DiamondRock Hospitality Acquires The Hotel Rex In San Francisco

       DiamondRock Hospitality Acquires The Hotel Rex In San Francisco

PR Newswire

BETHESDA, Md., Nov. 13, 2012

BETHESDA, Md., Nov. 13, 2012 /PRNewswire/ --DiamondRock Hospitality Company
(the "Company") (NYSE: DRH) announced today that it acquired the fee simple
interest in Hotel Rex (the "Hotel") for $29.5 million. The full-service
boutique hotel is located in the Union Square district of San Francisco,
California and is managed by Joie de Vivre Hospitality, LLC.

(Logo: http://photos.prnewswire.com/prnh/20040708/DCTH028 )

"We are excited to be announcing our first acquisition in San Francisco at an
attractive initial yield and a significant discount to replacement cost. With
no supply on the horizon, we believe San Francisco can achieve several years
of outsized growth. This acquisition, combined with the recent disposition of
the Westin Atlanta, continues the Company's strategy of disposing of non-core
hotels and reallocating proceeds into faster growing markets at comparable or
better returns," stated Mark W. Brugger, Chief Executive Officer of
DiamondRock Hospitality Company.

San Francisco is one of the most desirable hotel markets in the world due to
the confluence of corporate, leisure and group demand. Continued strong growth
is anticipated since there is a strong convention calendar, a diverse base of
both emerging and established companies, and no new supply. Year-to-date
through October 2012, the city has exhibited strong performance with RevPAR
growth of approximately 14.0%. With a diverse base of demand generators, lack
of new hotel supply and upcoming highly anticipated events such as The
America's Cup, the city's lodging market will continue to see significant
gains in operating performance over the next few years. The Urban Land
Institute recently made San Francisco its top-ranked city in its 2013 Real
Estate Forecast.

The 94-room Hotel Rex is located in the Union Square district, one block from
the famed Union Square. Leisure and business guests enjoy the Hotel's
convenient location close to the city's leading retail, dining and
entertainment venues as well business demand generators including the Moscone
Center, the Financial District and the burgeoning hub of the technology sector
in the South of Market (SoMa) District. Guests enjoy a location less than one
block from San Francisco's Powell Street Cable Car line, which provides
convenient access to the city's key attractions including Fisherman's Wharf,
Nob Hill and Chinatown.

Originally built in 1907, the Hotel opened as the Hotel Rex in 1996 featuring
94 rooms, including 2 suites, with modern amenities and is themed after the
San Francisco art and literary salons of the 1920-30's. The Hotel features
distinctive period furnishings, rich and playful color schemes, shelves of
antique books in the lobby and an impressive artwork collection. The lobby
lounge hosts a variety of events including the evening wine hour, various
literary events and live jazz on Friday evenings. Guests enjoy high quality
finishes and accommodations, more than 1,700 square feet of meeting and event
space, a restaurant and bar and a business center.

The Hotel is forecasted to achieve 2012 revenue per available room ("RevPAR")
of over $150, an increase of 20% over the prior year. With occupancy exceeding
85 percent, the Hotel continues to be successful in moving up room rates.
Earnings before interest expense, taxes, depreciation and amortization ("
EBITDA") in 2012 is projected to be $2.15 million. The EBITDA for the
Company's ownership period in 2012 is expected to be approximately $200,000.

For 2013, we anticipate that the Hotel will continue to benefit from strong
demand in San Francisco for leisure (40% of revenues), group (15% of revenues)
and business transient guests (45% of revenues), with RevPAR increases of over
10%. Budgeted EBITDA for 2013 of $2.45 million would be even greater but for
increases to property taxes as a result of the transaction.

The Company intends for the Hotel to continue operating as an independent
boutique property and Company is reviewing several upside opportunities. In
particular, the Company is evaluating strategic capital investments in the
guestrooms which would enable the Hotel to generate additional ADR and
reconfiguring the public space to create leased retail opportunities on highly
trafficked Sutter Street.

