LaSalle Acquires Park Central For $405.5M

NEW YORK CITY-In its latest major acquisition, Bethesda, MD-based REIT LaSalle Hotel Properties signed a purchase and sale agreement for the 934-room Park Central Hotel in Midtown for $405.5 million, making it the third Manhattan property in the company’s portfolio. The deal, expected to close toward the end of third quarter of this year, is subject to a due diligence review as well as customary closing requirements and conditions, LaSalle’s CEO Michael Barnello tells GlobeSt.com.

While the timing is “longer than most,” Barnello says several issues still need to be worked out due to the large nature of the deal, but company is “excited” to be expanding their operations in Manhattan. “It’s a fantastic asset for us,” Barnello says. Other New York properties in LaSalle’s portfolio include Gild Hall on Gold Street in the Financial District, as well as the 193-room Roger Williams Hotel at 31^st and Madison Avenue in Murray Hill. “We were looking get more of a presence in New York City and we are very excited about what this has enabled us to do to grow our portfolio, both in terms of the location and the physical asset, but also to have a company as highly regarded as HighGate Hotels to be managing the hotel for us.”

The company anticipates funding the majority of the purchase price with net proceeds of approximately $216.6 million from the company’s previously completed seven-million sale of common share on April 26 and property level financing, says LaSalle’s CFO, Bruce Riggins.

Located steps from Central Park, across the street from Carnegie Hall, about 10 blocks north of Times Square and two blocks from Columbus Circle, the hotel--located on Seventh Avenue between West 55^th and West 56^th Streets--features more than 14,000 square feet of meeting space, including the 8,500 square foot Grand Ballroom. The property also includes 4,800 square feet of retail space. Barnello says the company intends to continue running the site as an independent hotel. “We could make it into any brand we want, but we have no plans to do so, and we are very happy running an independent hotel,” he says.

The property, originally constructed in 1928, has undergone several renovations over time. Once LaSalle officially closes in Q3, the company is planning a $30 million to $35 million renovation here, which will include improvements to the lobby, guest bathrooms, corridors and guestrooms.

Nationwide, the REIT owns 35 full-service hotels and estimates that room occupancy rates will rise not only in Manhattan, but across the country in 2011. “We had a tough couple of years in 2008 or 2009, but in the second quarter of 2010, things were starting to turn a corner for the industry,” Barnello says. “We were really strong throughout the remainder of 2010. In 2011, we have had a very good start to the year.”