DiamondRock buys San Francisco's Hotel Rex for $29.5 million

George Sell George Sell Uploaded 15 November 2012

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US: DiamondRock Hospitality Company has acquired the Joie de Vivre-managed Hotel Rex, in the Union Square district of San Francisco.

Originally built in 1907, the hotel opened as the Hotel Rex in 1996 featuring 94 rooms, and is themed after the San Francisco art and literary salons of the 1920s and 30s.

Mark W. Brugger, CEO of DiamondRock Hospitality Company, said: "We are excited to be announcing our first acquisition in San Francisco at an attractive initial yield and a significant discount to replacement cost. With no supply on the horizon, we believe San Francisco can achieve several years of outsized growth. This acquisition, combined with the recent disposition of the Westin Atlanta, continues the company's strategy of disposing of non-core hotels and reallocating proceeds into faster growing markets at comparable or better returns."

Hotel Rex is forecasted to achieve 2012 RevPAR of more than $150, an increase of 20 per cent over 2011, and has average occupancy of 85 per cent.

DiamondRock funded the acquisition with existing corporate credit facility capacity generated by the recent sale of the Westin Atlanta North. Following the transaction, the company has $95 million of capacity on its corporate credit facility and owns 16 hotels unencumbered by mortgage debt.

www.drhc.com

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