- The Washington Times - Thursday, May 31, 2007

The Hilton Washington, the second-largest hotel in the District, is set to be bought by a private equity firm and investment firm for $290 million, the companies announced yesterday.

Lowe Enterprises Investors and the Canyon-Johnson Urban Fund, a joint venture of Canyon Capital Realty Advisors and former basketball player Earvin “Magic” Johnson, plan to buy the hotel, which is north of Dupont Circle on Connecticut Avenue.

The companies plan to spend $100 million on renovations to the hotel, which hasn’t been redone in more than a decade. Seller Hilton Hotels Corp. will still manage it.

Renovation plans at the 42-year-old hotel include a new, approximately 15,000-square-foot ballroom, to complement the 36,000-square-foot International Ballroom already at the hotel, said Bobby Turner, managing partner of the Canyon-Johnson Urban Fund. Guest rooms, meeting rooms and common areas will be remodeled. A spa and possibly an upscale restaurant will be added. Renovations are scheduled to start during the late summer or early fall.

The hotel has 1,119 rooms — second to the Marriott Wardman Park Hotel in size.

“It will not look like the Hilton Washington you know now,” Mr. Turner said. “This hotel has underperformed against its competitive set [in D.C.]. There hasn’t been the requisite capital in the hotel to maintain it.”

“The fact is, this is an unbelievable asset in the D.C. market,” said Brad Howe, managing director of Lowe Enterprises Investors. “With some investment, we’ll restore it to its rightful place as one of the top hotels in the market … it’s in dire need of some capital.”

The Hilton Washington hosts some of the city’s largest events, including the White House Correspondents Association dinner, the Congressional Club’s annual First Lady’s Luncheon and the Commandant of the Marine Corps’ birthday ball. It is also where John Hinckley Jr. attempted to assassinate President Reagan in 1981.

The Washington hotel market is in for some changes. The Gaylord National Resort & Convention Center is slated to open next year with 2,000 rooms in Oxon Hill. It would be larger than any D.C. hotel and is already threatening to lure away some large-group business that traditionally comes to the District, according to hotel industry officials.

But the new owners of the Hilton, which does about two-thirds of its business from groups, are confident in the market.

“We like the D.C. hotel market,” Mr. Turner said. “Convention business as a whole has not been growing significantly. The growth will be in defining groups and defining conventions.”

The hotel has the largest ballroom in the city and one of the largest exhibition spaces in a hotel, which can draw up to 10,000 people, he said. The meeting-space renovations are designed to break up the space, to make it accessible to both large and small groups, Mr. Turner said.

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