UNITED STATES - Warburg Pincus Real Estate Fund I and Triyar Hospitality have formed a joint venture to develop and acquire ‘select-service' hotels.

Michael Mahoney, chief executive of Triyar Hospitality, said it has signed a deal on a venture with a total capitalization of $160m (€113m), and through a combination of debt and equity, to tap into the mid-market hotel space which targets the business traveler by offering state-of-the-art technology, but which also gives real estate owners the option for mixed-use properties.

 "We think that there will be a great deal of interest in select-service properties. This kind of hotel will offer special features and designs that it new and exciting. This will not be just another run of the mill hotel chain," added Mahoney.

The first asset held by the JV is expected to be the ground breaking of a 136-room hotel in Tempe, Arizona on October 24 - a project likely to cost $25m.

The overall investment strategy is mostly to develop select-service properties but some acquisitions may be considered.

But it is also anticipated Triyar and Warburg Pincus will agree further joint ventures in the future, again focused on hotel assets.

All of the ventures this time around will be funded by Warburg Pincus Real Estate I opportunity fund, which had a total equity raise of $1.2bn in 2006.

At that time, New Jersey Division of Investment and Washington State Investment Board both committed $100m each to the fund.