Strategic Hotels & Resorts Buys Remaining Ownership of Hotel del Coronado

Strategic Hotels & Resorts Inc. today announced that the Company has signed an agreement to acquire the remaining 63.6 percent ownership interest in the 757-room Hotel del Coronado for $210 million.  The Company currently owns a 36.4 percent ownership position in the asset through a joint venture with certain affiliates of Blackstone Real Estate Partners VI L.P. ("Blackstone").  

The transaction values the asset at a gross value of approximately $787.0 million, net of approximately $18.0 million of cash currently held at the property and within the joint venture, and includes the assumption of the existing $475.0 million mortgage financing.

"We are thrilled to be acquiring the remaining equity position in the Hotel del Coronado and to have the opportunity to fully own this truly iconic hotel in the very attractive San Diego market.  Our company has had an ownership interest in the Del since 2006 and served as asset manager throughout that period, giving us comprehensive knowledge of this multi-faceted resort," commented Raymond L. "Rip" Gellein, Chairman and Chief Executive Officer of Strategic Hotels & Resorts, Inc.  

"The Hotel Del is experiencing excellent growth in group and transient business, and is expected to outperform in the coming years given the lack of any new supply in the San Diego market.  Further, the hotel is not encumbered by a long-term hotel management contract which creates additional flexibility and value as owner of this property," stated Gellein.  "Finally, we would like to acknowledge Blackstone as an outstanding partner and for the value they helped create at the Del during our joint ownership period."

The net purchase price represents a 14.3 times multiple on forecasted 2014 EBITDA and a 6.2 percent capitalization rate on forecasted 2014 NOI.  Management estimates the to-be-acquired 63.6 percent interest in the hotel is projected to generate an incremental $19 million to $21 million of EBITDA for the remainder of 2014.  In the first quarter of 2014, RevPAR grew 11 percent at the property resulting in 21 percent EBITDA growth.  The transaction, which is subject to certain closing conditions, is expected to close in the second quarter of 2014.

—Strategic Hotels & Resorts, Inc.