LaSalle Hotel Properties (NYSE: LHO) today announced that Modern Magic
Hotel LLC, a joint venture between the Company and Oxford OG Hospitality
Chicago, LLC ("Oxford”),
has acquired from Prime Group Realty Trust ("Prime”)
floors 2 through 13 and a portion of the first floor (representing
approximately 375,000 square feet) of the existing 52-story IBM Building
located at 330 N. Wabash Avenue in downtown Chicago, IL for $46.0
million. The joint venture has developed plans to convert the existing
vacant floors to a super luxury hotel. LaSalle Hotel Properties holds a
95% controlling interest in Modern Magic Hotel, LLC with the remaining
5% interest owned by Oxford.
The existing building, designed by world-renowned architect Mies van der
Rohe, was recently designated a historic landmark. The hotel will be
created on the purchased floors, with exclusive elevators and a separate
entrance on the ground floor. The upper floors, owned by Prime, an
unrelated entity, will remain high-quality office space. The development
plan has not yet been finalized, but the hotel is expected to house up
to 335 rooms. The standard guestroom will be approximately 525 square
feet, one of the largest in the city, and will feature large 5-fixture
bathrooms. Guestrooms will have 9.5 foot ceilings with floor to ceiling
windows providing dramatic views of the Chicago River, Lake Michigan and
the Chicago skyline. Approximately 20% of the rooms will be suites,
ranging in size from 775 to 2,350 square feet. The hotel will offer
17,000 square feet of state-of-the-art facilities for meetings and
social affairs, including a 5,000 square foot ballroom with spectacular
river views. A 9,000 square foot distinguished chef-driven restaurant
will also be featured, as well as a lobby bar, wine room, fitness
center, indoor pool and destination spa. The hotel is being designed by
The Gettys Group, Inc. ("Gettys”),
a global hospitality design and development firm based in Chicago. The
joint venture is striving to achieve a Silver LEED certification for the
hotel, through both "green”
design and operations. The joint venture is currently in discussions
with both independent and branded operators, and a selection will be
made later this year. It is expected that the completed hotel will open
in 2010.
"We are extremely excited about working with
Oxford and Gettys on this compelling opportunity to create a 5-star
hotel, in one of our targeted urban markets at a very significant
discount to what it would cost to acquire or construct this highest
quality of hotel,” said Jon Bortz, Chairman
and Chief Executive Officer of LaSalle Hotel Properties. "By
converting existing clean, vacant space, we are able to eliminate a
significant portion of the development risk and can complete the project
in less than half the time of new ground-up development. As the
completed hotel ramps up to its full income potential, it will help fill
our pipeline of growth for 2010 through 2013.”
The new hotel will enjoy an outstanding location directly on the north
bank of the Chicago River, in the Michigan Avenue Corridor, one block
west of Michigan Avenue proper and at the new epicenter for luxury
hotels along the banks of the Chicago River. The hotel will join LaSalle
Hotel Properties’ luxury Hotel Sax Chicago,
which is adjacent to the west on the river; the Westin River North, one
block further west; the new Trump International Hotel directly adjacent
to the east along the river; the Renaissance Chicago Hotel, directly
across the river; and the proposed Shangri-la Hotel, also along the
south side of the river. The hotel will benefit from its direct
waterfront location along the rapidly expanding and increasingly visible
Chicago River Walk, which ties directly into Chicago’s
famous Magnificent Mile on Michigan Avenue.
The building’s world-famous minimalist modern
architecture represents the last, largest and arguably one of the
greatest designs by famed architect Mies van der Rohe, the father of the
Modernist movement. It is one of the most iconic, distinctive and
architecturally significant buildings in Chicago and is an ideal
structure within which to develop a sleek and progressive super luxury
hotel. As a mixed-use development, the office space above will be one of
the most desired office locations in downtown Chicago.
"This building provides a great location and
terrific structure to create a unique 5-star experience for our guests,”
said Mr. Bortz. "With the lower cost basis in
the hotel and with landmark status creating significant property tax
savings, we believe this opportunity furthers our mission to create
long-term shareholder value. This redevelopment makes a fantastic
addition to our current investments in Chicago, which include the Westin
Michigan Avenue Hotel and the repositioned Hotel Sax Chicago in the
Marina City complex next door.” "We’re excited to
be developing a super luxury hotel in this iconic building, which along
with the Seagram Building on Park Avenue in New York, is one of Mies Van
der Rohe’s most important buildings and thus
among the most prominent mid-century modern buildings in the world. We
are also excited to be part of developing one of only two luxury hotels
directly on the waterfront in Chicago’s new
Gold Coast given the myriad positive developments in and around the
immediate area,” said managing principal John
W. Rutledge, Oxford Capital Group, LLC President and CEO.
LaSalle Hotel Properties is a leading multi-operator real estate
investment trust owning 31 upscale and luxury full-service hotels,
totaling approximately 8,500 guest rooms in 14 markets in 11 states and
the District of Columbia. The Company focuses on owning, redeveloping
and repositioning upscale and luxury full-service hotels located in
urban, resort and convention markets. LaSalle Hotel Properties seeks to
grow through strategic relationships with premier lodging companies,
including Westin Hotels and Resorts, Sheraton Hotels & Resorts
Worldwide, Inc., Hilton Hotels Corporation, Crestline Hotels and
Resorts, Inc., Outrigger Lodging Services, Noble House Hotels & Resorts,
Hyatt Hotels Corporation, Benchmark Hospitality, White Lodging Services
Corporation, Gemstone Hotels & Resorts, LLC, Thompson Hotels, Sandcastle
Resorts & Hotels, Davidson Hotel Company, Denihan Hospitality Group and
the Kimpton Hotel & Restaurant Group, LLC.
