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LaSalle Hotel Pushes Back $175M IBM Conversion

CHICAGO-The company has delayed its hotel conversion for floors at 330 N. Wabash, the former IBM Plaza, pushing a construction start date back to 2010.

By Cari Brokamp | Updated on October 30, 2008

CHICAGO-LaSalle Hotel Properties has pushed back its hotel conversion of the a few floors of the former IBM office plaza, at 330 N. Wabash, by nearly two years. The company originally set a “fast-track schedule” for the $175 million project, wherein construction would have begun by the second or third quarter of this year, with a planned hotel opening in 2010. However, under the modified schedule, construction will only just be beginning in 2010, and the hotel is expected to open in 2011, says Hans Weger, CFO of LaSalle Hotel Properties.

“Given the current economic environment and liquidity of banks, this is one of the steps we’re taking to provide cash,” Weger tells GlobeSt.com of the change in plans. “Putting out $100 million next year didn’t look like the best option.”

The conversion is the product of a joint venture between LaSalle Hotel Properties, based in Bethesda, MD, and Oxford OG Hospitality Chicago, based here. The companies acquired 12 floors in March for $46 million. Floors two through 13 of the building represent a total of 375,000 sf and were purchased from Prime Group Realty Trust, based here, which will continue to own the rest of the 52-story building. The joint venture is going by the name of Modern Magic Hotel LLC, in which LaSalle Hotel Properties has a 95% controlling interest, with the remaining 5% owned by Oxford.

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