DiamondRock Hospitality Company (NYSE: DRH) today announced it has acquired the fee simple interest in the 245-room AC Hotel Minneapolis Downtown for $30 million, or approximately $122,000 per key with cash on hand. The Hotel, constructed in 2016, is located in downtown Minneapolis, which has one of the largest concentrations of Fortune 1000 companies in the world and is also a major hub for biotechnology and medical innovation.
“The AC Hotel Minneapolis Downtown represents an opportunity to acquire a recently constructed urban hotel with good in-place cash flow in a rapidly recovering hotel market with a strong roster of companies increasing their return to the office,” said Jeffrey Donnelly, Chief Executive Officer of DiamondRock Hospitality Company. “The acquisition is aligned with our strategic objectives as we evaluate our portfolio and look to recycle capital efficiently into hotels at a significant discount to replacement cost with minimal future capital requirements while also providing the Company with immediate yield.”
The acquisition represents a 8.2% capitalization rate on the Hotel’s forecasted 2024 net operating income and brings the total number of properties in the Company’s portfolio to 37 hotels. The acquisition of the Hotel was not contemplated in the Company’s updated full-year 2024 guidance issued on November 7, 2024. Given the timing of the acquisition, the Hotel will not contribute meaningfully to the Company’s full year 2024 Adjusted EBITDA or Adjusted FFO per share. However, the Hotel is expected to be included in the Company’s comparable metrics and add approximately 20 basis points to the Company’s comparable full-year RevPAR growth and 10 basis points to the comparable full-year Total RevPAR growth.
About the Company
DiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) that is an owner of a leading portfolio of geographically diversified hotels concentrated in leisure destinations and top gateway markets. The Company currently owns 37 premium quality hotels and resorts with over 10,000 rooms. The Company has strategically positioned its portfolio to be operated both under leading global brand families as well as independent boutique hotels in the lifestyle segment. For further information on the Company and its portfolio, please visit DiamondRock Hospitality Company’s website at www.drhc.com.
