Innkeepers has managed the hotel at 421 Salisbury St. since 2003 and will continue to operate the property under a revised long-term contract. Innkeepers CEO and president Jeffrey H. Fisher calls the deal "a very attractive opportunity with compelling economics and the potential to generate positive long-term shareholder returns."

Area construction sources tell GlobeSt.com hotels comparable to the Sheraton Capital Center can't be built today for less than $200,000 per room. That makes the JV's $118,000-per-room acquisition considerably below replacement cost. Fisher says the JV plans to invest $5 million in upgrading the property. The $5 million is part of the acquisition price.

The JV funded the purchase with $8.5 million in cash and about $33.5 million in debt from CapitalSource Finance LLC of Chevy Chase, MD. Innkeepers funded its portion of the cash from borrowings on its unsecured line of credit. The debt issued by the joint venture is at a floating rate of interest based on Libor, plus 285 basis points. The loan matures in November 2009. The JV can extend the maturity date up to two years under certain conditions, according to Fisher.