LaSalle Hotel Properties said it closed on the acquisition of the Park Central hotel in Manhattan for $396.2 million, or about $425,000 per key.
LaSalle, a Bethesda, Md.-based real estate investment trust, said the closing price represents a $9.3 million reduction from the original price of $405.5 million. The company said the current price was calculated based on Park Central’s income after debt service since Sept. 2, 2011.
LaSalle financed the deal with available cash, borrowing from a senior unsecured line of credit and by issuing 296,300 operating partnership units.
LaSalle originally signed a June 2011 deal to buy the 934-room property, at 870 Seventh Avenue between 55th and 56th streets, for $405.5 million. The hotel had been on the market and listed with the New York-based brokerage of Atlanta-based Hodges Ward Elliot. Highgate Holdings, which previously managed the hotel, will continue in that role.
LaSalle plans to spend between $30 million and $35 million to renovate the hotel starting late this year, including an upgrade of guest rooms, bathrooms, corridors and the lobby by 2013. The company is looking to gradually increase rates and generate higher end business travelers who are not as sensitive to price as vacationers.
“Our expectation is the yield is going to improve because of market reasons,” said Michael Barnello, president of LaSalle.
He noted that revenue per available room, or revpar, is up 6.2 percent in New York through the first 11 months of 2011, coming off of a strong 2010.
The deal represents the latest in a series of acquisitions over the past two years, as the New York hotel market continues to recover from the crash.
Ben Thypin, director of market analysis at Real Capital Analytics, said he expects to see additional interest from investors.
“There’s only so many large hotels [like Park Central] near Central Park out there,” Thypin said. “Hotels like this are going to continue to see a lot of interest both from investors and travelers.”