The 15-story hotel will be managed by Merritt Hospitality, a wholly owned subsidiary of HEI.   

It is the sixth property acquired since HEI announced in June 2004 the formation of HEI Hospitality Fund, a $275 million private equity investment fund, which plans to acquire up to $800 million of hotels over the next 24 to 36 months.  The company is targeting both stabilized and turn-around hotels or portfolios of first class, full-service hotels and resorts with 200 to 500 rooms. 

�This is our third property in California, and we remain very interested in the West Coast," said Gary Mendell, HEI chairman and CEO.  �We continue to aggressively pursue hotel acquisitions, and expect to consummate $400 million to $500 million in hotel transactions in each of the next several years.� 

The hotel will undergo an approximate $5 million renovation that is expected to be completed by year end.  It will be completed in phases to minimize disturbance to guests.  The renovation will complete a total upgrade to the hotel that was initiated in 2004, placing the 12-year-old hotel in �like-new condition.�  Renovations will include completing the remaining 80 guests rooms not upgraded in the recent program, substantial improvements to the meeting space and pre-function areas, corridors and elevator lobbies, as well as significant upgrades to the pool area. 

Eyes Other West Coast Acquisitions
 
�We would like to acquire additional assets in the region, especially in Southern and Northern Calif.; Portland, Ore., and Seattle, Wash.,� said Stephen Mendell, executive vice president-acquisitions & development.  �We currently are evaluating a number of properties, including hotels in Los Angeles, Orange County and San Diego.  We also are looking at new development on a limited basis.  To provide greater geographic diversity to our currently owned portfolio and planned acquisitions in other regions of the U.S., we would like to add at least three to five additional major properties on the West Coast.� 

Mendell said that the adjacent 5.6-acre parcel of land had a significant bearing on the decision to acquire the hotel.  �We believe this is a very attractive site that is very well located for residential use, such as condominiums, as well as possibly some retail and office space components.  Housing is at a premium in this highly desirable location, and we believe that there is significant upside potential for this property.  We anticipate selling the 5.6-acre parcel in the near future.�  

Located at 701 W. Ocean Blvd., the hotel is adjacent to the World Trade Center in downtown Long Beach and is four blocks from the Long Beach Convention Center.  The hotel caters to a broad cross-section of guests who visit Long Beach, the state's fifth largest city.  Primary demand generators include meetings and conventions, as well as corporate clients from neighboring companies in the shipping, energy, aerospace and healthcare industries.  Long Beach tourism and residential expansion continues with nearly 4,000 residential units and almost one million square feet of retail space valued at more than $1 billion either recently completed, under construction or planned.  The Convention Center already has 24 citywide conventions booked for 2005, and the Long Beach airport continues to expand, anchored by the JetBlue Airlines hub. 

The hotel features the Daily Grill, a newly opened, leased restaurant; a 4,500 square-foot WTC health club; outdoor swimming pool; and two retail outlets.  The newly renovated guest rooms and suites include dual phone lines, high speed Internet access, and fresh, stylish furniture and furnishings. 

HEI Hospitality, headquartered in Norwalk, Conn., is an ownership/investment firm that owns and/or operates 25 first-class and full-service hotels throughout the United States, under such well-known brand names as Marriott, Sheraton, Westin and Hilton.  Merritt Hospitality is an independent hotel management company and a wholly-owned subsidiary of HEI Hospitality.