BETHESDA, MD—DiamondRock Hospitality Company has completed the sale of the 1,004-room Los Angeles Airport Marriott.
"The sale of the Los Angeles Airport Marriott achieves the company's goal of strategically recycling capital from noncore assets into high-growth, high-quality assets. This transaction improves the overall quality of our portfolio and increases our manager and brand diversity," stated Mark W. Brugger, president and CEO of DiamondRock Hospitality Company.
"We are excited to have successfully redeployed the proceeds from this sale into our recent acquisition of the Westin Beach Resort & Spa, Fort Lauderdale, a premier beachfront hotel in the high growth, South Florida market."
DiamondRock sold the Los Angeles Airport Marriott to the same buyer who purchased the Torrance Marriott from the company in late 2013 for proceeds of approximately $160 million, including credit for the hotel's replacement reserve. The total consideration represents a 6.6% capitalization rate on the hotel's net operating income of $10.5 million for the trailing 12-month period ended Sept. 30, 2014.
The total consideration plus an estimated $15 million of incremental capital expenditures represents a 6.0% capitalization rate on the hotel's net operating income of $10.5 million for the trailing 12-month period ended Sept. 30, 2014. The Company expects to record a gain on the sale, which will be excluded from its reported adjusted EBITDA and adjusted FFO.
In conjunction with the sale, DiamondRock prepaid the existing $82.6 million mortgage secured by the hotel and incurred approximately $1.5 million of defeasance costs. The company will exclude the defeasance cost from its reported adjusted EBITDA and adjusted FFO.
