DiamondRock Debuts in San Francisco - Analyst Blog
15 Novembro 2012 - 2:10PM
Zacks
Bethesda-based real estate
investment trust (REIT), DiamondRock Hospitality Company
(DRH), recently announced the acquisition
of Hotel Rex in San Francisco for $29.5 million. This major
acquisition marks the entry of DiamondRock in San Francisco.
The 94-room Hotel Rex was opened in 1996 and is managed by Joie de
Vivre Hospitality, Inc. The hotel is situated in the heart of San
Francisco city in close proximity to city landmarks such as
Union Square, Moscone Convention Center, Yerba Buena Gardens and
the Museum of Modern Art.
Hotel Rex is a well-equipped
boutique hotel, which caters to both leisure and business
travelers, and enjoys current occupancy rate of over 85%.
DiamondRock intends to invest in further renovation and development
of the property to hike Average Daily Rate (ADR) and also avail
leased space opportunities for retailers.
DiamondRock anticipates that the hotel will generate revenue per
available room (RevPAR) of over $150 in 2012, which represents a
year-over-year increase of 20%. RevPAR is expected to increase over
10% in 2013 backed by strong demand for all guest types in San
Francisco.
The acquisition is in line with the company’s ongoing portfolio
restructuring activity. The company is actively selling off the
non-core properties and using the proceeds to purchase assets in
fast growing regional markets in the U.S. In October 2012,
DiamondRock sold a Starwood Hotels and Resorts Worldwide
Inc. (HOT) property - Westin Atlanta
Perimeter North - for $39.6 million. The hotel was sold to a joint
venture among Carey Watermark Investors Inc., The Arden
Group Inc. (ARDNA) and Marcus Hotels
& Resorts of The Marcus Corporation
(MCS).
San Francisco, the leading financial and cultural center of
Northern California and the San Francisco Bay Area, is one of the
top tourist destinations in the world. Year-to-date through October
2012, the city recorded strong performance with RevPAR growth of
approximately 14.0%. The city’s lodging industry mainly benefits
from high demand and lack of new hotel supply.
Moreover, the advent of highly profitable events in the city going
forward will likely boost the operating performance of the lodging
market in coming years. These growth factors have caught the
attention of DiamondRock. However, DiamondRock should be wary of
its competitors. Its top peers, Strategic Hotels &
Resorts, Inc. (BEE) and FelCor
Lodging Trust Incorporated (FCH), already
have a strong presence in the city.
DiamondRock owns, acquires, and invests in upscale hotels under the
Hilton, Marriott and Westin brands across the U.S. The company
reported adjusted FFO (funds from operations) of 18 cents in the
third quarter of 2012, missing the Zacks Consensus Estimate by a
penny. Its current property portfolio includes 27 hotels with over
11,600 rooms.
We have a long-term Underperform recommendation on DiamondRock.
Also, it carries a short-term Zacks #4 Rank (Sell).
Note: FFO, a widely used metric to gauge the performance of
REITs, is obtained after adding depreciation and amortization and
other non-cash expenses to net income.
(ARDNA): ETF Research Reports
STRATEGIC HOTEL (BEE): Free Stock Analysis Report
DIAMONDROCK HOS (DRH): Free Stock Analysis Report
FELCOR LODGING (FCH): Free Stock Analysis Report
STARWOOD HOTELS (HOT): Free Stock Analysis Report
MARCUS CORP (MCS): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Felcor Lodging (NYSE:FCH)
Gráfico Histórico do Ativo
De Jun 2024 até Jul 2024
Felcor Lodging (NYSE:FCH)
Gráfico Histórico do Ativo
De Jul 2023 até Jul 2024