RLJ Lodging Acquires Humble Oil Building for $79M

HOUSTON-RLJ Lodging Trust of Bethesda, MD has acquired the Humble Oil Building complex in the CBD for $79.5 million in an off-market transaction. According to the Harris Central Appraisal District, the previous owner of record was Housing Horizons LLC of Irving, TX.

The complex at 1212 Main St. was built during the late 1920s. These days, the three-tower complex consists of an 82-unit apartment tower that will be converted to a 166-room SpringHill Suites and two existing hotels. The hotels are the 191-room Courtyard Houston Downtown Convention Center and the 171-room Residence Inn Houston Downtown Convention Center.

According to a press release announcing the transaction, the purchase price represents a forward capitalization rate of approximately 10.1% for the Courtyard and 9.5% for the Residence Inn, based on each hotel's projected 2013 net operating income and applicable purchase price allocation. The company purchased this assets with its revolving credit facility. The seller was represented by Dakota Ridge Real Estate Advisors in Denver.

“Acquiring the Humble Oil Building complex represents a value-add opportunity," comments Thomas J. Baltimore, Jr., president and CEO of RLJ Lodging in the press release. "Both existing hotels have notable upside potential and our extensive experience managing complex renovations will enable us to deliver another conversion property that will help drive economies of scale.”

An estimated $70-million renovation of the premises was completed in 2003 that restored several historical features and converted the complex into its present use of two hotels and one apartment tower. RLJ Lodging convert the existing apartment tower into a high-quality, institutional-grade hotel with an anticipated completion date of mid-2015. The Courtyard and the Residence Inn underwent 6-year Marriott “Refresh” renovations in 2010 and 2011, respectively.