Real estate investment trust (REIT) DiamondRock Hospitality Company has acquired the AC Hotel Minneapolis Downtown for $30m.
Constructed in 2016, the 245-room property is situated in a region known for its corporate presence of Fortune 1000 companies and innovation in biotechnology and medical fields.
DiamondRock Hospitality Company CEO Jeffrey Donnelly said: "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.
"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 capitalisation rate of 8.2%, calculated based on the hotel's anticipated net operating income for 2024.
This addition increases DiamondRock's holdings to 37 properties.
The deal was not anticipated in the company's updated full-year 2024 guidance issued earlier this month.
While the hotel's acquisition will not substantially contribute to the 2024 adjusted EBITDA or [AFFO] adjusted funds from operations per share, it is anticipated to be included in the company's comparable metrics and add 20 basis points to its comparable full-year RevPAR growth and ten basis points to the comparable full-year total RevPAR growth.
DiamondRock Hospitality’s portfolio boasts more than 10,000 rooms and has positioned its portfolio to be operated under global brand families and independent boutique hotels in the lifestyle category.
