NEW YORK, June 1, 1998 - LaSalle Hotel Properties (NYSE: LHO) today announced the acquisition of the 44-acre San Diego Princess Resort for a cash purchase price of $73 million from VVH Resorts, Ltd. The newly formed public real estate investment trust also announced they will officially rename the property the San Diego Paradise Point Resort and invest up to $8 million in capital improvements over the next two years to renovate and reposition the resort. LaSalle will lease the hotel to an affiliate of Noble House Hotels Resorts, who will also operate the property. Russell D. Urban, Executive Director of Insignia/ESG Hotel Partners, was the exclusive agent for the seller.
As part of its new strategic relationship with LaSalle Hotel Properties, Noble House will acquire $2 million of shares of common stock from the REIT. These shares will be used as collateral for Noble House's obligations under its lease and the company has agreed to maintain such shares as collateral for its 10-year lease term.
"We are pleased to announce our first hotel acquisition since our initial public offering on April 24," said Jon Bortz, President and Chief Executive Officer of LaSalle Hotel Properties. "San Diego is a high growth market with significant barriers to entry; and this asset perfectly fits our strategy of acquiring upscale and luxury properties in urban, resort and convention markets with sustained high growth."
According to Smith Travel Research, San Diego's hotel market ran 70.8 percent occupancy March year to date versus 69.8 percent for the same period in 1997. The average daily rate (ADR) was $98.26 in the first three months of 1998 versus $84.39 in the same period of 1997, representing a 16.4 percent rate increase. For the same period, room revenue per available room (REVPAR) increased 18 percent from $58.80 to $69.56. In 1997, the San Diego Paradise Point Resort had an ADR of approximately $136, with an occupancy of 77 percent, resulting in REVPAR of approximately $105. During the first three months of 1998, the resort experienced occupancy of approximately 70.9 percent at an ADR of $142, which resulted in REVPAR of $100.67.
The resort is located in the heart of Mission Bay on Vacation Island, a 4,600-acre aquatic park in southwest San Diego County. The 44-acre resort has nearly one mile of beachfront and 462 spacious guestrooms in 129 unique, single-story villas. The San Diego Paradise Point Resort is subject to a 50- year ground lease from the City of San Diego with 46 years currently remaining on the term.
The property is minutes away from the San Diego International Airport and convenient to many major San Diego tourist attractions including Sea World, Old Town, Downtown San Diego, the San Diego Convention Center, Qualcomm Stadium and the San Diego Zoo. Resort amenities include the Barefoot Bar and Grill, The Tropics Bar and Grill, the Village Cafe and the Dockside Restaurant and Bay Lounge. The San Diego Paradise Point Resort also features 24 meeting rooms totaling 30,000 square feet of flexible indoor, outdoor meeting and social space. The resort also offers a large ballroom, boat marina, six lighted tennis courts, indoor and outdoor fitness facilities, an 18-hole green grass putting course, bike rentals, six swimming pools, a volleyball court and a whirlpool.
"Working closely with Noble House, LaSalle plans to renovate and upgrade this irreplaceable asset incrementally over time," said Michael Barnello, Chief Operating Officer of LaSalle Hotel Properties. "As the San Diego market continues to thrive, our renovation plans will enable us to offer more and better services to our guests to make this prosperous resort even more successful."
"We are pleased to commence our strategic business relationship with Noble House Hotels Resorts, a nationally known and prestigious hotel operator," added Mr. Bortz. "LaSalle's relationship with Noble House underscores our commitment as a multi-tenant REIT to acquire hotels and establish strategic relationships with many premier hotel management companies. With the addition of Noble House, LaSalle Hotel Properties currently has such alliances with six major hotel operators."
Noble House Hotels Resorts, formed in 1976, presently manages in excess of 2,000 hotel rooms primarily located in Florida, Texas and on the West Coast. Noble House specializes in renovations, repositionings and managing high-end independent hotels including the Edgewater in Seattle; the Adolphus in Dallas; the Portofino in Redondo Beach, Calif.; The Inn at Loretto in Santa Fe, N.M.; La Playa Beach Resort in Naples, Fla.; The Sunburst in Scottsdale, Ariz.; and The Grove Isle Club Resort in Coconut Grove, Fla.
"It is a tremendous opportunity for our company to be involved with an asset as special as the San Diego Paradise Point Resort," said Patrick Colee, Chairman of Noble House. "We are extremely pleased with our new relationship with LaSalle Hotel Properties -- one that we expect will lead to further partnership opportunities."
LaSalle Hotel Properties is a leading multi-tenant, multi-operator real estate investment trust which, with the purchase of the San Diego Paradise Point Resort, owns 11 upscale and luxury full-service hotels, totaling 3,841 guest rooms in eight states. The company seeks to grow through strategic relationships with premier internationally recognized hotel operating companies including Le Meridien Hotels Resorts, Marriott International, Inc., Radisson Hotels International, Inc., Durbin Companies, Outrigger Lodging Services and Noble House Hotels Resorts.
LaSalle Hotel Properties is focused on acquiring upscale and luxury full- service hotels located primarily in major business and urban, resort and convention markets and the REIT serves as the exclusive vehicle for LaSalle Partners' hotel investment activities in the United States. Founded in 1968, LaSalle Partners Incorporated (NYSE: LAP) is a leading vertically integrated global real estate services firm providing management services, corporate and financial services, and investment management services for public and private institutions and other real estate owners and investors worldwide.
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