Nothing ventured, nothing gained.

Richard Mandel, founder and president of Ramsfield Hospitality Finance, admits that starting any new business venture is risky, especially in today's uncertain times.

"But if it's successful, it's a great way to generate strong earnings and better control my time commitments," says Mandel, who left his post as president of Kennedy-Wilson's commercial investment sales group to form RHF, a small investment firm providing mezzanine financing for hotel owners and investors.

Mandel's Manhattan-based team was set up last May in response to a distressed hospitality real estate sector.

In developing RHF, the 40-year-old entrepreneur decided to focus on hotel real estate investments in the current marketplace that would provide attractive returns for his capital backers. Mandel believes that in providing investors with strong risk adjusted returns, he'll be able to build RHF into a major player in the hospitality finance industry in just a few years.

"Our business model is well-suited for hotel owners and investors," he explains. "While it's a challenge to build an immediate strong presence, we feel we'll be able to close more than our fair share of deals. Being an experienced small team, we're able to bring great flexibility to our loans in order to meet hotel borrowers' needs. We can tailor our loans in a myriad of ways."

Over the next year-and-a-half, RHF plans to invest about $150 million of capital and provide subordinate loans ranging from $3 million to $12 million on properties based in the top 25 U.S. hotel markets. While each property will vary in size between $15 million and $60 million, Mandel believes that on portfolios of hotels, they could easily exceed the $70-million mark.

"Our capital will be competitive and our execution streamlined so we can quickly respond to borrowers' needs," he says. "In the future we will diversify our capital sources and partners, allowing us to participate in a wide spectrum of investment opportunities within the hospitality industry."

While RHF plans to focus on these opportunities for the next few years, Mandel admits business trends are changing faster than ever. In other words, "we don't want to build an infrastructure within RHF that locks us into a non-competitive business in the future."

With that in mind, Mandel feels the timing was right to launch RHF this past spring. "The truth is that hotel property values are bottoming, and the weak economy, terrorism and structural changes within the industry have significantly impacted most hotels' underlying cash flows. Considering these factors, I think it's a great time for RHF to make new loans at secure loan-to-value levels."

To get the word out about RHF, Mandel and his associates launched a direct mail campaign aimed at about 1,000 industry professionals, including hotel owners, bankers and lenders, property and mortgage brokers, and hotel consultants. The campaign has since been followed up with phone calls to arrange face-to-face meetings. So far, Mandel says RHF has a number of deals in the pipeline.

Before launching RHF, Mandel founded and directed Kennedy-Wilson Japan in 1995. The full-service investor and advisory firm grew from one employee (Mandel himself) and $10,000 in raised capital to 130 people and a net worth of $150 million through a successful IPO in 2002.

"At Kennedy-Wilson Japan, our initial opportunity was assisting Japanese companies sell off their U.S. real estate assets and loans. This helped us build strong relationships with Japanese banks and other financial institutions. These strong relationships were instrumental when we started buying distressed real estate and non-performing loans in Japan."

Prior to joining Kennedy-Wilson, Mandel served as director with Jones Lang Wootton USA, where he became involved in several aspects of real estate banking, including disposition, analysis, marketing, negotiations and closings. He was also a "link partner" to JLW Asia, responsible for all cross border U.S./Asian.

"JLW gave me the necessary background to analyze real estate values and property locations. The company gave me great exposure to many wealthy Asian investors, which in turn gave me excellent contacts for raising capital and successfully completing transactions."

On that note, Mandel cautiones investors to "make sure you raise enough capital up front. You don't have to hit a home run on the first pitch. Find a niche and don't be swamped with or surrounded by too many competitors. At this point, I'm not trying to create a billion-dollar empire, but rather a modestly profitable business that will gradually grow over the next five to 10 years."

Mandel first became interested in the business as a teenager when he worked for his uncle, a real estate lawyer. Although his professional experience is skewed towards office building investments, he has always been involved in hotel investments and brokerage.

"I love to travel and compare hotel properties in different cities and countries," he says. "Obviously, that passion has spilled over into my professional life. It's partly why I felt the time was right to build a new company which invests in hotels."