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IRVINE, CA-HEI Hospitality of Norwalk, CT has acquired the 293-room Embassy Suites hotel from a private investor for an undisclosed price. Sources say the hotel, which is at 2120 Main St., was expected to trade in the $60-million range.

Industry sources say the seller was believed to be West Bay Properties, a Japanese entity. HEI says it will begin a $7-million renovation of the hotel in the first quarter of 2007, with an expected completion date of June 2007.

The deal is the third acquisition by the company’s recently announced HEI Hospitality Fund II, a $425-million discretionary equity investment vehicle. Merritt Hospitality, a wholly owned HEI subsidiary, will operate the hotel.

The Embassy Suites has benefited from its location in the Orange County Airport market, according to John Strauss, an SVP for Jones Lang LaSalle Hotels in Los Angeles, which brokered the transaction. Strauss notes that the market consists primarily of commercial travel and related demand, generated by the John Wayne Airport, with healthy occupancy and double-digit RevPAR growth in 2005.

Steve Mendell, HEI Hospitality EVP of acquisitions and development, says that Irvine is a “very attractive” market for the company, based on its 18 million sf of class A office space, 30 million sf of R&D space and more than 4,500 companies. The Embassy Suites has a strong following in the community and “the extensive renovation should enable the hotel to recapture its dominant competitive position,” Mendell says.

Orange County has been a strong investment sales market for hotels recently. The latest report from Irvine-based Atlas Hospitality Group showing that the median price-per-room paid for hotels in the county rose by 8.8% in 2005.

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