Commercial Real Estate Direct Staff Report
Noble Investment Group is looking to raise up to $200 million of equity for its latest investment fund.
The Atlanta hotel company and investment manager, which focuses on value-add and opportunistic acquisitions, has raised $101 million for its Noble Hospitality Fund II in a marketing effort that began about a year ago. The fund is a follow-up to the first Hospitality Fund that raised $310 million in marketing that ended in 2007.
Noble invests in full- and limited-service properties that operate under national brands in major markets around the country. It has been focused on buying properties for prices that would be less than the cost of new construction, then investing heavily on upgrades.
The firm sat on the sidelines during the economic recession, from 2008 until mid-2010, when it acquired the 126-room Holiday Inn Charleston Historic District in downtown Charleston, S.C., for what is said to have been $10 million. Within a year, it renovated and expanded the property to 176 rooms, rebranded it as a Courtyard by Marriott and sold it to RLJ Lodging Trust for $42 million.
Noble's acquisitions since late 2011 include the 191-room Hotel Midtown-Atlanta, for which it paid $16 million, or about $83,770/room. It then launched a $21 million renovation effort, which is nearing completion and includes converting the boutique property to a Hyatt.
The firm also is in the midst of an $8.6 million renovation of the Embassy Suites Cleveland-Beachwood in Beachwood, Ohio. It bought the property last July for $8.1 million, or $37,500/room, according to Crain's Cleveland Business, which noted that the hotel previously changed hands in 2005 for $18.5 million, or $85,658/room.
"Noble was able to acquire this asset at a substantial discount to replacement," boasted Rodney Williams, the firm's chief investment officer, at the time. He said the $40,000/room renovation costs are justified by the hotel's location in what he considers to be a strong suburban Cleveland market.
Williams joined Noble in 2004 from Hardin Capital, a venture between DLJ Real Estate Capital Partners and Hardin Construction, where he led investment and asset management activities. He also is a former senior manager at InterContinental Hotels Group.
Noble was founded in 1993 by Mitesh "Mit" Shah, who learned about the hospitality industry as a boy working in hotels acquired by his father, Bart, a North Carolina hotel investor.
The firm, which has been marketing its vehicles to investors that include pension funds, endowments and high net-worth individuals, also raised $122 million combined for its first two funds that completed their marketing in 1999 and 2004. Its latest fund becomes the company's fourth.
Noble owns 55 hotels in 16 states, with the heaviest concentration in the South. They are operated by a management affiliate that it established and sold in 2011 to Interstate Hotels & Resorts of Arlington, Va. It also operates a venture with Hyatt Hotels Corp. that was established in 2011 to develop Hyatt Place and Summerfield Suites properties.
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