Canyon's $290m JV to buy DC hotel

Real Estate Weekly, June 6, 2007

WASHINGTON, D.C.: In one of the largest hotel acquisitions in Washington, D.C. history, the Canyon-Johnson Urban Fund (CJUF) and Lowe Enterprises Investors announced the purchase from Hilton Hotels Corporation of the iconic Hilton Washington hotel near Dupont Circle for $290 million.

The new ownership team will invest in excess of $100 million in a top-to-bottom renovation of the legendary hotel that has been the site of prestigious gatherings hosted by U.S. presidents, world leaders and other prominent figures since opening in 1965.

The CJUF/Lowe Enterprises joint venture have entered into a long-term management agreement with Hilton Hotels Corporation.

The Hilton Washington's major equity investor, the Canyon-Johnson Urban Fund, is a joint venture between Canyon Capital Realty Advisors and basketball-legend-turned-urban-entrepreneur Earvin "Magic" Johnson. Based in the Los Angeles area, Canyon-Johnson is one of the largest private real estate funds focused on the development and repositioning of urban properties in the U.S.

Los Angeles-based Lowe Enterprises is a leading national real estate investment, development and management firm with extensive experience in the hospitality industry.

"This investment goes to the very heart of what Canyon-Johnson is all about," said CJUF managing partner Bobby Turner. "The hotel is located in a densely-populated, urban neighborhood and employs hundreds of people. By deploying the expertise and capital necessary to redevelop this important asset, Canyon Johnson and Lowe Enterprises are setting the stage for strong economic and community returns in one of America's most recognized urban centers. We couldn't be more pleased to work with Lowe Enterprises, a company that has impressive expertise in the hospitality industry and detailed knowledge of the Washington, D.C. real estate market."

"Our team is breathing new life into this irreplaceable and historic property in the nation's capital," said Earvin "Magic" Johnson. "We look forward to working in partnership with Mayor Adrian Fenty and local leaders to ensure that the Hilton Washington continues to be a valuable economic development engine for decades to come."

Beyond its 1,119 rooms, the hotel has 110,000 s/f of meeting space, including the signature 36,000 s/f International Ballroom, the city's largest hotel ballroom.

Executives from Lowe Enterprises already have developed and will oversee the extensive renovation program set to begin in the third quarter of this year.

Lowe Enterprises' acquisition team was led by Harmar Thompson, senior vice president of Lowe Enterprises Real Estate Group and Mike Everett, senior vice president of Lowe Hospitality Group. Pillsbury Winthrop and Sidley Austin LLP provided legal services to Lowe and CJUF. The acquisition and renovation loan is being provided by Prudential Mortgage Capital Corporation. Eastdil Secured represented Hilton Hotels Corporation in the transaction.