MeriStar financed the investment in the landmark 705-room hotelwith cash on hand. According to a company spokesman, MeriStar wasattracted to the property because of the location--at the corner ofLexington Avenue and 48th Street--and occupancy rates in the low90% range.

"We are pleased to have been able to reallocate capital from ournon-core asset sales into a strong hotel in a premier market," sayschief financial officer Donald D. Ollinger in a statement. "Wecompleted this transaction without having to access the capitalmarkets while maintaining adequate liquidity."

The 28-story hotel was built in 1929 and features 82 suites, 101deluxe rooms and 522 standard rooms. An $18-million renovation wascompleted in 2001 and included upgrades to all public spaces, guestrooms, bathrooms and mechanical systems. In March of this year, 90rooms were upgraded to business-class rooms, with new carpeting,granite-topped work desks and luxury-quality linens. In addition tothe guest rooms, four retailers--Raffles, J. Sung Dynasty, LatinQuarter and Starbucks--lease space at the hotel.