US: Real estate fund manager JER Partners has acquired a 785-room hotel portfolio in Colorado for US$53m (EUR 43.8m). Branded as TownePlace Suites by Marriott hotels, the portfolio is based on six properties in the greater Denver area and one in Colorado Springs.
The portfolio was acquired with a combination of cash and debt provided by Bank of America.
JER Partners believes that the economy in Denver has started to show positive signs of recovery. Alex Gilbert, a principal with the company, worked on the transaction. He said: "The Denver region was slow to recover from the telecommunications fallout. Things are now looking better for job growth. But it still doesn’t make sense economically to build new hotels. This creates a positive outlook in the near term for existing hotels."
JER has set aside around $5m for capital improvements to the hotels. The majority of this work will be to upgrade the common areas and guest rooms of the properties.
The assets in the portfolio were developed in 2000 by Sage Hospitality Resources. This company will continue to manage the portfolio.
Average annual occupancy is around 70%. JER believes it can increase this over time to the mid-to-high 70s by attracting business travellers and tourists.
JER made the hotel acquisition for its commingled fund, JER Real Estate Partners III. The real estate manager established the fund in the fall of 2004 and has raised $823m of equity for it.
One of the investors – with an $85m commitment – is the Teachers Retirement System of the State of Illinois. Another is the Virginia Retirement System with $150m comitted.
Real Estate Partners III is an opportunity fund. It invests in a variety of property types across the US.