DiamondRock Hospitality Co. completed the acquisition of a four-hotel portfolio from affiliates of Blackstone Real Estate Partners VI for approximately $495 million. The portfolio includes the Hilton Boston Downtown, the Westin Washington D.C. City Center, the Hilton Burlington and the Westin San Diego.
The acquisition was funded with a combination of borrowings under DiamondRock’s senior unsecured credit facility, cash on hand, net proceeds from the company’s recent public offering of common stock and the issuance of shares of the common stock to Blackstone in a private placement. Goldman, Sachs & Co. and BofA Merrill Lunch served asadvisors to DiamondRock in the transaction.
“This off-market acquisition enhances our portfolio quality and growth prospects while adding to our brand and geographic diversity,” said DiamondRock CEO Mark Brugger in a statement. “In addition to growth from the ongoing recovery in lodging fundamentals within these markets, we believe that there are a number of upside opportunities within the acquisition portfolio that can be achieved through smart capitaland aggressive management initiatives. Additionally, we welcome Blackstone as a significant shareholder and look forward to building on that relationship.”
Hilton Boston Downtown is a 362-room full-service hotel with more than 10,000 sq. ft. of meeting space located in Boston’s Financial District. The building was converted into a hotel in 1999. DiamondRock plans to invest about $6 million in capital improvements to the property over the next two years in order to capture higher business transient demand.
The Westin Washington D.C. is a 406-room full-service hotel with 12,000 sq. ft. of meeting space in downtown Washington. DiamondRock plans to invest $13 million in capital improvements to the property over the next two years to increase the average daily rate and market penetration of all customer segments.
The Hilton Burlington is a 258-room full-service hotel with 16,000 sq. ft. of meeting space in downtown Burlington, Va. DiamondRock plans to invest approximately $6 million over the next two years to renovate the property.
The Westin San Diego is a 436-room full-service hotel with 19,000 sq. ft. of meeting space in downtown San Diego. DiamondRock plans to invest approximately $10 million in capital improvements at the property to increase market penetration.