Braemar to acquire Dorado Beach, A Ritz-Carlton Reserve for $186.6M; more sales

Companies are getting in end-of-year acquisitions as Braemar has entered into an agreement to acquire Dorado Beach, a Ritz-Carlton Reserve in Dorado, Puerto Rico, for $186.6 million.

Braemar enters agreement to purchase Dorado Beach, a Ritz-Carlton Reserve
Braemar Hotels & Resorts Inc. has entered into a definitive agreement to acquire the 96-room Dorado Beach, a Ritz-Carlton Reserve in Dorado, Puerto Rico, for $186.6 million. In addition, the company is also acquiring the income stream attributable to 14 luxury residential units adjacent to the property that participate in a rental management program.

The acquisition is expected to close on or prior to Feb. 1, subject to certain customary closing conditions. Because the acquisition is subject to certain customary closing conditions, the company can give no assurance that the transaction will be consummated by such date or at all.

The property is situated within Dorado Beach Resort, a 1,900-acre master planned community in one of the most sought after residential real estate markets in both Puerto Rico, as well as the U.S., according to the company. In addition to the amenities of the self-contained Dorado Beach community, the resort also benefits from its location within the town of Dorado. Dorado is an upscale suburb of San Juan featuring many restaurants, retail outlets and other amenities and leisure activities in the surrounding area. Additionally, the town is 20 miles from Old San Juan and 22 miles from Luis Muñoz Marin International Airport.

The property opened in 2012 and underwent an extensive $78-million renovation in 2018. It has 96 rooms, including 12 suites that average 1,288 sq. ft. in size. The hotel offers an array of amenities, including the full-service, five-acre Spa Botanico and three food and beverage outlets (in addition to in-room dining). The property also has COA Restaurant, more than 4,800 sq. ft. of meeting space and an infinity pool with direct access to the beach. Additionally, the surrounding Dorado Beach residential development contains several other amenities that guests of the Ritz-Carlton Reserve can access during their stay, including 2.5 miles of beachfront, the TPC Dorado Beach Golf Club with two 18-hole Championship golf courses, a tennis center with five Har-Tru clay courts offering lessons and clinics for all skill levels, a fitness center, the Encanto Pool, “The Watermill”—an expansive water park, three additional food and beverage outlets, as well as Dorado Farms—a 500-acre site including skeet shooting, equestrian center and culinary offering that is currently under construction.

While not included in the property’s fee simple collateral, the acquisition includes the income from 14 additional residential units, ranging in size from 2,200-6,600 sq. ft., which are part of a rental management program.

The total consideration for the acquisition is $186.6 million ($1.7 million per key, inclusive of the residential units in the rental program). The acquisition will be funded with approximately $104 million of cash, six million shares of common stock and the assumption of a $54-million mortgage loan. No additional equity will be issued to fund the cash portion of the consideration, which will be funded from available excess cash.

The purchase price for Dorado Beach, a Ritz-Carlton Reserve represents, based on forecasted financial results for 2021, a capitalization rate of 9.8% on hotel net operating income of $18.2 million and a 10.2x hotel EBITDA multiple, according to the company’s preliminary estimates based on unaudited operating financial data provided by the seller. The company expects to realize a stabilized yield of approximately 8% on its investment in the next three-five years. On a trailing 12-month basis as of Nov. 30, the property achieved RevPAR of $1,129, with 57% occupancy and an average daily rate (ADR) of $1,968, according to unaudited operating financial data provided by the seller.

OTO Development acquires Hyatt House Nashville at Vanderbilt
OTO Development is moving into Music City with the acquisition of Hyatt House Nashville at Vanderbilt. The deal was brokered by Hunter Hotel Advisors.

The extended-stay property is located in Nashville’s historic West End, near Lower Broadway. It’s within walking distance of Music Row and convenient to Vanderbilt University as well as Vanderbilt University Medical Center and other prominent community hospitals.

Opened in December 2018, this 15-floor Hyatt House comprises 201 extended-stay guestrooms, including 125 suites and more than 2,000 sq. ft. of meeting space. The brand’s H bar and a rooftop pool highlight the amenities list, with added conveniences such as a fitness center, in-suite kitchens/kitchenettes, complimentary breakfast, hotel shuttle and a pet-friendly policy.

Marcus & Millichap sells 150-room DoubleTree by Hilton
Marcus & Millichap, a leading commercial real estate brokerage firm specializing in investment sales, financing, research and advisory services, has sold the 150-room DoubleTree by Hilton Hotel Winston-Salem University.

Jack Davis, Joce Messinger and Josh Williams, investment specialists in Marcus & Millichap’s Charleston office, had the exclusive listing to market the property on behalf of the seller, a private investor. The listing team also secured and represented the buyer, another private investor.

DoubleTree by Hilton Hotel Winston-Salem was built in 1987 and renovated in 2015. Its amenities include complimentary WiFi, laundry facilities, a restaurant and bar, an event center, a 24-hour fitness center, an outdoor pool and a fire pit.