DiamondRock Hospitality Company (the "Company") (NYSE: DRH) announced today that it has closed on the acquisition of The Westin Beach Resort & Spa, Fort Lauderdale ("Hotel") for $149.0 million (or $345,000 per guest room). The purchase price represents a 12.0 to 12.5 multiple on the Company's projected 2015 Hotel earnings before interest, taxes, depreciation and amortization ("EBITDA"). In conjunction with the acquisition, the Company has entered into a management agreement with HEI Hotels & Resorts to operate the Hotel.
"We are pleased to add The Westin Beach Resort & Spa, Fort Lauderdale to our portfolio. This acquisition represents the successful recycling of capital from slower growth assets into a high-quality hotel located in a high-growth, target market," said Mark W. Brugger, President and Chief Executive Officer of DiamondRock Hospitality Company.
The acquisition of the Hotel achieves several of the Company's strategic objectives including the further diversification of its brand and manager representation. The Company plans to implement its asset management best practices to drive further upside and additional synergies at the Hotel following acquisition. As previously stated, the Hotel is in excellent physical condition and the Company does not anticipate any major capital improvements in the near-term.
"We are excited to create a new partnership with DiamondRock Hospitality Company," said Ted Darnall, Chief Operating Officer and Principal of HEI Hotels & Resorts. "The Westin Beach Resort & Spa, Fort Lauderdale exhibits both margin expansion opportunities and strong long-term growth potential. We are eager to bring our proven industry and Westin brand expertise to the hotel."
The Company expects the Hotel to contribute approximately $0.5 million to the Company's full-year 2014 adjusted EBITDA.
The Company funded the acquisition with a combination of existing corporate cash and short-term borrowings from its corporate credit facility, which the Company intends to repay upon closing on the previously announced sale of the Los Angeles Airport Marriott in late December.
About the Company
DiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) that is an owner of a leading portfolio of geographically diversified hotels concentrated in top gateway markets and destination resort locations. As of September 30, 2014, the Company owned 27 premium quality hotels with over 11,000 rooms. The Company has strategically positioned its hotels to generally be operated under leading global brands such as Hilton, Marriott, and Westin. For further information on the Company and its portfolio, please visit DiamondRock Hospitality Company's website at www.drhc.com.
This press release contains forward-looking statements within the meaning of federal securities laws and regulations. These forward-looking statements are identified by their use of terms and phrases such as "believe," "expect," "intend," "project," "anticipate," "position," and other similar terms and phrases, including references to assumptions and forecasts of future results. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These risks include, but are not limited to those risks and uncertainties associated with our business described from time to time in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K filed on February 25, 2014. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that the expectations will be attained or that any deviation will not be material. All information in this release is as of the date of this release, and we undertake no obligation to update any forward-looking statement to conform the statement to actual results or changes in our expectations.
