US: The Bourbon Orleans Hotel in New Orleans and Henderson Park Inn in Destin have been acquired by DiamondRock Hospitality Company for $108.6 million.
The Bourbon Orleans Hotel, located in the French Quarter of New Orleans, Louisiana, is a 220-room property. It previously operated as The Orleans Theatre & Ballroom between 1817-1881 and a convent for the Sisters of the Holy Family in 1881-1964.
It has recently reopened and is expected to generate approximately 6.3 per cent net operating income (NOI) yield in 2022. It’s been underwritten to achieve a stabilised eight per cent NOI yield.
The Henderson Park Inn, situated on Florida’s Emerald Coast, is an adults-only beachfront resort. The 37-room property sits on nearly two acres of secluded beach and achieved an average room rate of more than $500 in June.
Previously managed by an owner-operator, DiamondRock has installed a professional management company at the resort. It was acquired for nearly a seven per cent capitalisation rate on trailing 12-month NOI and is expected to achieve an eight per cent yield.
Both acquisitions were funded with cash proceeds from dispositions closed in the second quarter of this year. Inclusive of transaction costs, the total investment came to $117.4 million.
DiamondRock Hospitality Company is a real estate investment trust (REIT). It owns a portfolio of 31 hotels and resorts in gateway markets and destination resort locations.