Ritz-Carlton, Pentagon City--located just 10 minutes outside theDistrict--was a prime acquisition for MeriStar; it carries thedistinction of being MeriStar's first Ritz Carlton property, and itfits perfectly into the company's strategy of filling its portfoliowith luxury hotels in major markets with significant barriers toentry. The 14-year-old property, which is physically connected tothe upscale Fashion Centre Mall, stands 18 stories tall andfeatures 18,000 sf of meeting space, as well as a fitness center,restaurant and lounge.

"The operating results from this exceptional asset are exceedingour initial expectations," MeriStar CFO Donald D. Olinger says.Upon announcing the agreement to purchase the hotel in April,company chairman and CEO Paul W. Whetsell noted that the projectedoperating income from Ritz-Carlton, Pentagon City for the year was$5.1 million. "The Washington, DC metropolitan market is one of thebest performing markets in the US, and we expect the market toremain one of the strongest over the coming years," Olinger adds."The mortgage financing we obtained allows us to continue toimprove our balance sheet by lowering our average borrowing costand also improves our equity yields."