Fairfax, Virgina-based Crescent Hotels and Resorts has launched an acquisition fund and expects to add more than $1 billion (€790 million) in assets over the next 18 months. The former hotel management company recently re-branded itself and changed its name to reflect its expanded business platform, which now includes the private equity real estate fund in addition to its role as owner and operator.
While the fund may be new, the idea to raise equity from outside investors was not, says Crescent chief executive and president Michael George, who founded the company as Crescent Hospitality in 2001.
“Our decision was that we would launch the company as a pure third-party management organization—very intense, high-impact turnaround specialists,” says George. “But, over a period of time of three to five years, we said we would establish enough size, bulk, infrastructure and reputation to be able to attract equity and be able to evolve into hotel ownership.”
“The plan, frankly, was executed to the T,” he added. Crescent’s new business platform will focus on acquisitions and sliver investments, as well as third-party management. The company currently operates 35 hotels in 18 states.
The fund will be national in scope and target hotels in the “upper upscale” category that are in need of improvements or repositioning, focusing on properties under the Renaissance, Hilton, Marriott, Westin ,Sheraton and Embassy Suites banners. The firm also recently announced the acquisition of the Marriott in Livonia, Michigan, near Detroit. Crescent’s investment in the property will be about $25 million including a planned $3.5 million overhaul, according to George.
“We’re hotel doctors,” he says. “We really look for assets that are in a healthy market. It doesn’t have to be a homerun market or in a major urban market,” just one with barriers to entry.
A typical play for Crescent, “might be a 20-year-old box that has an established reputation but has management that’s maybe gotten a little bit lethargic [with a property that] could use some product enhancements or potentially could be rebranded,” says George.
The new fund has backing from Washington DC-based business development firm Allied Capital, which has invested $10 million, and DC-based real estate investor LCP Group. Robert Roskind, LCP Group’s founder, also serves as chairman of Crescent. Roskind founded CapStar Hotels and Resorts, the predecessor to MeriStar Hospitality.