Sofitel in D.C. Changes Hands in $95M Deal
- Mar 03, 2010
March 3, 2010
By Barbra Murray, Contributing Editor
Prime opportunities in the commercial real estate market go well beyond the distressed property pool, as evidenced by LaSalle Hotel Properties’ recent all-cash acquisition of the unencumbered Hotel Sofitel Washington, DC Lafayette Square. The Bethesda, Md.-based REIT snapped up the 237-room luxury hotel for $95 million.
Sofitel Washington opened its doors in 2002 in an updated historic structure originally built in 1880. Located at 806 15th St. N.W., the premier property boasts a coveted address two blocks from the White House in the city’s central business district. Hotel amenities include 5,500 square feet of meeting space and two restaurants.
LaSalle was somewhat aggressive in its pursuit of Sofitel Washington. Hotel brokerage and investment banking firm Hodges Ward Elliott Inc. had been marketing it on behalf of the seller–Chicago-based GEM Realty Capital Inc., according to D.C. Office of Tax and Revenue records–but promotion activity quickly came to a halt.
“We interrupted the overall marketing process,” Hans S. Weger, LaSalle CFO, told CPE. “We reached a deal that we both thought was fair.”
GEM Realty paid $61 million almost exactly four years ago for the hotel. Weger noted that LaSalle acquired the property at below replacement cost. “It was an excellent deal for us,” he said, “and it will create long-term shareholder value.”
Washington, D.C., although it certainly has taken its recession-induced lumps, is the top hotel market in the country. According to Marcus & Millichap Real Estate Investment Services’ fourth quarter performance index of the largest U.S. hospitality markets–excluding Las Vegas–Washington, D.C. topped the list with a score of 95.2, compared to an average U.S. score of 89.1.
“D.C. is one of eight markets we’ve stayed focused on,” Weger said. “It has a lot of upside. We’re very confident in the long-term prospects for the city.”
With the purchase of Sofitel Washington, LaSalle now has eight hotels in the District.