In Brief: DiamondRock Hospitality Company announced today the sale of its leasehold interest in the 189-room Courtyard by Marriott New York Manhattan/Fifth Avenue for $33.0 million. The sales price represents a 6.3x multiple on 2025 Hotel Adjusted EBITDA and a 13.3% capitalization rate on 2025 Hotel Net Operating Income.
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Guestroom at the Courtyard by Marriott New York Manhattan/Fifth Avenue – Image Credit Marriott International
DiamondRock Hospitality Company announced today the sale of its leasehold interest in the 189-room Courtyard by Marriott New York Manhattan/Fifth Avenue for $33.0 million. The sales price represents a 6.3x multiple on 2025 Hotel Adjusted EBITDA and a 13.3% 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%, or 6.5% 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:
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Metric
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Previous 2026 Guidance
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Adjustment for Hotel Sale
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Revised 2026 Guidance
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Comparable RevPAR Growth
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1.5% to 3.5%
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— %
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1.5% to 3.5%
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Comparable Total RevPAR Growth
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1.75% to 3.75%
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— %
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1.75% to 3.75%
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|
Adjusted EBITDA (in millions)
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$296 to $308
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($5.9)
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$290.2 to $302.2
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Adjusted FFO (in millions)
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$233.5 to $245.5
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($5.1)
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$228.4 to $240.4
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Adjusted FFO per share
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$1.12 to $1.18
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($0.025)
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$1.10 to $1.16
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EBITDA, EBITDAre and Adjusted EBITDA
The following table is a reconciliation of our GAAP net income to EBITDA, EBITDAre and Adjusted EBITDA (in thousands):
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Full Year 2026 Guidance
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|||
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Low End
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High End
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||
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Net income
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$ 103,200
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$ 116,200
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|
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Interest expense
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59,000
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58,000
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|
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Income tax expense
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3,000
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4,000
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|
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Real estate related depreciation and amortization
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110,600
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109,600
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|
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EBITDA/EBITDAre
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275,800
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287,800
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|
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Non-cash lease expense and other amortization
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5,350
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5,350
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|
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Share-based compensation expense
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9,000
|
9,000
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|
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Adjusted EBITDA
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$ 290,150
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$ 302,150
|
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FFO and Adjusted FFO
The following table is a reconciliation of our GAAP net income to FFO and Adjusted FFO (in thousands except per share amounts):
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Full Year 2026 Guidance
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|||
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Low End
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High End
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||
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Net income
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$ 103,200
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$ 116,200
|
|
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Real estate related depreciation and amortization
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110,600
|
109,600
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|
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FFO available to common stock and unit holders
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213,800
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225,800
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|
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Non-cash lease expense and other amortization
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5,600
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5,600
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|
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Share-based compensation expense
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9,000
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9,000
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|
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Adjusted FFO available to common stock and unit holders
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$ 228,400
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$ 240,400
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|
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Adjusted FFO available to common stock and unit holders, per diluted share
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$ 1.10
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$ 1.16
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|
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Diluted weighted average shares and units
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208,000
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208,000
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Reconciliation of Hotel Net Income to Hotel Net Operating Income
The following table is a reconciliation of the Hotel’s GAAP net income to Hotel Adjusted EBITDA and Hotel Net Operating Income. Hotel Net Operating Income represents Hotel Adjusted EBITDA after the deduction of a 4% capital reserve (in millions).
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Year Ended
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|
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(unaudited)
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|
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Hotel Net Income
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$ 3.1
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Cash interest expense for ground lease
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1.1
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Non-cash interest expense for ground lease
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0.8
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Depreciation and amortization
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1.4
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Hotel Adjusted EBITDA
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6.4
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Cash interest expense for ground lease(1)
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(1.1)
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Hotel Adjusted EBITDA (including ground lease)
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5.3
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Capital reserve
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(0.9)
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Hotel Net Operating Income
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$ 4.4
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(1)
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The Hotel’s ground lease is accounted for as a finance lease for GAAP purposes, resulting in the lease expense being recorded as interest expense in our consolidated statement of operations. In order to reflect Hotel Adjusted EBITDA on a basis comparable to other ground leased hotels, the Company is presenting Hotel Adjusted EBITDA inclusive of the cash-based ground lease expense associated with the Hotel.
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Selected Quarterly Comparable Operating Information
The following tables are presented to provide investors with selected quarterly comparable operating information for the Company’s current portfolio of 34 hotels.
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Quarter 1, 2025
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Quarter 2, 2025
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Quarter 3, 2025
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Quarter 4, 2025
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Full Year 2025
|
|
|
ADR
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$ 278.85
|
$ 294.88
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$ 279.91
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$ 292.20
|
$ 286.57
|
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Occupancy
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66.6 %
|
76.3 %
|
75.8 %
|
67.6 %
|
71.6 %
|
|
RevPAR
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$ 185.70
|
$ 255.03
|
$ 212.06
|
$ 197.57
|
$ 205.14
|
|
Total RevPAR
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$ 293.07
|
$ 350.49
|
$ 323.24
|
$ 308.81
|
$ 318.95
|
|
Revenues (in thousands)
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$ 248,093
|
$ 299,999
|
$ 279,713
|
$ 267,228
|
$ 1,095,033
|
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Hotel Adjusted EBITDA (in thousands)
|
$ 61,153
|
$ 93,576
|
$ 81,534
|
$ 73,829
|
$ 310,092
|
|
Hotel Adjusted EBITDA Margin
|
24.65 %
|
31.19 %
|
29.15 %
|
27.63 %
|
28.32 %
|
|
Available Rooms
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846,540
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855,946
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865,352
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865,352
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3,433,190
|
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Quarter 1, 2026
|
|
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ADR
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$ 286.02
|
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Occupancy
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66.3 %
|
|
RevPAR
|
$ 189.54
|
|
Total RevPAR
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$ 300.46
|
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Revenues (in thousands)
|
$ 254,351
|
|
Hotel Adjusted EBITDA (in thousands)
|
$ 65,878
|
|
Hotel Adjusted EBITDA Margin
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25.90 %
|
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Available Rooms
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846,540
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