Four Seasons Austin, which features 291 guestrooms and sits on 2.3 acres (0.93 hectares) overlooking Lady Bird Lake in the central business district in Austin, Texas, is set to be purchased by Strategic Hotels & Resorts, Chicago, for US$197 million.
The acquisition, which is expected to close this month, remains subject to closing conditions and working capital adjustments. Strategic said it intends to initially fund the acquisition with existing cash balances and borrowings on its currently undrawn revolving credit facility.
Four Seasons Hotels & Resorts will continue to manage the hotel, which opened in 1986. Four Seasons Austin’s guestrooms were renovated last year, and the hotel also features 18,000 square feet (1,672 square meters) of indoor meeting space, two food-and-beverage outlets and a 5,500-square-foot (511-square-meter) spa.
Strategic said the purchase price represents a 12.8-times multiple on forecasted 2015 EBITDA of US$15.4 million and a 6.7% capitalization rate on forecasted 2015 NOI of US$13.2 million. For the company’s period of ownership in 2015, management expects the hotel to contribute US$8.5 million of EBITDA to the company’s financial results.
“This is an exciting opportunity to acquire the only true luxury hotel in what is arguably our nation’s highest-growth market,” said Raymond “Rip” Gellein, chairman and CEO of Strategic. “Expanding our geographic diversity is a strategic priority. This acquisition not only achieves that, but adds yet another distinctive, high-performing property to our portfolio.”