Transactions - FEBRUARY 22, 2018

Host Hotels to buy three Hyatt-managed hotels for $1b

by Andrea Zander

Host Hotels & Resorts has agreed to acquire three Hyatt-managed hotels for $1 billion.

The three hotels under contract for acquisition are the 301-room Andaz Maui in Hawaii, 668-room Grand Hyatt San Francisco and 454-room Hyatt Regency Coconut Point in Florida.

The hotels will continue to be managed by Hyatt under long-term management agreements. The deal is expected to close by the end of the first quarter.

Prior to acquisition, Host Hotels & Resorts owned 10 Hyatt properties.

These assets are fee-simple and located in what the company believes are some of the top growth markets in the United States, including Maui and San Francisco, which are benefitting from strong lodging demand and limited supply growth, said the firm in a statement.

Combined 2018 forecast pro forma operations result in RevPAR of nearly $290, with the Andaz Maui ranking in the top three of the company’s portfolio from a RevPAR perspective, pro forma. Based on pro forma 2018 forecast, the purchase price results in a combined forward EBITDA multiple of 17x and a cap rate of 5 percent.

These assets are located in markets with outsized RevPAR growth that Host Hotels & Resorts anticipates will outpace the country and its current portfolio. In addition, each asset has a unique story, having undergone significant renovations, and has not yet reached what the company believes to be stabilized levels.

Overall, hotel investors are more confident about the lodging sector now than they were in late 2016, according to new research from JLL. The firm’s North America Hotel Investor Sentiment Survey collected more than 5,000 data points from hotel investors to measure their expectations for 2018.

And U.S. hotel demand grew 3.7 percent nationally during the fourth quarter 2017, up from the 2.4 percent rate during the third quarter 2017, according to CBRE’s fourth quarter 2017 U.S. hotel figures.

CBRE projected the supply of new hotel rooms entering the U.S. lodging markets will peak in 2018. CBRE Hotels’ Americas Research is forecasting the net addition of approximately 101,000 rooms to the U.S. lodging inventory during 2018, an increase of 2.0 percent over 2017 average annual daily supply.  This is the largest number of new rooms to enter the market since the 130,000 rooms that came online in 2009.

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