Station Square hotel sold for $61M, rest of complex off the market
Forest City Enterprises Inc. on Friday announced the largest sale of one of its Pittsburgh-area properties since it began a restructuring more than a year ago.
The Cleveland real estate developer said it sold the Sheraton Station Square Hotel in the South Side to a group of investors for $61 million, and disclosed that it has taken the adjacent Station Square complex off the market.
The 399-room hotel was acquired by a joint venture led by Pyramid Hotel Group of Boston and including an affiliate of Glenmont Capital Management LLC of New York, which plans a $12 million to $16 million renovation.
Forest City said it will receive about $18.5 million in proceeds from the sale, with the remainder going to pay off a mortgage and other expenses. Forest City bought the hotel in 1998 from businessman John Connelly for $32.5 million, and later spent $20 million to expand the hotel to its current size.
The Sheraton hotel, a popular indoor meeting space, is adjacent to Station Square, Forest City's retail/entertainment complex along the Monongahela River.
The Station Square complex itself is no longer actively for sale, said spokesman Jeff Linton. “We did not see the level of interest appropriate so we discontinued active marketing,” he said. “We're happy to remain the owner, but if we receive an appropriate offer, we'd entertain that.”
Jeffrey Ackerman, managing director of CBRE Inc. in Pittsburgh was marketing Station Square and continues to assist Forest City, he said.
“I think they are where they originally were. They said if they didn't get a good offer for Station Square, they were prepared to engage in more development or just continue to operate it,” said Arthur Ziegler, president of the Pittsburgh History & Landmarks Foundation.
Forest City bought the 52-acre complex for $25.5 million in 1994 from Pittsburgh History & Landmarks, which in 1976 redeveloped the Pittsburgh & Lake Erie Railroad depot into a historic preservation area with office and retail space, restaurants such as the iconic Grand Concourse, parking and docks for the Gateway Clipper fleet. That sale included leases for the land on which the hotel and the seven-story Commerce Court office building are located.
In 2007, Forest City purchased Commerce Court for an undisclosed price from Mural GEM Investors of Chicago and Opal Investors LP, according to Allegheny County real estate records. GEM Investors paid $32.1 million for the building in 1997.
Among the tenants is the headquarters of Wesco International Inc., a Fortune 500 company.
Forest City has invested more than $70 million in development projects in the complex since 2000, including the expansion of the Sheraton hotel and the creation of Bessemer Court, which brought Hard Rock Cafe and other bars and restaurants as Station Square's draw shifted to nighttime entertainment.
The complex also includes the site of the $10 million soccer stadium built by the Pittsburgh Riverhounds last year.
In 2006, Forest City and its proposed casino operator, Las Vegas-based Harrah's Entertainment Inc., lost a bid to place a casino at Station Square when the state Gaming Control Board chose a bid by the former Majestic Star Casino owned by the late Don Barden. The casino operates as the Rivers Casino on the North Shore.
“We continue to execute our strategy of exiting non-core products and markets, and using liquidity from dispositions to further improve our balance sheet, invest in our mature portfolio and development opportunities,” said Forest City CEO David J. LaRue.
Pyramid Hotels, a privately held company with 54 hotels and resorts under management, plans $12 million to $16 million in renovations to the hotel next year to improve service for leisure, corporate, and group travelers, said Jim Dina, the company's chief operating officer. Pyramid will operate the hotel under a long-term Sheraton franchise agreement with Starwood Hotels.
Forest City disclosed the strategic plan to sell assets to improve its financial results in February 2012. In April, Forest City said it acquired full control of the 12-year-old Mall at Robinson.
Forest City still is trying to sell Liberty Center, Downtown, which includes the Westin Convention Center Hotel and adjacent offices, said Linton.
John D. Oravecz is a staff writer for Trib Total Media. He can be reached at 412-320-7882 or email@example.com.