HOUSTON Weeks after purchasing the debt on the 135-key Hotel Icon in Houston, a joint venture between Magic Johnson’s Canyon-Johnson Urban Funds and Centurion Partners has taken ownership of the property through foreclosure.
Canyon and Centurion acquired the senior and the junior loans on the 100-year-old building in November and immediately initiated a consensual foreclosure that concluded at an auction January 4. The joint venture plans to rebrand the hotel under a major international luxury hotel flag.
“We believe in the strength of the commercial and leisure travel market in Houston, and we have a great hospitality team in place to maximize the value of this extraordinarily unique hotel asset,” says Bobby Turner, managing partner of Canyon Capital Realty Advisors. “This deal is a prime example of our team’s ability to move quickly to acquire a struggling hotel asset with enormous potential.”
A repositioning plan for the hotel calls for property improvements including guestroom renovations, enhanced TV, upgraded technology systems and other cosmetic improvements. Previous owner Lowe Hospitality Investment Partners purchased the property in 2006 and completed an extensive renovation that included a complete upgrade of all guestrooms, common areas and landscaping.
The new round of property upgrades and the new hotel affiliation are expected to be finalized in the next six months. Until then, Destination Hotels & Resorts will continue to manage the hotel.
Originally built as the Union National Bank building and converted to a hotel in 2004, the 12-story Hotel Icon is located within walking distance of the retail, cultural and dining amenities in downtown Houston’s Market Square.
“Houston is exactly the type of dense, diverse, urban market where our fund invests,” Johnson says. “Houston is a great city, and we believe our repositioning plans will benefit the surrounding community both by reenergizing Hotel Icon and helping to support more than 100 jobs at this incredible property.”
The Hotel Icon transaction comes on the heels of an expansion of Canyon’s hotel lending and acquisition activities across the country. The firm is intensifying its investments in the hospitality space through equity infusions and debt financing, with a focus on complex transactions. Canyon’s portfolio includes Washington Hilton, Hotel 71 in Chicago and W Austin Hotel and Residences.
“We are coming across many excellent hotel assets and repositioning opportunities that are in need of recapitalization,” says Canyon Managing Director Richard Bosworth. “In the case of Hotel Icon, the underlying asset is perfectly capable of successfully performing in today’s economic climate with the right capital structure. We are thrilled to partner with Centurion, a firm that has extensive experience in redeveloping and repositioning luxury hotels, to maximize the potential of this incredible property.”
