Interstate Hotels & Resorts (NYSE:IHR) announced that it has signed a definitive agreement to acquire the 297-room Hilton Houston Westchase hotel in Texas for $50.5 million, or $170,000 per key, from affiliates of The Blackstone Group.
Interstate intends to finance the acquisition with approximately $33 million of non-recourse mortgage debt and the remainder with a combination of cash on hand and borrowings on its senior credit facility. The transaction is expected to close in the first quarter, becoming the company's fifth wholly owned property.
Subsequent to closing, the company will invest approximately $2 million to $3 million in capital improvements, which will complete a comprehensive $11 million renovation program, already in progress.
"This hotel is in fine physical condition and will be even more competitive following completion of the renovation program," said Thomas F. Hewitt, chief executive officer. "The hotel is in a premium location in the center of West Houston's booming commercial corridor, has great visibility and access, and is proximate to such major corporations as Chevron, Texaco, Shell Oil, Dow Chemical and BMC Software."
Located at 9999 Westheimer Road off the Beltway between Interstate 10 and Westpark Tollway, the property is convenient to Houston's Minute Maid Park, Reliant Stadium, Westside Tennis Club, The Toyota Center, The Galleria and Sam Houston Racepark. The property is easily accessible from both major airports and all major Texas interstates in the Houston area.
Hotel amenities include 13,000 square feet of flexible meeting space suitable for groups of up to 800, a state-of-the-art fitness room and outdoor pool/spa, an executive level, and a full-service restaurant and lounge. Guest rooms feature Hilton's Suite Dreams(R) luxury bedding package, voice mail, two line telephones, and web-TV.
"The Hilton Westchase is a market leader in its competitive set, and as one of the only full-service hotels in the area, enjoys substantial penetration premiums in occupancy and average rate," said Leslie Ng, chief investment officer. "This will be our fifth wholly owned property and continues our long-term strategy to further diversify our earnings base. Our pipeline remains quite active, and we continue to aggressively seek JV- investment partnerships and other wholly owned properties."
As of December 31, Interstate Hotels & Resorts operated 223 hospitality properties with more than 50,000 rooms in 39 states, the District of Columbia, Canada, and Russia. BridgeStreet Worldwide, an Interstate Hotels & Resorts subsidiary, is one of the world's largest corporate housing providers. BridgeStreet and its network of Global Partners offer approximately 10,000 corporate apartments located in more than 100 MSAs throughout the United States and internationally.
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