PHOENIX—The question before Fortuna Realty Group is not whether to buy or build. Company officials are actively considering both options.
During a break at last month’s 19th annual Lodging Conference, Ashish Lall, Fortuna’s director and head of acquisitions and asset management, said the company’s goal is to strike one deal every quarter, though Fortuna will remain opportunistic when it comes buying and building.
Fortuna, founded in 1984 by veteran New York real estate investor Morris Moinian, boasts nine properties in its portfolio.
The private investment company is in search for more deals, too. Lall said Fortuna could raise a fund to help aid its drive to increase the number of properties in Fortuna’s portfolio if a joint venture partner can’t be found.
“We could do a blind pool, or we could go on a deal-by-deal basis.”
He said the company could put together one or more deals a year that might involve a joint venture or equity partner if one can be found. “We put our money where our mouth is,” he said.
He said company officials are “speaking with a few funds” though no deal has yet been struck.
The company is looking at developing and acquiring unbranded and branded properties. Markets where the company could be active include Washington, D.C.; Boston; southern California; San Diego; Los Angeles; and Miami.
“We love the major markets,” he said. Cases-in-point: Fortuna last year acquired the 272-room Garden City Hotel in Garden City, New York, which is located approximately 28 miles outside of the city of New York.
Outside the city, Lall said Fortuna’s bias is on acquiring hotels and then levering up the property with debt as properties outside New York can still be acquired below replacement cost.
Meanwhile, in December, the company will open the $60-million, 122-room Independent in New York City that broke ground in 2011.
“We’re opportunistic in New York,” Lall said.
However, he said New York is a challenging environment to acquire hotels and do land deals because of the amount of competition there is to get a foothold in the market.
There’s also a lot of capital that’s been on the sidelines that hotel buyers and developers are eager to put to work, he said.
“There’s a lot of demand (for development and acquisitions),” he added. “You have to have a deal within a couple of days or a week, tops; then it’s gone. If there’s a good deal you have to have it done (as soon as possible).”
There is financing available to help aid in Fortuna’s search for properties, Lall said.
“We have good relationships with Asian banks because they’ve been pretty aggressive,” he said. The Asian lenders are competitive on rates, though they are more conservative as far as loan to value goes, he added.