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Crillon Hotel, Paris

Two of the best-known names in the real estate and hotel industries have married.

Starwood Capital Group of Greenwich, CT has purchased a 49.9 percent ownership stake in Philadelphia-based Hersha Hospitality Management.

The price was not disclosed. Both companies are privately-owned.

Hersha president and CEO Naveen Kakarla said in a prepared statement the deal will provide Hersha the resources to expand its highly successful platform across the United States.

The new partnership "will seek to capitalize on the ongoing industry recovery by aggressively pursuing select-service and full-service hotel management opportunities on a national scale," according to the Starwood statement.

Naveen Kakarla

In addition, the venture will also target strategic investments in turnaround and opportunistic select-service hotels throughout the country and full-service hotels in select suburban markets. "We are very pleased to be partnering with HHM," said Barry Sternlicht, Chairman and CEO of Starwood Capital.

"Over the years, we have built a close relationship with Hersha's leadership team and admire its best-in-class operating capabilities and ability to create value for the properties it manages."

Sternlicht says Starwood Capital "will contribute capital, deal flow and enterprise-building resources to help leverage HHM's operating expertise across the country and across a broader spectrum of investments."

Barry Sternlicht

"Partnering HHM with Starwood Capital allows us to leverage the considerable strengths of both organizations," said Hersha's Kakarla.

"Barry Sternlicht and Starwood Capital Group have demonstrated keen judgment, innovative vision, and an unparalleled access to capital across several real estate cycles.

"HHM, I believe, has struck the fine balance between building a high quality multi-brand platform that is both scalable and process-oriented, while preserving a hands-on, entrepreneurial approach to managing hotels and projects."

HHM currently operates more than 70 hotels in metropolitan regions in Boston, Connecticut, New York, New Jersey, Philadelphia and Washington, D.C.

The company provides turnkey management services for properties with leading brand affiliations, including Marriott, Hilton, Hyatt, Starwood and InterContinental Hotels Group and, for independent and boutique hotels.

The company's executive headquarters will remain in Philadelphia, PA and its operations and administrative headquarters will remain in Harrisburg, PA.

Starwood Capital Group is a private investment firms focused on real estate. In addition, Sternlicht is also the founder of Starwood Hotels & Resorts, where he served as Chairman and CEO for nearly 10 years as the company grew into one of the world's leading hotel and leisure companies.

Sternlicht also serves as the chairman of Groupe du Louvre, which owns internationally-known luxury hotels, including the Crillon in Paris, and one of the world's largest budget hotel companies, Louvre Hotels, with more than 800 hotels across Europe.

Additionally, a controlled affiliate of Starwood Capital acquired Golden Tulip out of bankruptcy in 2009, adding a network of more than 230 hotels in almost 40 countries to its portfolio.

Since Starwood Capital's inception in 1991, the firm, through its various funds, has invested more than $24 billion in assets.

Starwood employs about 150 people across nine offices including Greenwich, San Francisco, Washington, D.C., Atlanta, London, Paris, Luxembourg, Mumbai and Tokyo.

 

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