GlobeSt.com UPDATE: Hilton Jacksonville Riverfront Sale Closes

The deal was previously reported by GlobeSt.com on May 25. MHI Hotels Services LLC, which has managed the hotel since 1996, will continue in the same capacity.

BIT Holdings, Seventeen Inc., an affiliate of the Washington, DC-based AFL-CIO Building Investment Trust sold the estimated 75% occupied, 3.8-acre property for $75,342 per room. The per-room price is below the estimated replacement cost of about $100,000 per room, area construction sources tell GlobeSt.com.

The acquisition was partly funded by an $18-million, five-year, interest-only mortgage loan provided by Merchantile Safe Deposit and Trust Co. of Baltimore as trustee for the AFL-CIO Trust, Andrew Sims, president and CEO of MHI Hospitality Corp., says in a prepared statement. The loan's interest rate wasn't disclosed. However, area mortgage banking sources tell GlobeSt.com the loan was probably in the 5% to 6% interest range.

An affiliate of MHI Hotels Services LLC contributed certain personal property to the deal and assigned its leasehold interest and other rights to the buyer in exchange for operating units valued at about $913,000, Sims says. The remaining portion of the purchase price was paid in cash, using proceeds from the company's initial public offering.

MHI Hospitality Corp., a self-advised lodging REIT, plans to start a $3-million renovation of the property this fall and have the work completed by third quarter 2006, Sims says. "Given our in-depth knowledge of this asset, we believe the Hilton Jacksonville will be highly accretive to earnings and are pleased with this solid addition to our portfolio," the MHI chief says. The REIT has seven properties totaling 1,675 in its portfolio.

The hotel, along the south bank of the St. Johns River, is within walking distance to Jacksonville Landing, a nationally recognized riverfront marketplace, and a short distance from the Jacksonville Airport, Alltel Stadium and the historic San Marco neighborhood of shops and restaurants.