The Company funded the acquisition with existing corporate credit facility
capacity generated by the recent disposition of the Westin Atlanta North.
Following the transaction, the Company has $95 million of capacity on its
corporate credit facility and owns 16 hotels unencumbered by mortgage debt.

About the Company

DiamondRock Hospitality Company is a self-advised real estate investment trust
(REIT) that is an owner of premium hotel properties. The Company owns 27
premium hotels with approximately 11,600 rooms and holds the senior mortgage
loan on another premium hotel. The Company's hotels are generally operated
under globally recognized brands such as Hilton, Marriott, and Westin. For
further information, please visit DiamondRock Hospitality Company's website at
www.drhc.com.

This press release contains forward-looking statements within the meaning of
federal securities laws and regulations. These forward-looking statements are
generally identifiable by use of the words "will," "believe," "expect,"
"intend," "anticipate," "estimate," "project" or similar expressions, whether
in the negative or affirmative. Forward-looking statements are based on
management's current expectations and assumptions and are not guarantees of
future performance. Factors that may cause actual results to differ
materially from current expectations include those risk factors and other
factors discussed from time to time in our periodic filings with the
Securities and Exchange Commission, including our Annual Report on Form 10-K
for the year ended December 31, 2011. Accordingly, there is no assurance that
our expectations will be realized. Except as otherwise required by the federal
securities laws, we expressly disclaim any obligations or undertaking to
publicly release any updates or revisions to any forward-looking statement
contained in this press release to reflect events, circumstances or changes in
expectations after the date of this press release.



Reconciliation of Estimated Net Income to Estimated EBITDA ($000s)
                        2012           2012 Period      2013
                        Forecast       of Ownership     Budget
Estimated Net Income    $   1,135    $     57    $   1,430
Income Tax Expense      40             3                45
Depreciation Expense    975            140              975
Interest Expense        -              -                -
Estimated EBITDA        $   2,150    $    200     $   2,450



EBITDA is defined as net income (loss) before interest, income taxes,
depreciation and amortization. We believe it is a useful financial performance
measure for us and for our stockholders and is a complement to net income and
other financial performance measures provided in accordance with GAAP. We use
EBITDA to measure the financial performance of our operating hotels because it
excludes expenses such as depreciation and amortization, income taxes and
interest expense, which are not indicative of operating performance. By
excluding interest expense, EBITDA measures our financial performance
irrespective of our capital structure or how we finance our properties and
operations. By excluding depreciation and amortization expense, which can vary
from hotel to hotel based on a variety of factors unrelated to the hotels'
financial performance, we can more accurately assess the financial performance
of our hotels. Under GAAP, hotels are recorded at historical cost at the time
of acquisition and are depreciated on a straight-line basis. By excluding
depreciation and amortization, we believe EBITDA provides a basis for
measuring the financial performance of hotels unrelated to historical cost.
However, because EBITDA excludes depreciation and amortization, it does not
measure the capital we require to maintain or preserve our fixed assets. In
addition, because EBITDA does not reflect interest expense, it does not take
into account the total amount of interest we pay on outstanding debt nor does
it show trends in interest costs due to changes in our borrowings or changes
in interest rates. EBITDA, as calculated by us, may not be comparable to
EBITDA reported by other companies that do not define EBITDA exactly as we
define the term. Because we use EBITDA to evaluate our financial performance,
we reconcile it to net income (loss) which is the most comparable financial
measure calculated and presented in accordance with GAAP. EBITDA does not
represent cash generated from operating activities determined in accordance
with GAAP, and should not be considered as an alternative to operating income
or net income determined in accordance with GAAP as an indicator of
performance or as an alternative to cash flows from operating activities as an
indicator of liquidity.

SOURCE DiamondRock Hospitality Company

Website: http://www.drhc.com
Contact: Sean Mahoney, +1-240-744-1150
 
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