Host Hotels & Resorts is tucking the Grand Hyatt Washington, at 1000 H St. NW, into its portfolio for $400 million, a year after first announcing plans to buy the 888-room property.
The Bethesda-based real estate investment trust acquired the 888-room hotel from 1000 H Street LLC and 1000 H Street Trust, according to Jones Lang LaSalle Hotels, who brokered the deal for the seller. The purchase price translates to about $450,450 per room.
The sellers completed an extensive renovation of the lobby and common areas in 2008. Built in 1987, the hotel features a two-floor fitness club, indoor swimming pool, spa, about 43,000 square feet of meeting space and five restaurants.
“It’s a large, urban, high-quality, well-branded property in an excellent location,” said Arthur Adler, managing director and chief executive of the Americas division at Jones Lang LaSalle Hotels. “From a timing perspective, the markets — from an industry fundamentals standpoint — are improving. We’re in an election season, and years following an election are generally very good in Washington.”
Adler says the Grand Hyatt will also benefit from the traffic generated by neighboring CityCenter DC, a $950 million project with 185,000 square feet of retail, 458 apartments, 216 condominiums, 520,000 square feet of office space and 1,570 underground parking slots.
Host has had its eye on on the Grand Hyatt since last summer, when it entered into an agreement to acquire the property for $442 million. But the deal fell through in December, after several closing delays, costing the company a $15 million deposit.
Host did not disclose a reason for the termination of the contract. Around the same time, however, REIT stock prices were in the tank, making a deal of that size less palatable.
Performance of hotel REITs has improved and the number of acquisition opportunities continues to grow. Just last week, Bethesda neighbors DiamondRock Hospitality Co. and Pebblebrook Hotel Trust, closed separate portfolio deals.
DiamondRock shelled out $455 million to private equity firm Blackstone Real Estate Partners for four full-service hotels, including the 406-room Westin Washington, D.C. Meanwhile, Pebblebrook snagged a pair of hotels from a joint venture of Westbrook Partners and Clearview Hotel Capital for a total $63 million.
Industry watchers say these deals are only the beginning of a busy second half of the year. Near-term debt maturities and a desire to free up cash for other deals are pushing owners into the market.