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Washington, D.C. City Center Hotel
DiamondRock Hospitality Company has announced the completion of the Westin Washington, D.C. City Center’s sale for $92.0 million, marking a significant stride in its long-term earnings and cash flow per share growth strategy.
DiamondRock Hospitality Company, a renowned real estate investment trust (REIT), confirmed on February 19, 2025, the finalization of the Westin Washington, D.C. City Center’s sale. The hotel, boasting 410 rooms, was sold for a contract price of $92.0 million.
The sales price represented an 11.2x multiple on the hotel’s 2024 EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) and a 7.5% capitalization rate on its 2024 net operating income. When considering the company’s projected capital expenditures, the capitalization rate was 5.6%. Excluding a one-time property tax credit and a temporary discount on franchise fees received by the hotel in 2024, the sales price represented an 11.9x multiple on the 2024 Hotel EBITDA and a 7.0% capitalization rate on the hotel’s 2024 net operating income, or a capitalization rate of 5.2% inclusive of the company’s projected capital expenditures.
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Reconciliation of Hotel Net Income to Hotel Net Operating Income
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(Unaudited, in millions)
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Hotel net income
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$ 3.9
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Adjustment:
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Depreciation and amortization
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4.3
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Hotel EBITDA
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$ 8.2
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Adjustment:
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Capital reserve
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(1.3)
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Hotel net operating income
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$ 6.9
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Hotel revenues
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$ 32.5
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Jeffrey J. Donnelly, Chief Executive Officer of DiamondRock Hospitality Company, stated that this sale signifies an essential phase in their strategy to augment long-term earnings and cash flow per share growth. He added that the company plans to judiciously redeploy the proceeds to generate exceptional value for its shareholders.
The hotel’s net income, depreciation, and amortization, EBITDA, and net operating income have been carefully detailed in the announcement. These figures provide insights into the hotel’s operational performance at a granular level.
DiamondRock Hospitality Company, owning 36 premium quality hotels and resorts with approximately 9,600 rooms, is positioned to operate under leading global brand families and independent boutique hotels. The company has not indicated any changes to its operations or outlook following the sale of the Westin Washington, D.C. City Center.
