Host Hotels & Resorts Inc. has entered into an agreement to acquire the fee simple interest in the 450-room Turtle Bay Resort on the north shore of Oahu, HI, including a 49-acre land parcel entitled for development, for approximately $680 million, net of key money.
The purchase price allocation is expected to be $630 million for the resort and $50 million for the land parcel, subject to final appraisal. The acquisition price represents a 16.3x EBITDA multiple or a cap rate of approximately 5.3% on the resort’s 2024 estimated results. The purchase is subject to customary closing conditions and the transaction is expected to close in late July.
The resort recently benefited from a renovation and was closed from March 2020 to June 2021. The renovation included the guestrooms and bungalows, lobby, pools, restaurants, retail, meeting space, spa, a new club lounge and building systems, as well as an updated exterior and arrival experience. It is being acquired fully unencumbered of brand and management.
At closing, Host intends to transition management to Marriott and flag the hotel to The Ritz-Carlton brand. In connection with the rebranding, Marriott provided key money and favorable modifications on several existing management agreements.
Before taking into account the significant upside that is expected from The Ritz-Carlton branding, the resort is expected to be one of Host’s top assets based on estimated full-year 2024 results with an expected RevPAR of $570, total RevPAR of $980 and EBITDA per key of $86,000. After ramping up from the recent renovation and the rebranding, the company expects the Resort to stabilize between approximately 10-12x EBITDA in the 2027-2029 timeframe.
“We are thrilled to enter into an agreement to acquire Turtle Bay Resort, which will further expand and diversify our already strong presence in Hawaii,” said James F. Risoleo, president/CEO, Host Hotels. “Oahu is a high-demand leisure destination with consistently high occupancy, an internationally diverse demand base and high barriers to entry, resulting in slightly negative supply growth historically and essentially no anticipated near-term supply. In addition, because of the resort’s recent transformational renovation, we do not expect meaningful capital expenditures in the near term. We look forward to working with employees and local partners to build upon the resort’s preeminent position on the north shore of Oahu. With the planned Ritz-Carlton rebranding, we believe the resort will generate outsized growth as it stabilizes, further elevating the EBITDA growth profile of our portfolio.”
The resort is situated on 1,180-acres alongside five miles of beach. It features 450 rooms, all with ocean views, including 42 bungalows with direct beach access, a separate check-in and a private pool. Other amenities include 18,000 sq. ft. of indoor meeting space, a club lounge, six food and beverage outlets, seven retail spaces, a spa, fitness center, two golf courses, seven beaches, four resort pools, tennis and pickleball courts, an equestrian center, a working farm and access to 12 miles of oceanfront trails.
The 49-acre oceanfront land parcel is entitled for development.