NEW YORK CITY-Arlington, VA-based Interstate Hotels & Resorts has formed a joint venture with Harte Holdings of Cork, Ireland to acquire four hotels from affiliates of locally based Blackstone Group LP for an aggregate price of $207.8 million. Interstate will mark its first hotel JV in the US and will invest approximately $11 million for a 20% equity interest in the four hotels.

Interstate will fund the acquisition with available cash and capacity under its senior revolving credit facility. The transaction is expected to close in the first quarter of 2008.

The four properties included in the joint venture acquisition are: the Sheraton Frazer Great Valley in Frazer, PA, which has 198 rooms; the Sheraton Mahwah in New Jersey, which has 225 rooms; the Latham Hotel Georgetown in Washington, DC, which has 142 rooms; and the Hilton Lafayette in Louisiana, which has 327 rooms.

Interstate currently manages three of the properties and previously managed the Latham hotel for the Blackstone Group and MeriStar Hospitality. Upon closing, Interstate will manage all four hotels under new management agreements.

The partnership plans to invest more than $30 million of additional funds for renovations on the hotels over the 24 months following the acquisition, with Interstate’s contribution expected to be approximately $2 million. “This joint venture represents a continuation of our hotel real estate ownership strategy and expands our JV partner universe,” says Thomas Hewitt, Interstate’s CEO in a statement. “The four-hotel portfolio was attractively priced, at or below replacement costs, and aligns well with our portfolio of wholly owned and JV real estate holdings.”

Hewitt adds that this hotel package includes two key upscale, full-service brands, Hilton and Sheraton, and a well-recognized independent boutique hotel in Georgetown that offers significant repositioning opportunity. Three of the properties are located in key urban and major suburban markets with strong barriers to entry–Washington, DC, northern New Jersey and the Philadelphia area, he explains. “The fourth property, the Hilton in Lafayette, LA, is having an exceptional year with RevPAR growth in excess of 20%, and we expect the hotel to provide strong, stable cash flow going forward. With the anticipated capital investment, this entire portfolio has considerable upside operating potential.”

Leslie Ng, Interstate’s CIO, says that the company will continue to seek global opportunities and relationships. “Harte Holdings is a highly regarded Irish investment and development company which owns a wide variety of real estate projects in the UK, Ireland and mainland Europe, and we look forward to exploring other opportunities together, both domestically and abroad.”

As of Nov. 30, Interstate owned seven hotels and had a minority ownership interest through separate joint ventures in 22 hotels and resorts. Interstate also has contracts to manage 15 hospitality properties with approximately 4,400 rooms currently under construction.

Interstate has also been in the news recently with its closing of three hotels with partner Investcorp Real Estate Group from the Blackstone Group in a deal priced at $118 million. previously reported that the duo teamed up for the first time to purchase the 321-room Hilton Seelbach Louisville in Kentucky; a 226-key Crowne Plaza Madison in Wisconsin; and a 288-unit Sheraton Columbia in Maryland.

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