Real estate investment trust (REIT) DiamondRock Hospitality has completed the sale of Los Angeles Airport Marriott to Chinese real estate developer Sichuan Xinglida Group for $160m.
Acquired through the US subsidiary XLD Group, the company believes that sale of the 18-storey, 1,004-room hotel will improve the overall quality of DiamondRock’s portfolio, while increasing its brand and manager diversity.
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DiamondRock Hospitality president and chief executive officer Mark Brugger said: "The sale of the Los Angeles Airport Marriott achieves the company’s goal of strategically recycling capital from non-core assets into high-growth, high-quality assets.
"We are excited to have successfully redeployed the proceeds from this sale into our recent acquisition of the Westin Beach Resort & Spa, Fort Lauderdale, a premier beachfront hotel in the high growth, South Florida market."
Los Angeles Airport Marriott will undergo $35m worth renovations.
According to the REIT, the total consideration represents a 6.6% capitalisation rate on the hotel’s net operating income of $10.5m for the trailing 12 month period ended 30 September 2014.
The total consideration in addition to an estimated $15m of incremental capital expenditures represents a 6% capitalisation rate on the hotel’s net operating income of $10.5m for the trailing twelve month period ended 30 September 2014.
Following the sale, DiamondRock hopes to record a gain, which will be excluded from its reported adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) and adjusted funds from operations (FFO).
