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HOUSTON-The 135-room Hotel Icon has a new owner–Lowe Enterprise Investors. Local market experts believe the Downtown boutique property has brought $25 million to $27 million in an off-market transaction.

The 220 Main St. property was bought on behalf of Lowe Hospitality Investment Partners, a $266-million discretionary fund dedicated to hotel and resort acquisitions. Holliday Fenoglio Fowler LP’s Houston team brokered the deal, delivering Lowe’s first deed in Houston and third in Texas. The seller of record is 220 Venture Partners LP.

The buyer’s affiliate company, Destination Hotels & Resorts Inc., will manage Hotel Icon. “The existing management team created a one-of-a kind product in Houston. We think there are additional opportunities for us to build on that including our knowledge in dealing with this kind of asset,” says Bleecker Seanan, managing director of Lowe Enterprises Investors. He tells GlobeSt.com that value-add strategy will focus on management positioning and leveraging various market segments rather than capital expenditures.

Hotel Icon, formerly Union National Bank Building, was constructed in 1911. In the early 2000s, Weekley Properties, Randall Davis Co. and Benchmark Hospitality International, all from the Greater Houston area, joined forces to reposition the historic building. They invested $35 million into converting the empty building into the boutique hotel, which opened in 2004. Unfortunately, the hotel opened as demand for rooms softened and the office market was on a downslide, which several local sources say set up a scenario for a hard fiscal hit for the sellers.

“The hotel market had been soft for a long time because of the Enron crash and decline in office occupancies Downtown and across the city,” says Richard Rudd, executive vice president in Houston for CB Richard Ellis. Added to the mix were two other boutique hotels coming on line, which pushed more rooms into the market.

Rudd, who wasn’t directly involved with the Lowe’s deal, tells GlobeSt.com that the Hotel Icon acquisition points to a sign of better things to come because it marks the first time an institutional investor has acquired a hospitality property in the current cycle. “For the first time in a long time, the Houston market is attractive to hotel investors,” he says. “With the office market healthy at this point and the economy healthy, it’s good for hospitality properties.”

Seanan says Texas as a whole is an attractive market for the fund, which is continuing to search nationwide for properties. “We’re pursuing a value-add strategy, where a combination of market, management of capital and repositioning will allow us to earn mid-to-high teens of leveraged return,” he adds.

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