DiamondRock Acquires the JW Marriott Denver for $72.6 Million (United States)
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DiamondRock Acquires the JW Marriott Denver for $72.6 Million (United States)
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Category: North America & West Indies / Carribean islands - United States - Industry economy -
Group or hotel buyout
This is a press release selected by our editorial committee and published online for free on 2011-05-20
DiamondRock Hospitality Company (the "Company") (NYSE: DRH) today announced that it has acquired the 196-room JW Marriott Denver Cherry Creek (the "Hotel") for a contractual purchase price of $72.6 million. The purchase price represents an 11.5 times multiple of 2012 forecasted EBITDA of $6.3 million and a 7.5% capitalization rate on forecasted 2012 net operating income.
"We are excited to acquire this high quality, newly renovated hotel in Denver. The Hotel, which opened new in 2004, is consistently the market leader among its competitive set and is well-positioned to continue capturing high-end demand.
Denver has long been one of our target markets, in part because of its superior RevPAR growth rates over the past 25 years and excellent growth prospects. With luxury finishes and a 2011 RevPAR of $165, this acquisition enhances the overall quality of the DiamondRock portfolio," stated Mark W. Brugger, Chief Executive Officer of DiamondRock Hospitality Company.
The Denver market has been one of the top five lodging markets measured by RevPAR growth since 1987 (the first year Smith Travel began keeping records), substantially outpacing markets such as San Francisco, San Diego, and Seattle. The Hotel is located in the heart of Cherry Creek, Denver's most upscale and affluent in-town neighborhood, adjacent to the 160,000 square foot headquarters of Janus Capital, and walking distance to the high-end Cherry Creek Mall. The Hotel benefits from Denver's 2.2 million square foot convention center, 25 million square feet of downtown office space, and is close to the University of Denver and other local demand generators. Earlier this year the Hotel completed a $5 million renovation of its 196 guestrooms, which all feature four-fixture marble bathrooms, as well as the Hotel's 8,400 square feet of meeting space and a new state-of-the-art Fitness Center. The Hotel is the only Denver property to be featured on Conde Nast Traveler's 2011 Gold List and is home to the acclaimed Second Home Kitchen + Bar, named "Denver's Best American Restaurant" by Westword in 2010.
The Company entered into both a new franchise agreement with Marriott International and a new management agreement with the current manager, Sage Hospitality. "We believe this deal represents a winning formula: a powerful brand combined with the operating prowess of Sage Hospitality. Sage Hospitality is a top tier independent manager with a proven track record of delivering market leading results at the Hotel.
They are well-respected within the industry and excel at maximizing profitability -- particularly of food and beverage operations," stated John L. Williams, President and Chief Operating Officer of DiamondRock Hospitality Company.
The Company funded the acquisition of the Hotel with existing corporate cash and the assumption of a $42 million mortgage secured by the Hotel. The loan bears an annual fixed interest rate equal to 6.47% and matures on July 1, 2015.
The Company expects to incur approximately $750,000 of acquisition costs that will be expensed as incurred.
About the Companies
DiamondRock Hospitality Company
DiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) that is an owner of premium hotel properties. Upon completion of the acquisition of the JW Marriott Denver Cherry Creek and the previously announced Radisson Lexington Hotel New York, the Company will own 25 premium hotels with approximately 11,700 rooms and holds the senior mortgage loan on another premium hotel. The Company's hotels are generally operated under globally recognized brands such as Hilton, Marriott, Westin and Renaissance.
Sage Hospitality
Founded in 1984, Sage Hospitality has strategically grown into one of the largest privately held hotel management and ownership companies in the nation operating a variety of large, full-service hotels as well as extended stay and select-service properties. Sage Hospitality's comprehensive portfolio includes major international brands such as Marriott, Sheraton, Renaissance, and Westin, and as well as independent boutique hotels. Sage Hospitality has further differentiated with the creation of the Sage Restaurant Group, which has created and is managing 10 unique restaurant concepts including the acclaimed Mercat a la Planxa in Chicago.
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