Sunstone Hotel Investors Inc. said Tuesday it closed the buy of its highest-profile hotel yet, the Hilton Times Square, just a half block west of Times Square in New York.
The San Clemente-based hotel operator paid $243 million for the hotel. Sunstone also picked up a $15 million option to convert the hotel to a franchise.
The hotel will be run by Sunstone Hotel Properties, a unit of Interstate Hotels & Resorts Inc. Sunstone sold its management unit to Interstate in 2004 as part of its conversion to a real estate investment trust and public stock offering.
To help finance the Hilton Times Square acquisition, Sunstone took out an $81 million loan that pays 5.9% interest and is due in 2010.
The buy of the midtown Manhattan hotel marks Sunstone’s second-largest acquisition. Its largest was last year’s $293 million buy of the 728-room Century Plaza Hotel & Spa in Century City.
The Hilton Times Square has 444 rooms. It opened on 42nd Street in 2000, and is surrounded by Broadway theatres, fashion houses, nightclubs, shopping, restaurants and a number of corporate headquarters.
Sunstone owns 61 hotels with a total of 17,091 rooms under the Marriott, Hyatt, Hilton and Fairmont names.
