March 21, 2009 – A year after announcing plans to convert 12 floors of 330 North Wabash into a 335-room “super luxury” hotel, LaSalle Hotel Properties is still working on what it calls “pre-development” and has not yet started construction.

On March 18, 2008, a joint venture that included LaSalle purchased floors 2-13 from Prime Group Realty Trust, a Chicago-based real estate investment trust. The venture paid $46 million for 375,000 square feet of the 52-floor building – and plans to spend an additional $100-200 million renovating.

Last October, LaSalle announced it would slow down from a fast-track schedule “to a normal development schedule” its conversion of 330 North Wabash, with major construction commencing in 2010 and the yet-unnamed five-star hotel opening in 2011.

Michael D. Barnello, President and Chief Operating Officer of LaSalle, told Marina City Online last week that construction will start when it is “appropriate.”

Last April, during its First Quarter 2008 conference call, LaSalle CEO Jon Bortz told investors they were continuing with pre-development activities, “which involve completing the plans, model room, and we’re installing some heating and air conditioning into the vacant space so that it doesn’t freeze or heat the upper floors of the office building.”

LaSalle has reportedly spent at least $3 million on pre-development of the property. (Left) 330 North Wabash (at right in photo) is located directly across North State Street from Marina City. Completed in 1973, it was the last building in North America designed by Mies van der Rohe.

Anita Pallardy, Senior Vice President of Leasing at Prime Group Realty Trust. says the project “is proceeding, just not as rapidly as initially anticipated.”

LaSalle, which owns Hotel Sax and adjacent commercial property at Marina City, will have a 95 percent controlling interest in the new venture. Besides Hotel Sax, LaSalle owns the 751-room Westin Michigan Avenue and 29 other luxury hotels.

Investors more optimistic about LaSalle than hotel industry

On March 10, Forbes reported that RBC Capital Markets analyst Mike Salinsky had upgraded his rating on LaSalle Hotel Properties. “With one of the strongest balance sheets in the sector, limited portfolio…requirements, and added liquidity from the recent dividend reductions,“ said Salinsky, ”we believe [LaSalle] is particularly well positioned to weather the current downturn.”