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By Paul Bubny, NEW YORK CITY-Carey Watermark Investors said Thursday it has raised enough to break escrow on its initial public offering, which seeks to raise up to $1 billion for acquisitions in the hospitality sector. A partnership of locally based W.P. Carey and Lake Forest, IL-based Watermark Capital Partners, headquartered here, CWI has now admitted initial investors as shareholders. A spokesman for CWI tells that the venture, which launched its IPO this past October and plans to qualify as a REIT, has not yet identified specific assets to acquire. Possible acquisitions may include full-service hotels, resort properties, high-end independent urban and boutique hotels, select-service hotels and mixed-use projects with non-lodging components, according to the IPO’s prospectus. CWI is offering up to 100 million common shares at $10 per share, and may issue another 25 million shares at $9.50 per share under its distribution reinvestment plan. It’s being advised by Carey Lodging Advisors LLC, a subsidiary of W. P. Carey, with Watermark subsidiary CWA LLC serving as subadvisor. Watermark chairman Michael Medzigian serves as CEO of CWI, while W.P. Carey CEO Trevor Bond is chairman. CWI plans to conduct its investment activities and own all of its assets through operating partnership CWI OP LP. Carey Watermark Holdings, owned indirectly by W. P. Carey and Watermark, will hold a special general partner interest in the operating partnership. The prospectus identifies the risk factors that may accompany lodging investments at this point in the cycle. Failure of the US economy to improve due to continuing adverse economic conditions, such as a declining GDP, “may adversely affect our ability to execute our investment strategy, generate revenues, attain profitability and make distributions to our stockholders,” the prospectus states. It notes a close correlation between GDP and RevPAR. Further, although CWI’s principals expect lodging fundamentals to improve in accordance with forecasts by industry analysts, such as PKF Hospitality Research and Smith Travel Research, “there can be no assurance as to whether, or when, lodging industry fundamentals will in fact improve, or to what extent they will improve.” Additionally, the prospectus cautions that “quarterly fluctuations” in operating results may occur as a result of the seasonality of certain lodging properties. Although CWI has not established a track record as yet, W.P. Carey and Watermark have partnered on two hotel acquisitions. In 2005, they repositioned and rebranded the 226-unit Holiday Inn Livonia West in Livonia, MI as a Radisson Hotel & Conference Center, and in 2007 they bought the 280-key Doubletree Hotel Memphis Downtown for $39.3 million, or $140,000 per room.

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