Host Hotels to Purchase the Grand Hyatt Washington, D.C., for $442M
- Jul 22, 2011
July 22, 2011
By Barbra Murray, Contributing Editor
Host Hotels & Resorts Inc. is on track to acquire the Grand Hyatt Washington, D.C., in what will be one of the largest hotel transactions in the metropolitan area so far this year. The hotel REIT revealed in its second quarter earnings statement that it has entered into an agreement to acquire the 888-room luxury property for $442 million.
“D.C. is a high-barrier to entry market and it’s Host’s backyard,” Tom Lewerenz, a vice president with hospitality industry-focused management consulting firm PFK Consulting, told Commercial Property Executive. “Host is a very competitive company so this will be a good move for them.”
The RTKL & Associates-designed hotel occupies a prominent corner site at 1000 H St. in the City’s East End submarket, just blocks east of the White House and west of the Verizon Center sports and entertainment arena. The 12-story building also features approximately 43,000 square feet of meeting space, 21,800 square feet of restaurant and bar space, an 8,600 square-foot fitness facility and 1,800 square feet of retail offerings.
Quadrangle Development Corp. built the Grand Hyatt in 1987 and recapitalized it with American Realty Advisors in 2008. According to D.C. property records, the asset has a current assessed value of roughly $227.8 million. Host’s purchase agreement is not quite set in stone; it has yet to be determined if the REIT will assume an existing $166 million mortgage loan as part of the acquisition price. The transaction is on track to close in September.
The hotel market in the nation’s capital can likely expect more big-ticket transactions this year. “Public REITs are still quite active and they’re going for high-density markets like Washington, D.C.,” Lewerenz said.
Investor interest is high, despite the fact that the metropolitan Washington, D.C., hotel sector has not yet fully recovered. “The central business district is still quite strong, but the market is softer in the suburbs,” he continued. “This year is basically flat, with minimal growth in RevPAR, but we think 2012 is going to be stronger. The economic indicators are there.”