DiamondRock Hospitality Company has entered into a purchase and sale agreement to sell the 1,004-room Los Angeles Airport Marriott. This transaction is the result of a reverse inquiry from the same buyer who purchased the Torrance Marriott from the Company in late 2013.
The company will receive total gross consideration from the sale of the hotel of approximately $160 million, including payment for the hotel's capital reserve. The total consideration represents a 6.6% capitalization rate on net operating income of $10.5 million for the trailing 12-month period ended September 30, 2014.
"Over the past few years, we have transformed our portfolio through strategic divestitures of non-core hotels and targeted acquisitions to focus on premium lodging assets in urban gateway markets. We are pleased to announce the agreement to sell this non-core, airport hotel, illustrating our commitment to take advantage of an attractive transaction market," said Mark W. Brugger, president and CEO of DiamondRock Hospitality Company.
DiamondRock bought the hotel in 2005 for approximately $118 million. The company expects to generate a leveraged internal rate of return over 16 percent on its investment.