Embassy Suites is HEI's second hotel here. It also owns the 289-room Westin Philadelphia at 99 S. 17 St. at Liberty Place. Steve Mendell, executive vice president of acquisitions and development, tells GlobeSt.com, "We're always looking at properties in Philadelphia as well as the Northeast and nationwide. A lot of positive things are happening in Philadelphia." He declined to disclose the price of this acquisition, which was marketed by Washington, DC-based Molinaro Koger. A call to Rob Koger was not returned by deadline.
On condition of anonymity, a local broker who has been involved in hotel sales here tells GlobeSt.com, "my guess is that the property was probably priced at between about $125,000 to $135,000 a key." That would translate to between $36 million and $39 million.
The hotel's exterior and lobby were recently renovated, and Mendell says HEI will invest some $10 million, primarily in guest room renovations, within a year. The 28-story asset was built in 1964. It is within walking distance of the Philadelphia Museum of Art and other cultural institutions to the east and the Pennsylvania Convention Center to the west.
An expansion of the Convention Center has begun, which is expected to increase demand for hotel space. Jin Lee, HEI's senior vice president of acquisition and development, says the hotel has recently experienced gains in RevPAR and points out that its success combines with a net decrease in supply here due to condominium conversions. As GlobeSt.com previously reported, they include the Sheraton Rittenhouse, Rittenhouse Regency and eight floors of the Radisson Plaza-Warwick.
This is the fourth acquisition made under HEI's recently raised $425-million hospitality fund II. Mendell says it is the third Embassy Suites and eighth Hilton family brand in the company's portfolio. Merritt Hospitality, a wholly owned HEI subsidiary, will operate the asset.
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