DiamondRock acquires Key West resort for $47M

DiamondRock Hospitality recently acquired the 106-room Inn at Key West in Key West, Fla., for a contractual purchase price of $47.5 million, or $448,000 per room. The purchase price represents a 12.1 multiple on forecasted 2014 hotel EBITDA of $3.9 million and a 7.6-percent capitalization rate on the hotel's 2014 forecasted net operating income.

"The Inn at Key West is a highly attractive off-market investment located in the highest RevPAR market in the United States," said Mark W. Brugger, president and CEO of DiamondRock Hospitality Company. "The acquisition meets all of our stated investment criteria as it is located within a prime destination resort market, requires limited near-term capital investment, and is an immediately accretive use of our investment capacity.  Moreover, we are pleased to enter the Key West market, which is a high-RevPAR, high-growth resort market. This acquisition adds an outstanding hotel to our high-quality portfolio."

In the 12-month period ended June 30, 2014, The Inn at Key West achieved a RevPAR of $174 from a combination of 86.3-percent occupancy and an ADR of over $202.

Chesapeake funded the acquisition with existing corporate cash. The acquisition of The Inn at Key West brings the total representation of resorts within the Company's portfolio to 16 percent.

The company now owns 27 hotels with over 11,000 rooms.