Buying & Selling: New Owners for Two Hotels

NATIONAL REPORT—The Aston Waikiki Beach Hotel has sold for $200 million as its former owner Xenia Hotels & Resorts seeks to refine its focus, while the Sheraton Reston Hotel has been acquired by a joint venture.

Xenia Hotels & Resorts Inc. has completed the previously announced sale of the leasehold interest in the 693-room Aston Waikiki Beach Hotel in Oahu, HI, for a sale price of $200 million, or approximately $310,000 per key. The price represented a 12.6x multiple on the hotel’s 2017 EBITDA.

“We are pleased to have completed the sale of the Aston Waikiki at an attractive price,” said Marcel Verbaas, Xenia’s chairman and CEO. “Although Oahu is a market with limited supply growth, this two-diamond hotel became less of a fit for our company as we have upgraded our portfolio and further refined our strategic focus. The hotel’s competitive position has weakened as the competition has significantly improved its product over the past two years. With less than 40 years remaining on the ground lease and considerable capital required to position the hotel more competitively in the market, the opportunity to take advantage of significant investment interest in Hawaii was too compelling to pass up.”

“We have been pleased with the evolution of our portfolio since our listing in early 2015,” Verbaas continued. “Our ability to execute over $1.8 billion of transactions, while dramatically improving the overall quality of our portfolio, exemplifies our dedication to upgrading the quality of our portfolio by making targeted investments and selective dispositions that fit with our long-term investment strategy of owning luxury and upper-upscale hotels in top 25 U.S. lodging markets and key leisure destinations. After this transaction, nearly 95% of our portfolio is in the luxury or upper-upscale chain scale, and we have created significant balance sheet flexibility to take advantage of opportunities as they arise.”

Elsewhere, DoveHill Capital Management LLC and Wurzak Hotel Group in a joint venture acquired the Sheraton Reston Hotel, expanding its vertically integrated investment platform. The 298-room hotel marks DoveHill’s first investment in the Washington, DC, region. The full-service hotel will be managed by DoveHill’s related company Wurzak Hotel Group and is the first in a series of new additions coming to the group’s growing portfolio in 2018.

Upon acquisition, DoveHill will begin execution of a major renovation and repositioning of the hotel. The renovation will include a modern update of all the guest bathrooms, a reimagined lobby, a gastro-pub concept, enhancements to the meeting space and a complete redesign of the building’s exterior.