webinar, the hardest hit of the five major food groups by the downturn is the hotel sector, so it may come as a surprise to some when an investment company chooses to enter it. To Stoneridge Capital Partners, a private investment company focused on acquiring assets with potential for significant increases in value, it was "an extremely appealing investment opportunity." GlobeSt.com recently caught up with Orange County, CA-based Greg Merage, CEO of Stoneridge to discuss Stoneridge's investment strategy, and its forecast for the hotel market.
GlobeSt.com: Tell me a little bit about your recent acquisition of the Hotel Highland in Phoenix. What made it an appealing investment in this market?
Merage: The Hotel Highland represented an extremely appealing investment opportunity for us due to its attractive pricing and outstanding location within Phoenix's Camelback Corridor, an affluent commercial district near Scottsdale that is home to approximately nine million square feet of office, hotel, shopping and dining destinations. The hotel recently underwent an extensive renovation and is ready to compete within this prominent submarket. After touring the property, we had it under contract within six days and closed shortly thereafter.
GlobeSt.com: Why did Stoneridge decide to enter the hotel market?
Merage: Hotel acquisitions have always been a core component of our investment strategy and represent a product platform we will continue to build over time. Despite the current challenges associated with the hospitality market, we believe hotels provide an opportunity for outstanding returns and historical data suggest that hotels are among the first product types to rebound following a recession.
GlobeSt.com: In what other markets is Stoneridge evaluating potential hotel investments and why?
Merage: We are actively evaluating hotel investment opportunities within sizable metropolitan areas in the Western US, including California, Phoenix, Las Vegas, Denver and Hawaii. Our strategy is to acquire well-located, moderate-to-upper-tier hotel properties that are positioned for significant growth when the overall economy rebounds.
GlobeSt.com: In addition to hotels, what other real estate property types is Stoneridge actively looking to acquire?
Merage: We are seeking to acquire and operate a diverse portfolio of property types, including retail, office, multifamily, self storage, industrial and residential land. Most recently, we have acquired retail centers on Oahu, Hawaii and in Indian Wells, CA, in addition to a luxury apartment community in Orange County, CA. Our ability to successfully acquire such a broad array of product types stems from the depth of expertise and experience of our team and advisory board.
GlobeSt.com: What is Stoneridge's overall investment strategy for the next two years?
Merage: We plan to aggressively expand and diversify our portfolio of assets. In the past year, we have completed more than $150 million in transactions and we believe outstanding investment opportunities will continue to surface through 2011. During this time-frame, we expect to place approximately $400 million in cash.
GlobeSt.com: What is your forecast for the hotel sector?
Merage: There is clearly a great deal of distress in the hospitality industry and until the economy shows sustainable improvement, which will lead to an increase in overall business and leisure travel, this sector will continue to feel the effects of the recession. Additionally, the number of potential acquisitions within this sector will continue to be dictated by the willingness of lenders to write down the loan balances and dispose of the bank-owned properties. If the volume of foreclosures expands, attractive pricing should exist on solid, well-located properties. Investors with a strong cash position should have a significant advantage versus the competition.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
