Sunstone Hotel Investors has agreed to acquire the 339-room hotel, The Confidante, in Miami Beach, Florida, US for $232m or $684000 per key.

The agreement has been reached with an affiliate of Hyatt Hotels .

Located on 1.5-acre of oceanfront land in Miami Beach, the hotel will now be rebranded as Andaz Miami Beach, following the successful acquisition.

Sunstone has funded the acquisition via cash and by borrowing from its existing undrawn revolving credit facility.

According to the company, the purchase price represents around 5.0% capitalisation rate on the hotel’s forecasted net operating income of 2022 and a 17.3x multiple on the hotel’s predicted earnings before interest, taxes, depreciation, and amortisation (EBITDA).

Apart from the purchase price, the company is planning to invest around $60m for rebranding.

Following full transformation, the hotel will be repositioned as a beachfront resort under Hyatt’s luxury lifestyle brand Andaz.

Sunstone Hotel Investors CEO Bryan Giglia said: “We are excited to announce our planned acquisition of The Confidante Miami Beach where we expect to generate significant value through an extensive renovation and rebranding of the hotel to Andaz Miami Beach.

“Upon completion of the planned renovation, we will have transformed the earnings potential of the hotel and we will own a premier Miami Beach luxury resort at a highly attractive all-in basis in a resilient, supply-constrained market that has continued to demonstrate meaningful rate growth.”

Sunstone is expecting the hotel to generate around 8% to 9% stabilised net operating income.