AUSTIN, ATLANTA AND LEXINGTON, KY. — DiamondRock Hospitality Co., a Bethesda, Md.-based hotel REIT, has closed on the sale of a three-hotel portfolio to affiliates of Inland American, an Oak Brook, Ill.-based non-traded REIT, for $262.5 million. The two entities entered into a purchase agreement in October 2011.
The hotels in the portfolio include the 492-room Renaissance Austin in Austin, the 409-room Griffin Gate Marriott Resort & Spa in Lexington, and the 521-room Renaissance Waverly in Atlanta. All three hotels are subject to long-term management agreements with Marriott International Inc.
“We are pleased to announce the completion of the sale of the three hotels to Inland American,” said Mark Brugger, CEO of DiamondRock Hospitality Co. “We believe the disposition achieves primary benefits for DiamondRock.”
The sale will reduce the company’s debt by $180 million and increase corporate cash by approximately $93 million, and position DiamondRock to be an opportunistic acquirer of hotels this year. The sale also improves DiamondRock’s portfolio and market concentration, according to Brugger.
As part of the sale, DiamondRock received approximately $10 million for hotel working capital and cash previously held in restricted escrow accounts, net of closing costs. Eastdil Secured advised DiamondRock on the sale.
In addition to the three-hotel portfolio, Inland American recently purchased the 685-room Marriott in San Francisco from Host Hotels for $108 million and the 195-room Hilton in downtown St. Louis from APHM St. Louis for $22.6 million. Inland American manages assets in excess of $25.3 billion.
DiamondRock (NYSE: DRH) owns 23 hotels with approximately 10,500 rooms, which are generally operated under brands such as Hilton, Marriott and Westin. The REIT’s stock price on Tuesday closed at $10.22 per share, down from $10.81 per share a year ago.
— John Nelson