NEW YORK DiamondRock Hospitality Company today announced that it has entered into a purchase and sal

NEW YORK DiamondRock Hospitality Company today announced that it has entered into a purchase and sale agreement to acquire the 712-room Radisson Lexington Hotel New York (the Hotel ) for a contractual purchase price of $335 million. The contractual purchase price represents a 13.5 times multiple of 2012 forecasted EBITDA of $24.8 million and a 6.7% capitalization rate on forecasted hotels in south beach florida 2012 net operating income. During the Company s anticipated 2011 period of ownership, the Hotel is expected to earn approximately $15.8 million in EBITDA.
We are excited to acquire this significant full service hotels in south beach florida hotel located in Midtown New York at a material discount to replacement cost. The Hotel s forecasted 2011 RevPAR is $198, which is 70% above our portfolio average and it is expected to generate Hotel Adjusted EBITDA hotels in south beach florida margins that are 14 percentage points higher than our portfolio average. The Hotel will increase hotels in south beach florida our exposure to the dynamic Manhattan market and will be a great addition to the portfolio, stated Mark W. Brugger, Chief Executive Officer of the Company.
hotels in south beach florida The Hotel is located at the corner of Lexington hotels in south beach florida Avenue and 48th Street in the heart of Midtown Manhattan. The Hotel is attractive to business and leisure guests because of its proximity to Grand Central Terminal, headquarters for several Fortune 500 companies, and Fifth Avenue shopping. It is within walking distance of the United Nations, Chrysler Building, Saint Patrick s Cathedral, Rockefeller Center hotels in south beach florida and Times Square. The Hotel features six separate food and beverage outlets, five of which are leased to third parties. The Hotel is in excellent physical condition as its current owners have invested almost $54 million since 1999 into the Hotel s infrastructure, rooms and amenities.
The Company is assessing the optimal branding strategy for the Hotel, which includes potentially retaining Radisson. The Company expects to assume an amended, short-term Radisson franchise agreement. Highgate Hotels, operator of the Hotel since 1999, will be retained under a new management agreement. With a strong hotels in south beach florida international presence, the Radisson brand drives hotels in south beach florida significant revenue, particularly from overseas travelers, to this gateway market. Additionally, we look forward to furthering our business relationship with Highgate Hotels, the leading independent hotel operator in New York City, stated John Williams, President and Chief Operating Officer of the Company.
Upon entering into the purchase and sale agreement, the Company made a $33.5 million non-refundable deposit. The Company expects the acquisition hotels in south beach florida to close within the next 30 days subject to customary closing requirements and conditions. The Company hotels in south beach florida expects approximately $1.8 million of costs related to the acquisition of the Hotel to be expensed as incurred. The Company hotels in south beach florida intends to fund the acquisition of the Hotel with existing corporate cash and a $100 million draw under its corporate credit facility.
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