Oxford’s managing and majority member is John
W. Rutledge, the founder, President and CEO of Oxford Capital Group,
LLC, and other senior principal is Roger G. Hill, founder and CEO of The
Gettys Group, Inc.
Oxford Capital Group, LLC ("Oxford Capital”)
is a Chicago-based real estate, private equity, asset management, and
investment holding company. Oxford Capital and its principals’
investment activities focus on operationally intensive forms of real
estate with the majority of the firm’s
activities devoted to the lodging, hospitality, leisure sectors and
senior housing. The firm also has invested selectively in the other
major real estate asset classes. In its corporate private equity
transactions, Oxford focuses on quick service restaurants, consumer
retail, select healthcare transactions and financial services, including
banking. The company and its affiliates have sponsored, co-sponsored
and/or participated in the acquisition, investment and asset management
of approximately $3 billion in transactions primarily in the lodging
sector. In addition to its corporate headquarters, Oxford Capital, has
direct or property-level offices in Charleston, South Carolina, Chicago,
New York City, Washington, D.C. (Northern Virginia), and Palm Beach, and
affiliated offices in San Francisco, Los Angeles and Tokyo. For more
information about Oxford Capital, call (312) 755-9500 or visit www.oxford-capital.com.
Gettys is a global hospitality design and development firm with offices
in Chicago, Hong Kong, Irvine, Miami and New York. For 20 years, Gettys
has passionately pursued the art of design, creating destination hotels,
resorts, spas, and mixed-use developments around the world with the
industry’s most discerning clients. The
company’s progressive approach to design
focuses on innovation, inspired creativity, and a collaborative process
that engages and delights their clients and creates memorable
experiences for their guests. They have built a studio of visionary
experts – from interior designers, to
architects, procurement professionals and hoteliers –
that understand and embrace the nuances and hallmarks of world-class
hospitality design. Gettys is leading the industry on the most
forward-thinking issues, including an intense focus on sustainable and
green design practices, and conceptualizing the future of our industry
through the Hotel of Tomorrow™ Project
consortium. For more information about Gettys, call (312) 836-1111 or
visit www.gettys.com.
This press release, together with other statements and information
publicly disseminated by the Company, contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. The Company intends such forward-looking statements to
be covered by the safe harbor provisions for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995 and
includes this statement for purposes of complying with these safe harbor
provisions. Forward-looking statements, which are based on certain
assumptions and describe the Company's future plans, strategies and
expectations, are generally identifiable by use of the words "believe,"
"expect," "intend," "anticipate," "estimate," "project" or similar
expressions. Forward-looking statements in this press release include,
among others, statements about development plans, hotel quality level,
discount to replacement and acquisition cost, number of guestrooms and
guestroom size, location and creation of shareholder value. You should
not rely on forward-looking statements since they involve known and
unknown risks, uncertainties and other factors that are, in some cases,
beyond the Company's control and which could materially affect actual
results, performances or achievements. Factors that may cause actual
results to differ materially from current expectations include, but are
not limited to, (i) the Company’s dependence
on third-party managers of its hotels, including its inability to
implement strategic business decisions directly, (ii) risks associated
with the hotel industry, including competition, increases in wages,
energy costs and other operating costs, actual or threatened terrorist
attacks, downturns in general and local economic conditions and
cancellation of or delays in the completion of anticipated demand
generators, (iii) the availability and terms of financing and capital
and the general volatility of securities markets, (iv) risks associated
with the real estate industry, including environmental contamination and
costs of complying with the Americans with Disabilities Act and similar
laws, (v) interest rate increases, (vi) the possible failure of the
Company to qualify as a REIT and the risk of changes in laws affecting
REITs, (vii) the possibility of uninsured losses, (viii) risks
associated with redevelopment and repositioning projects, including
delays and cost overruns, (ix) risks associated with development
activity, including project cost overruns and delays, and (x) the risk
factors discussed in the Company’s Annual
Report on Form 10-K as updated in its Quarterly Reports. Accordingly,
there is no assurance that the Company's expectations will be realized. Except as otherwise required by the federal securities laws, the
Company disclaims any obligation or undertaking to publicly release any
updates or revisions to any forward-looking statement contained herein
(or elsewhere) to reflect any change in the Company’s
expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based. For additional information or to receive press releases via e-mail,
please visit our website at www.lasallehotels.com.
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