The hotel, situated on 6.6 acres at 2401 E. Lamar Blvd., was inherited by the New York City-based Blackstone in the $2.6-billion takeover of MeriStar Hospitality Group in Bethesda, MD. The Interstate acquisition included Blackstone's agreement to accelerate its remaining $14.5-million termination fee. Interstate now manages 39 Blackstone-owned hotels.

"We knew the asset well, liked the pricing and liked the long-term prospects of that area in Arlington," Leslie Ng, chief investment officer for the Arlington, VA-based Interstate, tells GlobeSt.com. "It was pretty straight forward. It was a good deal for both Interstate and Blackstone." As for other Blackstone pickups, he says Interstate is "exploring opportunities, but we don't have anything definite at the moment."

The Hilton 2006 occupancy is in the upper 60% range. This year's average daily rate will hit $100 to $110, Ng says. And RevPAR growth for the past two years has been 10% to 12%.

"Although it will be difficult to continue that trend, we do expect solid RevPAR growth to continue," Interstate CEO Thomas Hewitt says, "especially considering the new local demand generators being developed, including the new Dallas Cowboys stadium and Arlington convention center and the growing number of corporate offices in the area."

The 25-year-old hotel sits at the heart of the city's entertainment district in a neighborhood with the Texas Rangers stadium, Six Flags Over Texas and Hurricane Harbor waterpark. MeriStar recently put $5 million into Hilton renovations, including the majority of guest rooms. Interstate will add another $2.3 million of upgrades. Ng says the upcoming work will include the restaurant, sports bar and pool as well as finishing guest room improvements. The construction will be done by mid-2007, he says.

Interstate secured a $24.7-million, non-recourse loan from Fairfield, CT-based UBS Real Estate Securities Inc. to close the $118,000-per-key transaction. The three-year financing floats at 135 basis points over Libor and includes an option for two one-year extensions.