Strategic jumps back in with Four Seasons Scottsdale buy

Strategic Hotels & Resorts has been rather quiet of late, but the Chicago-based REIT today announced it has made a luxury acquisition—The Four Seasons Resort Scottsdale at Troon North, for $140.0 million. The deal is valued at $666,000 per key for the 210-room luxury hotel.

The hotel was purchased from an affiliate of Walton Street Capital. The acquisition also includes 13.8 acres of developable land zoned for an additional 88 hotels keys and potential incremental residential usage. Management has valued the land parcels at $6.0 million. 

The hotel falso has 24,000 square feet of indoor meeting space, a 14-treatment room spa, four food-and-beverage outlets and contractual access to Troon North Golf Club. Four Seasons will continue to manage the property subsequent to the closing of the acquisition.

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The acquisition is expected to close during the fourth quarter of 2014.

The Company forecasts the property will contribute approximately $10.0 million of EBITDA and $8.0 million of NOI in 2015. The purchase price, net of the allocated land value, represents a 13.4 times multiple on forecasted 2015 EBITDA and a 6.0-percent capitalization rate on forecasted 2015 NOI.

"The resort is poised to continue to benefit from the positive Scottsdale market dynamics and includes significant value-enhancing opportunities to hotel operations and potentially through the future addition of hotel keys and amenities on two vacant and entitled adjacent parcels of land," said Raymond "Rip" Gellein, chairman and CEO of Strategic Hotels & Resorts.

The acquisition of the Scottsdale property is the second for Stretgic in the area. In April, it fully acquired the 649-room Fairmont Scottsdale Princess. Prior to the transaction, the company had a half-ownership position through a joint venture with an affiliate of Walton Street Capital. The transaction valued the asset at a gross value of $307.5 million.

That same month, Strategic announced it had exited Europe with the sale of the Marriott London Grosvenor Square for a reported $207.7 million. That move came on the heels of Strategic's $200-million sale of the Four Seasons Punta Mita in December to Bill Gates' Cascade Investment.

In May, Strategic bought the remaining portion of San Diego's Hotel del Coronado it didn't already own from joint-venture partner Blackstone Group, in a deal that reportedly valued the property at $787 million. It reportedly paid $210 million for the 63.6-percent stake.

Strategic's full-year 2013 revenue per available room increased 8.8 percent in the company's North American portfolio. In the fourth quarter last year, average daily rate increased 6.2 percent over the same time last year to $292.75, while occupancy grew 2.4 points.

"We have very positive expectations for 2014, based on our group outlook, continued strength from the transient traveler, and our ability to continue expanding margins across the portfolio," said Gellein at the time. "We also look forward to continuing to deleverage the company's balance sheet and reviewing growth opportunities that meet our strategic and financial thresholds. The luxury sector is well positioned for continued strength given the dearth of competitive new supply in virtually all of our major markets."

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