DiamondRock Hospitality Company has acquired two luxury beachfront hotels in Florida; RLJ Lodging Trust has purchased a Moxy hotel in Denver and disposed of a DoubleTree property in New York City; and Blue Flag Partners has acquired another property on Nantucket island in Massachusetts. Read about those transactions and more below.
DiamondRock acquires two Florida resorts for $175.5M
DiamondRock Hospitality Company has acquired two luxury coastal Florida resorts—the 170-room Henderson Beach Resort (shown above) in Destin and the 103-unit Tranquility Bay Beachfront Resort in Marathon. The total investment for the two separate transactions was $175.5 million. These investments conclude an active year of capital recycling for DiamondRock that strategically shifted the portfolio to almost two-thirds destination leisure hotels and resorts.
The Henderson Beach Resort was purchased for $112.5 million on Dec. 23 in an off-market transaction. The recently constructed luxury oceanfront resort offers 40,000 sq. ft. of meeting space, a “lazy river” pool, separate family and adult pools and a spa, as well as numerous restaurant and bar outlets, including Destin’s only rooftop bar, the company reports. The acquisition also includes income from 46 luxury residences adjacent to the hotel currently participating in the hotel’s rental management program.
The Henderson Beach Resort is adjacent to the oceanfront Henderson Park Inn, which was acquired by the company earlier in 2021. Together, the two resorts command the highest ADRs in the market, according to the company; Henderson Beach Resort at $430 and Henderson Park Inn at $520. The purchase price of the Henderson Beach Resort represents a 6.4% yield on 2021 forecasted hotel net operating income (NOI) and is expected to stabilize above an 8.0% yield.
The Tranquility Bay Beachfront Resort, a beachfront resort with 1,000 linear ft. of shoreline located on 12 acres, was acquired for $63 million on Jan. 6. The resort has a total of 231 bedrooms in 87 two-bedroom and three-bedroom beach houses, as well as 16 tropical garden guestrooms. The purchase price represents an 11.5% yield on 2021 forecasted NOI.
DiamondRock’s investment in Tranquility Bay is comprised of: (1) ownership of 16 tropical garden guestrooms, plus all resort amenities and infrastructure including the lobby, restaurants, back-of-house facilities, as well as the trademark and exclusive use of the name “Tranquility Bay”; (2) exclusive room revenue sharing agreements for all of the 84 third-party owned beach houses; and (3) a majority of the intervals in three beach houses structured as vacation ownership.
Over the five years from 2015-2019, Tranquility Bay generated an average annual NOI of approximately $4.5 million, representing a capitalization rate of 7.0% on the company’s purchase price.
RLJ acquires Moxy Denver Cherry Creek, disposes of NYC DoubleTree
RLJ Lodging Trust has acquired the 170-room Moxy Denver Cherry Creek for a purchase price of $51.3 million, or approximately $301,000 per key, and completed the disposition of the 764-room DoubleTree Hotel Metropolitan New York City for gross proceeds of $169.0 million.
The Moxy Cherry Creek opened in late 2017 and is expected to generate an estimated 8.0%-8.5% stabilized NOI yield. It is also expected to generate a stabilized RevPAR premium of 15%-20% relative to the company’s existing portfolio in 2019, with hotel EBITDA margins that are 600 to 800 basis points higher. RLJ has engaged Denver-based Sage Hospitality Group to manage the property. The company funded the acquisition with the combination of corporate cash and the assumption of $25.0 million of non-recourse secured debt. The seller is BMC Investments, a Denver-based developer of commercial real estate throughout the U.S.
The hotel is one of five located within the upscale Cherry Creek North neighborhood of Denver, and features amenities such as the signature Moxy Bar and the Cherry Creek Beer Garden, in addition to meeting rooms, outdoor event space, complimentary bike rentals and a fitness center.
RLJ also recently closed on the previously announced disposition of the 764-room DoubleTree Metropolitan for a gross sales price of $169.0 million, which represents a highly accretive multiple of over 47 times the property’s 2019 hotel EBITDA. Following this disposition, the company currently owns two hotels in New York City, representing approximately 550 rooms and less than 3.5% of the company’s pro forma 2019 hotel EBITDA.
Blue Flag acquires The Beachside on Nantucket
Blue Flag Partners has acquired The Beachside on Nantucket, a 94-key hotel in Nantucket, MA.
Originally built in 1966, The Beachside encompasses a 3.5 -acre campus in Nantucket’s Brant Point neighborhood and features one of just five hotel pools on the entire island, according to the company.
Continuing their long-standing partnership, Blue Flag has hired New York-based boutique hotel operator Life House to manage the day-to-day operations of the hotel.
Ascendant Capital Partners, Centerbridge Partners acquire Monterey Tides hotel
Ascendant Capital Partners, a vertically integrated real estate investment and operating platform, in partnership with Centerbridge Partners have acquired Monterey Tides, a 196-room waterfront boutique hotel in Monterey, CA, from Southwest Value Partners.
The property is Monterey’s only hotel with a privately owned beachfront, according to Ascendent, and features restaurants and bars, a heated outdoor pool and hot tub, 9,000 sq. ft. of ocean-view meeting space and direct access to the Monterey Peninsula Recreational Trail.
Highgate has been engaged by the new owners to operate Monterey Tides.
New Orleans’ The Whitney Hotel purchased by Angevin & Co.
Robert Thompson’s hospitality firm, Angevin & Co., in partnership with GBX Group, which specializes in preserving and operating historic real estate in urban markets, has completed the acquisition of The Whitney Hotel, a landmark hotel in New Orleans. Tyler Robinson at Urban Properties represented Angevin & Co. on the transaction.
Located in New Orleans’ Central Business District, The Whitney Hotel building was originally constructed as a bank. Now registered as a National Historic Landmark, the property has 93 guestrooms, 24 suites and 30-ft. lobby ceilings. Thompson’s Angevin & Co., along with design partners FAM Design, will preserve the historic integrity of the building while making top-to-bottom renovations and updates.
The Whitney Hotel is anticipated to reopen to guests in the first quarter of 2023.