DiamondRock Acquires Two Hotels Combined Price of $108.6 Million
Main Photo: The Impressive Looking Bourbon Orleans Hotel
Date: September 2021
Name: Bourbon Orleans Hotel & Henderson Park Inn
Location: New Orleans, Louisiana and Emerald Coast, Florida, USA
Number of Keys: 257
Seller: Bourbon Orleans – The New Orleans Hotel Collection – J Collection, a group of seven hotels in the New Orleans region owned by local investors; Henderson Park Inn – Dunavant Enterprises, who bought the hotel after it’s closure from Hurricane Ivan in 2004
Buyer: DiamondRock Hospitality Company
DiamondRock Hospitality Company has acquired the Bourbon Orleans Hotel, a lifestyle boutique hotel on the famed Bourbon Street in the French Quarter of New Orleans, Louisiana, and Henderson Park Inn, a beachfront resort situated on the Emerald Coast in Destin, Florida. The combined purchase price for the two hotels is $108.6 million. Inclusive of transaction costs, the total investment is $117.4 million.
The 220-room Bourbon Orleans Hotel recently reopened and is expected to generate approximately a 6.3% NOI yield in 2022 and is underwritten to achieve a stabilised 8% NOI yield. The investment in the 37-room Henderson Park Inn was acquired for nearly a 7% capitalisation rate on trailing 12-month NOI and is also expected to achieve an 8% yield after the implementation of new professional management and best practices. Both acquisitions were funded with cash proceeds from dispositions closed in the second quarter and the properties are expected to generate positive cash flow in 2021.
The Bourbon Orleans Hotel is located in the heart of the French Quarter of New Orleans. When the property was rebuilt into a modern hotel it retained its historic façade and Parisian grandeur from its time as The Orleans Theatre & Ballroom (1817-1881) and convent for the Sisters of the Holy Family (1881-1964). The hotel is traditionally ranked top 10 on TripAdvisor. It has also been recognized for its excellence by Conde Nast (#7 Top Hotel in New Orleans), USA Today (#5 Top Haunted Hotel in the U.S.), and TripAdvisor (2019 Certificate of Excellence).
The Bourbon New Orleans Hotel is part of the prestigious New Orleans Hotel Collection. Located in the heart of the French Quarter, the Bourbon Orleans Hotel features a rich history and opulent French styling reminiscent of the early 1800s. The hotel’s location is just steps away from the famed St. Louis Cathedral, upscale shopping on Royal Street, local artists and performers of Jackson Square, and many restaurants, galleries and nightlife in between. The Bourbon Orleans Hotel is locally owned and committed to preserving the history and character of the hotel for generations.
Situated on Florida’s Emerald Coast, Henderson Park Inn is aimed at the adults-only, beachfront romantic vacations and retreats market. The Resort is situated on nearly two acres of secluded white-sand beach, making it the #1 resort in Destin on TripAdvisor. Destin was recently ranked as the #1 Best Beach in Florida and the #3 Best Beach in the U.S. The Henderson Park Inn is one of the few beachfront hotels in Destin.
In 1992, long-time Destin residents, Bill and Steve Abbott built the main building of Henderson Park Inn to resemble their uncle’s inn in Maine, The Sparhawk Hotel. In 1997, they expanded the property, adding the east building.
Billy Dunavant of Dunavant Enterprises, the world’s largest cotton merchant, saw the closed property as a grand opportunity and purchased the Destin beach hotel with plans to construct a stunning new beach resort in its place. This resort was envisioned and brought to his attention by his real estate vice president, Bill Hagerman, and the two worked on plans for what would one day become Henderson Beach Resort.
That plan was halted when they decided to open the inn to evacuees of Hurricane Katrina instead. Working with Destin city officials and The Village Baptist Church, the inn became a transitional home for over a year to those who had lost everything in the storm. Community members brought daily meals and other necessary items for those residing at the Destin beach hotel.
Price: $108.6m
Price per Key: $422,568
THPT Comment: Great progress for Diamond Rock, a REIT, with some 30 premium hotels across North America and the Caribbean, since their foundation in 2004.
First Seen: www.hotel-online.com
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