DiamondRock Grows Western Hotel Portfolio
- Mar 06, 2018
DiamondRock Hospitality Co. has acquired a boutique hotel in downtown Phoenix. The Kimpton Hotel Palomar traded for $80 million, a 12.6x multiple of the forward 12 months of hotel EBITDA. The company used existing corporate cash to fund the purchase, predicting a $1 million impact to its first quarter adjusted EBITDA.
The 242-key hotel is situated within the 1.2 million-square-foot mixed-use project, CityScape, at One E. Washington St. The property provides immediate access to the city’s downtown destinations, including the NBA Basketball Arena, Chase Field, the Phoenix Convention Center, several movie theaters, Symphony Hall and plenty of restaurants and retailers. Phoenix Sky Harbor International Airport is just a 10-minute drive from the hotel, while plenty of public transportation options facilitate transit across the metro.
Increased western exposure
Open since 2012, Kimpton Hotel Palomar features guestrooms ranging from 410 to 1,325 square feet. Amenities include a rooftop pool with cabanas and an upscale bar, yoga mats and several lounges, a fitness center, valet parking and a breakfast club. A meeting space of 15,000 square feet is also available, featuring natural light and a flexible indoor or outdoor area.
“The acquisition aligns well with our strategic goals and increases our exposure to West and West Coast markets and urban lifestyle boutique hotels. Moreover, we have already identified a number of asset management opportunities to enhance the hotel’s revenues and cost structure,” said Mark Brugger, president & CEO of DiamondRock Hospitality Co., in a prepared statement.
Kimpton will continue to manage the hotel acquired by DiamondRock, which will become unencumbered in two years. Phoenix is currently one of the top leading U.S. real estate markets, with a diversified economy fueled by a recent revitalization. According to the latest Yardi Matrix report, the city’s leisure and hospitality employment sector has seen a 3.7 percent year-over-year increase.
Image courtesy of DiamondRock Hospitality Co.