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LaSalle, Oxford Buy 12 Office Floors for $46M

CHICAGO-The joint venture plans to convert the floors of the former One IBM Plaza to a $160-million hotel.

By Gina Kenny | Updated on March 19, 2008

CHICAGO-A joint venture between LaSalle Hotel Properties, based in Bethesda, MD, and Oxford OG Hospitality Chicago, based here, is acquiring 12 floors of the former One IBM Plaza, 330 N. Wabash Ave. The sales price is $46 million.

The joint venture, called Modern Magic Hotel LLC, is acquiring the floors from Prime Group Realty Trust, based here, which will continue to own the rest of the 52-story building. The venture has acquired the second floor through the 13th floor of the building, which has a total of approximately 375,000 sf, and plans to convert the floors into a luxury hotel. The total estimated cost for the hotel project is about $160 million, says Hans Weger, CFO of LaSalle Hotel Properties. The company has a 95% controlling interest in the joint venture with the remaining 5% owned by Oxford.

“It is a great piece of real estate in Chicago,” Weger says. “We think the heart of the city is moving there.” Buying floors of an existing building allows the joint venture to develop the hotel for less money, in less time and with less risk, he says. “We do not have any risk of going down into the ground [and] we do not have any risk in terms of construction costs for the building.”

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