BETHESDA, Md., Nov. 15,
2024 /PRNewswire/ -- DiamondRock Hospitality Company
(the "Company") (NYSE: DRH) today announced it has acquired the fee
simple interest in the 245-room AC Hotel Minneapolis Downtown (the
"Hotel") for $30 million, or
approximately $122,000 per key with
cash on hand. The Hotel, constructed in 2016, is located in
downtown Minneapolis, which has
one of the largest concentrations of Fortune 1000 companies in the
world and is also a major hub for biotechnology and medical
innovation.
"The AC Hotel Minneapolis Downtown represents an opportunity to
acquire a recently constructed urban hotel with good in-place cash
flow in a rapidly recovering hotel market with a strong roster of
companies increasing their return to the office," said Jeffrey Donnelly, Chief Executive Officer of
DiamondRock Hospitality Company. "The acquisition is aligned with
our strategic objectives as we evaluate our portfolio and look to
recycle capital efficiently into hotels at a significant discount
to replacement cost with minimal future capital requirements while
also providing the Company with immediate yield."
The acquisition represents a 8.2% capitalization rate on the
Hotel's forecasted 2024 net operating income and brings the total
number of properties in the Company's portfolio to 37 hotels. The
acquisition of the Hotel was not contemplated in the Company's
updated full-year 2024 guidance issued on November 7, 2024. Given the timing of the
acquisition, the Hotel will not contribute meaningfully to the
Company's full year 2024 Adjusted EBITDA or Adjusted FFO per share.
However, the Hotel is expected to be included in the Company's
comparable metrics and add approximately 20 basis points to the
Company's comparable full-year RevPAR growth and 10 basis points to
the comparable full-year Total RevPAR growth.
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 leisure
destinations and top gateway markets. The Company currently owns 37
premium quality hotels and resorts with over 10,000 rooms. The
Company has strategically positioned its portfolio to be operated
both under leading global brand families as well as independent
boutique hotels in the lifestyle segment. 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,"
"forecast," "plan" 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: the adverse
impact of any future pandemic, epidemic or outbreak of any highly
infectious disease on the U.S., regional and global economies,
travel, the hospitality industry, and the financial condition and
results of operations of the Company and its hotels; national and
local economic and business conditions, including the potential for
additional terrorist attacks, that will affect occupancy rates at
the Company's hotels and the demand for hotel products and
services; operating risks associated with the hotel business;
relationships with property managers; the ability to compete
effectively in areas such as access, location, quality of
accommodations and room rate structures; changes in travel
patterns, taxes and government regulations which influence or
determine wages, prices, construction procedures and costs; and
other risk factors contained in the Company's filings with the
Securities and Exchange Commission. Although the Company believes
the expectations reflected in such forward-looking statements are
based upon reasonable assumptions, it 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 the Company undertakes no obligation to update any
forward-looking statement to conform the statement to actual
results or changes in the Company's expectations.
|
Reconciliation of
Hotel Net Income to Hotel Net Operating Income
|
|
(Unaudited, in
millions)
|
|
|
Hotel net
income
|
$ 1.6
|
|
|
|
Adjustment:
|
|
|
Depreciation and
amortization
|
1.3
|
|
|
|
Hotel EBITDA
|
$ 2.9
|
|
|
|
Adjustment:
|
|
|
Capital
reserve
|
(0.4)
|
|
|
|
Hotel net operating
income
|
$ 2.5
|
Hotel EBITDA and net operating income are non-GAAP financial
measures as defined under Securities and Exchange Commission (SEC)
Rules. The Company's presentation of the hotel's forecasted EBITDA
and forecasted net operating income after capital reserves should
not be considered as an alternative to net income (computed in
accordance with GAAP) as an indicator of the hotel's financial
performance. The table above is a reconciliation of the hotel's
forecasted EBITDA and net operating income after capital reserves
calculations to hotel net income in accordance with GAAP. The
Company has presented forecasted hotel EBITDA and forecasted hotel
net operating income after capital reserves, because it believes
these measures provide investors and analysts with an understanding
of the hotel-level operating performance.
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SOURCE DiamondRock Hospitality Company