Host Hotels & Resorts has acquired from KHP Capital Partners the fee simple interest in the 200-room Baker’s Cay Resort Key Largo (Florida), for approximately US$200 million in cash (US$1 million/key). The off-market purchase price represents an estimated 6.2% capitalization rate and a 14.5x EBITDA multiple based on 2021 property forecasts.
Blackstone sold the hotel (formerly known as the Hilton Key Largo) to KHP in 2016 for US$82 million (US$410,000/key).
After a complete US$63 million renovation and repositioning in 2019 to Hilton’s Curio Collection soft brand, Host believes the deal in a rebounding market will improve the EBITDA growth profile of its portfolio, according to President and CEO James Risoleo.
Risoleo added that the Florida Keys benefit from excellent supply-demand dynamics partially due to strict development ordinances, which have led to the highest 2019 upper-upscale RevPAR of any market in the U.S. “We expect this resort to deliver over US$300 of RevPAR and US$69,000 of EBITDA per key in 2021, ranking eighth on both metrics in Host’s 2019 pro forma portfolio.”
This transaction brings Host’s total hotel acquisitions so far in 2021 to nearly US$1 billion with a blended 14.3x estimated EBITDA multiple. In March, the largest publicly traded owner of U.S. hotels acquired the distressed Hyatt Regency Austin for US$161 million.
Michael Bellisario, analyst with R.W. Baird noted, “Following this transaction, we estimate Host has approximately US$501 million of investment capacity remaining, assuming no asset sales and/or capital raises. We suspect the company could start to evaluate select asset sales, especially those that require high capex, in order to backfill recent acquisitions and give the company continued balance sheet flexibility going forward.”