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DALLAS-Apollo Value Enhancement Fund, besting four other domestic institutions, has grabbed the prominent 500-room Hilton Dallas Lincoln Centre from Ashford Hospitality Trust Inc. The $72-million sale has been bundled with a $30-million cap-ex plan for the 3.2-acre hotel component of the landmark 1.6-million-sf office complex.

Romy Bhojwani, senior vice president for Jones Lang LaSalle Hotels in Los Angeles, tells GlobeSt.com that the Hilton flag stays in place for the long term, with Apollo rising above the competition with its plan to “go beyond” the already planned improvements for the hotel at 5410 LBJ Freeway. The Dallas-based seller hired Bhojwani and managing director Evan Stone in Dallas at the end of January, with the deal advancing to a best and final among three would-be buyers and closing just yesterday.

Bhojwani says Hilton’s management contract and required product improvement program presented a deterrent for some bidders. The New York City-based Apollo scored the win by proposing to exceed the flag’s requirements. Pre-planning will begin soon, with work possibly beginning by year’s end or early 2009, according to Bhojwani. “They’re really planning to take this asset to the next level,” he says. The $30-million facelift includes an additional 10,000 sf of meeting space, bumping the total to 45,000 sf, give or take, in addition to renovating all rooms, lobbies and common areas and bringing in yet another signature restaurant.

Bhojwani says Ashford’s move to the Hilton flag from Doubletree was the right thing to do after it acquired it in the April 2007 buy-out of Orlando-based CNL Hotels & Resorts Inc. In December, the local REIT and Hilton reworked management pacts for 11 hotels, including the Dallas asset.

In making the close, Bhojwani says Apollo assumed the Hilton contract, stepping up for the finish-up. “With the renovation and cap-ex and added meeting space, they are hoping to increase occupancy and the average daily room rate because they can go after a higher rate of group business,” he says.

The Hilton Dallas Lincoln Centre’s historic occupancy is 65%, according to Bhojwani. The ADR is pushing $140 per night.

Jones Lang LaSalle’s real estate investment banking group arranged financing for the Apollo fund. According to Bhojwani, the debt was secured at a 65% loan-to-value, but additional details are unavailable.

Given today’s economic climate, Bhojwani says the deal really had no hurdles. “The challenge was the external transaction environment. In terms of property and market, Dallas has a great story,” he says. “We were able to articulate it well for the market and the asset.”

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