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January 11, 2022

DiamondRock buys two luxury coastal Florida resorts for $175.5m

DiamondRock owns 33 hotels and resorts with more than 9,400 rooms.

DiamondRock Hospitality has purchased Henderson Beach Resort and Tranquility Bay Beachfront Resort in Florida, US for $175.5m.

The investments in the two luxury coastal Florida resorts marked the end of the company’s capital recycling activities in 2021.

The acquisitions are in line with the company’s strategy to have a leading portfolio of resort and leisure-oriented hotels.

DiamondRock president and chief executive officer Mark Brugger said: “The six transactions we successfully completed over the last year solidify DiamondRock’s strategic initiative to curate a preeminent portfolio of leisure-oriented, lifestyle hotels and resorts.

“These investments cap off an active year where DiamondRock recycled $220m from low-yield, encumbered, capital-intensive properties into $293m of high-quality, unencumbered, independent hotels and resorts.

“We project our recycling initiative will immediately and meaningfully increase our investment yield and drive long-term cash flow growth.”

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Henderson Beach Resort in Destin features 170 rooms, 40,000ft2 of meeting space, separate family and adult pools, a spa, as well as numerous restaurant and bar outlets, including Destin’s only rooftop bar.

The luxury oceanfront resort was built recently and acquired in an off-market transaction on 23 December 2021 for $112.5m.

The deal includes income from 46 luxury residences adjacent to the hotel.

The 103-unit Tranquility Bay Beachfront Resort in Marathon offers 231 bedrooms comprising of 87 two-bedroom and three-bedroom beach houses, as well as 16 tropical garden guest rooms.

Located on 12 acres in Marathon, Florida, the property was purchased on 6 January 2022 for $63m.

The purchase price for this property represents an 11.5% yield on 2021 forecasted net operating income (NOI).

In July last year, the company acquired the 220-room Bourbon Orleans Hotel for $89.9m and the 37-room Henderson Park Inn for $27.5m.

During the nine months that ended 30 September 20221, DiamondRock invested approximately $30.1m in capital improvements at its operating hotels.

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