NEW YORK CITY-Sunstone Hotel Investors has completed its acquisition of the Hilton Times Square at 234 West 42nd St. for approximately $242.5 million from Forest City Ratner Cos. The San Clemente, CA-based REIT also assumed an $81-million note due in 2010 with a rate of 5.9% per year and executed its option and made an additional $15-million payment to convert the 444-room property to a franchise.

Sunstone previously said financing would also come from additional debt proceeds generated from the pending refinancing of two assets and through an equity offering. The site was developed by Forest City Ratner in 2000 as part of a mixed-use complex. The hotel occupies the 21st through 44th floors of the project.

Sunstone Hotel Properties, a division of Interstate Hotels & Resorts, will manage the property. It had previously been managed by Hilton Hotels. “The Hilton Times Square is a high-performing asset located in a market with growing business and leisure demand drivers,” adds Robert A. Alter, Sunstone’s CEO.

Sunstone owns 61 hotels with an aggregate of 17,091 rooms. They are primarily operated under franchises from brands such as Marriott, Hyatt, Hilton and Fairmont.