DiamondRock Hospitality Company (the company) announced the sale of its leasehold interest in the 189-room Courtyard by Marriott New York Manhattan/Fifth Avenue (the hotel) for $33.0 million.
The sales price represents a 6.3 times multiple on 2025 Hotel Adjusted EBITDA and a 13.3 percent capitalization rate on 2025 Hotel Net Operating Income. Inclusive of $12 million of capital expenditures required to be spent in the next 12 months, a contractual increase in the ground lease payment and higher labor costs over the next several years, the company estimates the stabilized capitalization rate on the sale to be approximately 7.8 percent, or 6.5 percent on a fee simple basis.
“From 2019 to 2025, the Hotel’s Net Operating Income more than doubled, reflecting the value created by our asset management team and operating partners. When evaluating the Hotel’s upcoming capital expenditure needs and structural expense headwinds, the expected returns did not meet our investment thresholds. This transaction reflects our continued commitment to disciplined capital allocation and growing free cash flow per share for the benefit of our shareholders,” said Jeffrey J. Donnelly, chief executive officer of DiamondRock Hospitality Company.
The Company is adjusting its guidance for full year 2026, provided on April 30, 2026, to account for the sale of the Hotel as follows:
|
Metric |
Previous 2026 Guidance |
Adjustment for Hotel Sale |
Revised 2026 Guidance |
|
Comparable RevPAR Growth |
1.5% to 3.5% |
— % |
1.5% to 3.5% |
|
Comparable Total RevPAR Growth |
1.75% to 3.75% |
— % |
1.75% to 3.75% |
|
Adjusted EBITDA (in millions) |
$296 to $308 |
($5.9) |
$290.2 to $302.2 |
|
Adjusted FFO (in millions) |
$233.5 to $245.5 |
($5.1) |
$228.4 to $240.4 |
|
Adjusted FFO per share |
$1.12 to $1.18 |
($0.025) |
$1.10 to $1.16 |
