Veteran Hoteliers Form Ownership and Management Companies

NORWALK, Conn./WASHINGTON, D.C., January 15, 2002—Four veteran hoteliers have joined forces to create an ownership and management organization to acquire, co-invest in and/or operate first-class hotels. The principals include Gary Mendell, former CEO of HEI Hotels; David E. McCaslin, former chief operating officer of MeriStar Hotels & Resorts; Stephen Rushmore, president, HVS International; and Stephen Mendell, former executive vice president/acquisitions HEI Hotels.
The ownership group, HEI Hospitality, initially will acquire or joint venture with other investors to acquire first-class, full-service hotels throughout the U.S. In addition, the company may acquire second mortgages or other forms of hotel debt.
“All of the principals have been through several real estate cycles and combined have more than 100 years in hotel-related experience,” said Gary Mendell, Chairman and CEO of HEI Hospitality, which is headquartered in Norwalk, Conn. “We believe we are entering the trough portion of the hotel real estate cycle where ‘cash is king,’ and seek to acquire assets with strong turn-around potential. In addition to the funds each of us has invested, we expect to partner with other investment groups or to co-invest with existing owners who may need additional capital but don’t wish to sell. We have a proven investment model and successful track record that will work well in the current economic environment. And, we have the creativity, flexibility and hands-on expertise to structure transactions that meet today’s needs.”
Smilezzzz (pronounced “smiles”) Hospitality LLC, the management company, is a wholly owned subsidiary of HEI Hospitality and will be headquartered in Washington, D.C. Smilezzzz will manage assets acquired by HEI Hospitality, as well as be an independent, third-party operator. “We are creating an entrepreneurial, long-term, value-driven culture,” said McCaslin, partner of HEI Hotels and president of Smilezzzz. “We are assembling a team of high-energy, seasoned professionals who are both bottom-line and people-driven. And with our parent company, we will have the ability to invest side-by-side from sliver to majority investor. Because all of the principals have been and will continue to be hotel owners, we will bring an owner-operator mentality to every hotel we manage. Our goal is to be a mid-sized company that has the size to deliver economies of scale but the scope for senior management to be able to personally focus on each property.”
Typical properties sought by the two companies include: 150 to 500 rooms, first-class, full-service hotels located throughout the U.S., according to Stephen Mendell, executive vice president-acquisitions and development, HEI Hospitality. The company expects to invest between $200 million and $300 million over the next 18 months. “While we are not limiting our scope, we are targeting $10 million as the low end for our property transactions. We have the capability to buy outright and the flexibility to structure deals and certainly are willing to take more risk for more upside potential,” Mendell said.
HEI Hospitality, headquartered in Norwalk, Connecticut is an ownership/investment and hotel management group that seeks to acquire and manage first-class and full-service hotels throughout the United States. For additional information, contact the company at 101 Merritt 7, Norwalk, Conn., 06851 Telephone is 203 849-5846 and e-mail address is steve.mendell@heiinvestments.com