- The Washington Times - Monday, February 13, 2006

From combined dispatches

The development firm controlled by Robert L. Johnson has signed a deal to buy 100 hotels for $1.7 billion, a significant expansion of the Black Entertainment Television founder’s holdings in hotel real estate.

Mr. Johnson’s RLJ Development LLC said yesterday that it will purchase the properties, most of them operating under Hilton and Marriott brand names, from the hotel company White Lodging Services. The hotels are concentrated in Illinois, Texas, Colorado, Florida and Indiana.

One of the holding companies Mr. Johnson formed after he sold BET to Viacom in 2001 for $3 billion, RLJ Development holds 30 properties, including four in the District and four in Maryland.

The Bethesda company will close on 87 of the White Lodging properties in the second quarter. The other 13 are under construction, and closing is expected within two years. White Lodging, based in Merrillville, Ind., will continue to manage the hotels.

“We are thrilled to add these hotel properties to the RLJ Development portfolio,” Mr. Johnson said.

After a plunge in demand for hotel rooms after the September 11, 2001, terrorist attacks, business and leisure travel is surging, attracting investors to the industry.

Revenue per room in the United States, a measure of average occupancy and rates, rose 11 percent in the week ended Feb. 4 in the year-ago period, according to Smith Travel Research.

“Lodging is undergoing a very robust recovery, which is going to go on for a long time,” said James Corl, chief investment officer for $16 billion of real estate securities at Cohen & Steers Inc. in New York. “That’s what’s driving more consolidation in the sector.”

RLJ Development invests in upscale urban hotels, most of them under Hilton and Marriott names. In December, it closed its first private equity fund, the RLJ Urban Lodging Fund, that held a purchasing power of $900 million from investments by public and private pension funds, with other investors.

Four of the five largest deals involving a hotel company in the United States were announced in the past three months, including Hilton Hotels Corp.’s Dec. 29 agreement to buy the lodging unit of British company Hilton Group PLC for $5.71 billion, and Saudi Prince Alwaleed bin Talal’s agreement last month to buy Toronto company Fairmont Hotels & Resorts Inc. for $3.24 billion in partnership with Colony Capital LLC.

Mr. Johnson’s purchase, announced yesterday, would more than quadruple the number of properties in six-year-old RLJ’s portfolio. The firm raised $315 million last year for two lodging private-equity funds.

The company, which renovates, rebrands and manages hotels, owns 29 locations in North America valued at more than $1 billion, it said. RLJ, which is run by Mr. Johnson and President Thomas Baltimore, is the biggest black hotel investment company in the United States.

“We’re still very optimistic about opportunities in the lodging sector,” Mr. Baltimore said. “Demand is going to continue to outplace supply; we’ll see very limited supply growth of 1 percent or less over the next couple years.” He declined to comment on how the acquisition will be financed.

White Lodging, a 21-year-old Merrillville, Ind., company run by Bruce White, develops and manages mid-to-large size hotels in the United States.

The company operates hotels under the Courtyard by Marriott and Residence Inn by Marriott names.

Of the hotels in its portfolio, 25 are in Indiana, with 21 in Texas, 14 each in Colorado and Illinois and the remainder in Florida, Michigan, Kentucky, Connecticut, New Jersey, Utah, Pennsylvania and Tennessee.

Mr. Johnson, who formed BET in 1979 and owns the NBA’s Charlotte Bobcats, is on the board of directors of Hilton Hotels Corp.

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