RLJ raises $743m for second hospitality fund

Robert Johnson’s second hospitality fund will have $2.5bn in buying power, most of which will be used to acquire a $1.7bn hotel portfolio from White Lodging Services.

Bethesda, Maryland-based RLJ Development has closed its second lodging-focused fund on $743 million (€580 million) in equity commitments, more than double the size of its predecessor. The firm says it will have $2.5 billion in buying power.

Like RLJ’s first private equity real estate vehicle, the second fund will seek to acquire and develop upscale, branded hotels in and around major metropolitan areas. The fund has already acquired 87 hotels for $1.4 billion as part of its $1.7 billion purchase of 100 hotels from Indiana-based White Lodging Services. The remaining thirteen properties under contract are scheduled to close over the next 18 months. White Lodging had managed RLJ’s Hilton Garden Inn in downtown Chicago since 2002.

Fifteen institutional investors, including public and private pension funds, financial firms and a large hospitality company contributed capital, according to a statement from RLJ. Presidio Partners was the firm’s placement agent.

RLJ development is led by Robert L. Johnson, the founder of Black Entertainment Television (BET), and Thomas Baltimore, Jr, a hotel executive with stints at Marriot and Hilton. RLJ closed its first private equity fund on $315 million in April 2005.