May 24, 2005 - A Virginia real estate investment trust said Monday it has an agreement to buy the Hilton Jacksonville Riverfront, the city's fourth-largest hotel, for $22 million

MHI Hospitality Corp., based in Williamsburg, Va., said it was buying the 292-room hotel on the Southbank from the AFL-CIO Building Investment Trust, which MHI's predecessor company went into partnership with when the AFL-CIO bought the property in 1996.

MHI Hospitality plans to spend $3 million on interior renovations after the deal is finalized in late June or early in the third quarter. The hotel will continue to operate as a Hilton, Chief Financial Officer Bill Zaiser said.

Predecessor company Maryland Hospitality Inc. agreed to operate the hotel for the AFL-CIO in 1996 when the AFL-CIO bought the property for $2 million and then spent nearly $10 million renovating it, Zaiser said.

MHI Hospitality, organized in August 2004, owns six other hotels, none in Florida. The closest is the Hilton Savannah DeSoto in Savannah, Ga.

"The Hilton Jacksonville represents an excellent opportunity for MHI to utilize the proceeds raised in the company's initial public offering and from the underwriter's exercise of the over allotment option earlier this year," MHI Hospitality Chief Executive Andrew Sims said in a news release. "This is a performing asset in an attractive market and has the potential to provide positive return to our shareholders."

The deal would mark the second sale of a major downtown Jacksonville hotel within two months.

In March, two companies bought the 966-room Adam's Mark, Jacksonville's largest hotel. The Northbank hotel was then re-flagged the Hyatt Regency Jacksonville Riverfront.

John Reyes, president of Jacksonville & the Beaches Convention and Visitors Bureau, said changes in ownership usually benefit hotels.

"It's always a positive situation whan a new company buys from an existing owner," he said. "Typically they'll put new dollars into freshening it up."

Zaiser said MHI Hospitality's affiliated MHI Hotels Services LLC will continue to manage the hotel after the ownership change. He declined to say if MHI Hospitality plans to buy any other Jacksonville hotels.

After the Hyatt Regency, the Omni Jacksonville is the next-largest hotel in Jacksonville with 354 rooms, followed by the Radisson Riverwalk Hotel, which has 322 rooms.

The Hilton Jacksonville hotel opened in the 1960's as The Sheraton Jacksonville.

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