LaSalle Hotel Properties Buys Park Central Hotel
- Jan 04, 2012
January 4, 2012
By Barbra Murray, Contributing Editor
Six months after announcing plans to purchase the Park Central Hotel in Midtown Manhattan, LaSalle Hotel Properties has wrapped up the acquisition of the 934-room property in a transaction valued at $396.2 million.
Carrying the address of 870 Seventh Ave., just across the street from Carnegie Hall, the lodging destination made its debut in 1928 and today features 14,000 square feet of meeting and function space and 4,800 square feet of retail space. Park Central last changed hands in 2005, when a partnership involving affiliates of Highgate Holdings and Goldman, Sachs & Co.-managed real estate investment funds picked up the asset for $215 million from Lehman Brothers in a sale orchestrated by real estate services firm Sonnenblick-Goldman Co.
LaSalle bought the 31-story hotel with cash on hand, proceeds from the issuance of approximately $8 million of operating partnership units at $27 per share and borrowings under its new $750 million senior unsecured credit facility, which the company entered into to replace its $450 million credit facility in mid-December. The property originally sported an agreed-upon price tag of $405.5 million, but the acquisition cost ultimately dropped by $9.3 million, a sum reflecting the hotel’s income after debt service from Sept. 2 of last year through the closing.
With the asset firmly in place in its portfolio, LaSalle has big plans for Park Central. The full-service hotel has maintained its high-quality status through a series of makeovers over the decades, including $33 million of upgrades since 2004, and the lodging REIT plans to continue the longstanding pattern of periodic renovations with the investment of as much as $35 million. The makeover is on track to get underway late this year and will reach completion in 2013. LaSalle has contracted Highgate to stay on as manager of the property.
Park Central is one of three hotels LaSalle purchased in 2011. In March, the REIT acquired the 162-room Viceroy Santa Monica in the Los Angeles beach town for $80.1 million, and in October it snapped up the 182-room Villa Florence in San Francisco for $67.2 million.