PHILADELPHIA-Norwalk, CT-based HEI Hospitality has bought the 289-room Westin Philadelphia from Starwood Hotels and Resorts Worldwide for $89 million, or just over $307,958 per room. It plans to invest up to $10 million in renovations, which are scheduled for completion in third quarter 2006.
The 14-story property is located at 17th and Walnut streets within the Liberty Place complex that includes Liberty Place One and Two, the tallest office buildings now in Center City, plus a shopping mall and four-story underground parking garage. It is six blocks from the Pennsylvania Convention Center, a distance that will be halved when the Convention Center expansion is completed. The hotel opened in 1990 as a Ritz-Carlton and was reflagged as a Westin in 1999.
HEI’s renovation will encompass all existing rooms, public areas, the 14,500-sf meeting space and add another four guest suites. Plans also call for a repositioning of the restaurant “under a to-be-announced re-concepting plan,” according to an HEI statement. Following the renovation, “we expect the Westin to be firmly positioned as one of the most competitive luxury hotels in the city,” says Clark Hanrattie, SVP and chief investment officer.
Calling Philadelphia “a dynamic and thriving urban market with strong and diverse demand generators [and] high barriers to new competition,” Steve Mendell, EVP of acquisitions and development, says the Westin “aligns perfectly with our investment strategy. …The market has gained momentum, following the recession several years ago.” Merritt Hospitality, an HEI subsidiary, will operate the hotel.
This asset is the 11th made on behalf of HEI Hospitality Fund LLC, a $275-million equity fund formed by HEI principals in April 2004. The total investments sponsored by HEI since 2003 aggregate approximately $1.4 billion, according to the company. It now owns and/or operates 26 hotels, primarily under the Marriott, Sheraton, Westin and Hilton brands.
This sale marks the beginning of Starwood’s recently announced plan to sell between $2 billion and $4 billion in assets over the next 12 months in addition to the $500 million it has already sold this year. According to a statement, it expects to use the proceeds for share repurchase and general corporate purchases