DiamondRock Hospitality Company on Monday said it plans to spend $495 million, or approximately $339,000 per room, to acquire a four-hotel portfolio from Blackstone Real Estate Partners VI. As part of the deal, Blackstone is taking a $75-million ownership stake in DiamondRock and would become a top 10 shareholder, according to R.W. Baird & Company analyst David Loeb.
The hotels included in the deal are the:
- Hilton Boston;
- Westin Washington, D.C.;
- Westin San Diego; and
- Hilton Burlington (Vermont).
In a research note, Loeb said he viewed the transaction as “neutral.”
While three of the four assets are high-quality and equity financing is creative, the purchase price (6.1% estimated 2012 capitalization rate and at 14.4 times 2012 estimated earnings before interest, taxes, depreciation, and amortization) appears full.
The deal is expected to close this month. Blackstone and DiamondRock officials were not available for comment by deadline Tuesday.
Only 32% of commercial mortgage-backed securities paid off on their balloon date in June, the second lowest total in 21 months, according to research from Trepp LLC. The figure is just slightly more than the 29.4% of loans that paid off during May.
The 12-month pay-off average is 42.7%. Before 2008, pay-off percentages were routinely higher than 70%. But since the beginning of 2009, there have been only four months where more than half the balance of the loans reaching the balloon date paid off.
Ascendas, a property group in Singapore, is spinning off its 11 hotel properties via a property trust in a deal worth up to $648 million, according to Reuters.
Ascendas Hospitality Business Trust owns the hotels in Australia, China, Japan and South Korea.
The hotel market in Abu Dhabi is poised for a supply bump, according to a report in gulfnews.com.
Approximately 20 new hotels are expected to open in and around Abu Dhabi during the next three years, according to Dubai-based TRI Hospitality Consulting. It’s a market that analysts believe will continue to suffer from oversupply until demand starts to catch up.
According to the Abu Dhabi Tourism & Culture Authority, the number of rooms available has increased by 13% since May 2011, with hotel occupancy in May reaching 63%, which is a 7% slip on last year.
It’s a situation that could affect average occupancy rates and average room rates this year, according to Peter Goddard, managing director of TRI. “In order to attract people you’re going to drop your rates,” he said.
Ted Knighton, the COO at Interstate Hotels & Resorts, has added president to his title.
An Interstate veteran since 1990, Knighton oversees global operations of the company’s approximately 400 managed and owned hotels.
“Since assuming the responsibilities of chief operating officer in December, Ted has taken on an even more expansive role as we integrate operations and sales worldwide,” Interstate’s CEO Jim Abrahamson said in a statement. “He has developed a strong team with incredible depth who are actively engaged in improving and expanding our global operations platform. This promotion reflects his accomplishments and the tremendous value and exceptional operations experience that he brings to our international growth strategy.”
Compiled by Shawn A. Turner.