Philadelphia’s New 202-Room Le Méridien Hotel Trades Hands
- Apr 30, 2010
April 30, 2010
By Barbra Murray, Contributing Editor
Just weeks before its opening, the brand new Le Méridien Hotel in Center City Philadelphia has found a new owner–but the transaction comes as no surprise. Norwalk, Conn.-based HEI Hotels & Resorts acquired the 202-room luxury property from Memphis-headquartered Development Services Group Inc. (DSG), which developed the adaptive reuse project under a 2007 agreement stipulating that HEI would acquire the hotel from DSG upon completion of construction.
The amount HEI paid for Le Méridien is not being publicized. “We agreed to sell at a fixed price in our agreement in 2007,” Gary Prosterman, DSG President and CEO, told CPE. “About 50 percent of our business is developing for REITs or other institutional owners like HEI who don’t want to take on development risks.”
As for construction costs, which according to Prosterman, did not rise too far above the original estimate, DSG secured a $46.8 million loan for the conversion from Silverton Bank subsidiary Specialty Finance Group approximately three years ago.
Carrying the address of 1421 Arch Street in Philadelphia’s central business district, Le Méridien occupies a 98-year-old building that had served as a YMCA facility before DSG, acting through its development entity Arch Street Hotel Partners, snapped up the property for the adaptive reuse endeavor. In addition to its upscale guestrooms, the new hotel will feature approximately 5,300 square feet of meeting space, a cocktail/wine bar, a restaurant and a state-of-the-art fitness center. Le Méridien also offers one of the most coveted amenities for business and leisure travelers–location. The hotel is just a block away from the Pennsylvania Convention Center, which is on schedule to emerge from its massive expansion in March 2011. Additionally, the entire City Center area is undergoing a renaissance.
Although the hospitality market is still suffering from a recession-induced downturn, the May debut of Le Méridien may very well be right on time. “There’s been a modest pickup in demand in the hotel market, depending on location,” Prosterman said. “Philadelphia’s downtown market has held up–relatively speaking, of course. Its RevPAR is down less than most markets in the country because it wasn’t a market that was overbuilt to begin with. The numbers have dropped but it’s nowhere close to what the national average drop is.”