DiamondRock Hospitality Co. agreed to buy four U.S. hotels from The Blackstone Group for US$420 million in cash and US$75 million in DiamondRock stock, a 4% stake.
The hotels DiamondRock will acquire are the 362-room Hilton Boston Downtown/Financial District, the 406-room The Westin Washington D.C. City Center, the 436-room The Westin San Diego and the 258-room Hilton Burlington, located in Burlington, Vermont. The purchase is expected to close this month, and DiamondRock made an initial deposit of US$50 million upon execution of the purchase agreement that is non-refundable.
The Bethesda, Maryland-based DiamondRock intends to fund the acquisition with a combination of borrowings under its senior unsecured credit facility, cash on hand, net proceeds from a public equity offering and the issuance of shares of its common stock to Blackstone in a private placement.
“We are excited to acquire these four high quality hotels from affiliates of Blackstone in an off-market deal and equally pleased that Blackstone is taking a $75 million ownership stake in DiamondRock as part of this transaction. We believe that these four hotels with higher RevPAR and EBITDA margins than those of our existing assets will enhance the overall quality of our portfolio,” said Mark Brugger, DiamondRock CEO.