BETHESDA, MD-Host Hotels & Resorts has inked an agreement to acquire the 888-room Grand Hyatt Washington for $442 million. This transaction, which the company announced in its earnings report for Q2 2011 Wednesday morning, includes the assumption of a $166 million mortgage loans.
The hotel is located opposite of the city's old Convention Center site, which is being redeveloped, Ed Walter, president and CEO noted during the earnings call. “We are pleased to acquire another hotel in DC, which is a historically top-performing market with a diversified demand base,” he said. A call to Host Hotels was not returned in time for publication.
The Grand Hyatt includes more than 43,000 square feet of meeting space. Host Hotels announced another acquisition as well: via its European joint venture it acquired the 396-room Pullman Paris Bercy for approximately euro 96 million ($136.4 million). When these deals close, Host Hotels will have invested nearly $1.7 billion in 12 properties in Paris, Washington, DC, New York City, San Diego, Melbourne, Australia and in four cities across New Zealand so far this year.
Hosts’ acquisition strategy is clearly having an impact: the REIT reported that its total revenues increased $128 million and $175 million, for the second quarter and year-to-date, respectively, in part due to the revenues generated by the 14 hotels it has acquired since July 2010.
Net income was $64 million for Q2 compared to net income of $20 million, for the same period last year. For year-to-date 2011, net income was $4 million, compared to a net loss of $64 million for year-to-date 2010.
Funds From Operations, a key metric for REITs, was $210 million in Q2, compared to $151 million, in Q2 2010. FFO was $287 million and $200 million for year-to-date 2011 and 2010, respectively.
For the DC market, the news of the acquisition holds a different meaning: it is trading at a price point that is very close to $500,000 per key, Humboldt Hospitality Advisors’ principal Marc Magazine tells GlobeSt.com. “The market did hit that level with the St. Regis trade earlier this year but that was a high end hotel very close to the White House--it was expected to trade along those lines,” he says, adding that this sale is a clear indication that the DC market for hotels is still frothy.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
