RLJ closes $1.2bn hospitality fund

The private real estate investment company controlled by media pioneer Robert Johnson has raised its third private equity real estate vehicle, more than double the size of its previous fund.

RLJ Development, founded by Black Entertainment Television founder and NBA Charlotte Bobcats owner Robert Johnson, has closed its third private equity real estate fund, RLJ Real Estate Fund III, on $1.2 billion (€800 million). With leverage, the vehicle has a purchasing power of nearly $4 billion.

“We are proud to close our third fund and delighted with the overwhelming response from the institutional investment community,” Johnson, RLJ chairman and chief executive, said in a statement. The fund garnered commitments from 16 institutional investors including the General Electric Pension Trust and General Electric Real Estate Equities.

RLJ Real Estate Fund III will focus on the acquisition and development of upscale service hotels in urban markets or dense suburban locations in major metro areas. The firm has also expanded its strategy to include mixed-use investments in target markets.

RLJ’s previous fund, RLJ Lodging Fund II, closed in September 2006 with more than $743 million in equity commitments, representing approximately $2 billion in purchasing power. In January 2007, it acquired the $69-million New York LaGuardia Airport Marriott from LaSalle Hotel Properties, the firm’s first investment in the New York City hospitality market. Located across the street from LaGuardia Airport, the 438-room property features approximately 15,300 square feet of meeting and banquet space as well as food and beverage outlets and parking.

Bethesda, Maryland-based RLJ Development, a portfolio company of RLJ Companies, was founded in 2000 by Johnson and Thomas Baltimore.