality sector is poised to recover as the economy rebounds, and, therefore, this is an opportune time to acquire hotel real estate.” Interstate president and COO John Emery adds, “We are beginning to see some positive movement in hotel real estate pricing and feel that properties are starting to become more attractively priced.”

Information from Boston-based Torto Wheaton Research backs up this premise about the hospitality industry market. “Barring any delay of the economic recovery beyond 2003, and any major terrorist attacks or other non-economic events that may negatively impact consumer attitudes toward travel–hotels at this juncture may present a historically unique real estate investment opportunity,” explained Petros Sivitanides in a late-January Torto report. “The rationale is that the underlying dynamics of an extraordinarily depressed demand and a very restrained supply are destined to set in motion forces quite likely to engineer a very strong recovery in hotel property cash flows and values.”

High on the joint venture’s list are upscale hotel properties with high investment potential in both urban and suburban areas. Interstate’s Melissa Thompson tells GlobeSt.com that the fund has not yet identified specific properties for acquisition; nor has it set a deadline for making an initial purchase. Interstate will be responsible for the operation of all properties the fund acquires.

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