HEI Hotels’ Development Pipeline Hits $500M
- Feb 06, 2008
It’s further evidence that, at least for some players, the hospitality market isn’t slowing down. With the acquisition of a one-acre parcel in Bellevue, Wash., HEI Hotels & Resorts, Norwalk, Conn., now has more than $500 million in its development pipeline. In addition to the 378-room, 15-story Marriott Bellevue, which should break ground mid-year, HEI has under planning or construction a 305-room W Hotel at Hollywood and Vine in Hollywood, Calif., and an historic adaptive re-use 202-room Le Meridien in Philadelphia. The Hollywood project also includes 143 residential condos and approximately 15,000 square feet of retail space. In a prepared statement, Steve Mendell, HEI’s executive vp/acquisitions and development, said, “Development will play an increasingly important role in our growth…. Going forward, we expect newly built hotels to account for approximately 15 percent of our portfolio.” Last July, HEI, one of the largest private hotel acquirers, opened its first development property, the 214-room Westin Minneapolis, an historic adaptive re-use of the Farmers & Mechanics Bank Building, built in 1941. Russ Urban, HEI’s senior vp/development, told CPN that adding development to its longstanding practice of hotel acquisition is a valuable form of diversification for the company. “Typically you end up developing in markets where you can’t buy, and you end up buying where you can’t develop.” Urban said that in 2004, HEI established HEI Fund I, which raised $275 million in equity from university endowment funds. In 2006, the company launched HEI Fund II, which raised approximately $425 million from a similar investor pool. Overall, he told CPN, the company currently has about $2 billion in buying power. “The challenge now is to the find the opportunities that work,” he said, adding “We always look for high-growth markets.” HEI owns 30 hospitality properties valued at approximately $2 billion, and in 2007, Hotel Business magazine ranked the company as the nation’s seventh-largest hotel manager.