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MHI Hospitality Corporation (AMEX: MDH) announced today that it has entered into a joint venture with global private equity firm The Carlyle Group to source, underwrite, acquire, develop and operate targeted substantial hotel assets and/or hotel portfolios. Carlyle has committed up to $100 million of equity capital to the joint venture, which allows for individual transactions to exceed $30 million. Washington, DC-based Perseus Realty Capital acted as agent and arranger of the venture.
Andrew M. Sims, President and Chief Executive Officer of MHI Hospitality Corporation, commented, “We are very pleased to announce this joint venture with Carlyle. The venture enhances our ability to invest in larger hotel assets and portfolios and will facilitate further growth of our real estate platform. We believe this venture is consistent with our core strategy and presents an additional means for us to create significant long-term value for our shareholders. We look forward to a productive partnership with Carlyle, an established firm with a stellar investment track record.”
Robert G. Stuckey, Managing Director of The Carlyle Group and head of Carlyle Realty Partners, said, “We are excited to partner with a group as experienced and dedicated as MHI Hospitality Corporation. MHI has a proven track record of successful hotel investing, which will only be enhanced by our partnership.”
Hayden R. Jones, Principal of The Carlyle Group said, “We thank Perseus Realty Capital for introducing us to MHI. One of our main goals is to partner with proven real estate investors and property managers to create value for our investors.”
Under the agreement, MHI will identify potential investment opportunities in excess of $30,000,000 and the joint venture partners will jointly agree on an investment’s suitability prior to capital commitment. Carlyle’s flagship U.S. real estate fund, Carlyle Realty Partners V (CRP V), will commit up to $100,000,000 of equity capital to the joint venture for a 36-month term. CRP V will fund up to 90% of the equity of an acquisition and MHI will provide between 10% and 25%.
It is expected that hotels acquired by the joint venture will be managed by MHI Hotels Services, L.L.C., and MHI will be paid an asset management fee of 1.5% of the gross revenues of the hotels owned by the venture. In addition, MHI will have a first right of offer with respect to any investment within the joint venture.
About MHI Hospitality Corporation
MHI Hospitality Corporation is a self-advised lodging REIT focused on the acquisition, redevelopment and management of mid-scale, upscale and upper upscale full service hotels in the Mid-Atlantic, Midwest and Southeastern United States. Currently, the company’s portfolio consists of seven properties comprising 1,723 rooms, all of which operate under the Hilton, InterContinental Hotels Group and Starwood Hotels and Resorts brands. In addition, the company has a leasehold interest in the common area of Shell Island Resort, a resort condominium property. MHI Hospitality Corporation was organized in 2004 and is listed on the Russell Microcap™ Index. The company is headquartered in Williamsburg, Virginia. For more information please visit www.mhihospitality.com.
About The Carlyle Group
The Carlyle Group is a global private equity firm with $56.0 billion under management. Carlyle invests in buyouts, venture & growth capital, real estate and leveraged finance in Asia, Europe and North America, focusing on aerospace & defense, automotive & transportation, consumer & retail, energy & power, healthcare, industrial, technology & business services and telecommunications & media. Since 1987, the firm has invested $26.4 billion of equity in 601 transactions for a total purchase price of $126.5 billion. The Carlyle Group employs more than 780 people in 18 countries. In the aggregate, Carlyle portfolio companies have more than $87 billion in revenue and employ more than 286,000 people around the world. www.carlyle.com.
Since its inception in 1993, Carlyle Realty Partners has completed more than 200 investments, investing approximately $3 billion of equity for a total capitalization of approximately $14 billion. Carlyle has more than 60 real estate professionals in Washington, DC; New York City; Los Angeles; Newport Beach, California; and Denver.
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