DiamondRock Hospitality Company Sells Courtyard by Marriott New York Manhattan/Fifth Avenue for \$33 Million; Revises Full-Year 2026 Financial Guidance

Key Points from the Announcement

• Asset Sale: DiamondRock Hospitality Company (“the Company”) has sold its leasehold interest in the 189-room Courtyard by Marriott New York Manhattan/Fifth Avenue for \$33 million.
• Valuation Metrics: The sale price represents a 6.3x multiple on 2025 Hotel Adjusted EBITDA and a 13.3% capitalization rate on 2025 Hotel Net Operating Income.
• Adjusted Cap Rate: After considering an upcoming \$12 million in mandatory capital expenditures, a contractual ground lease payment increase, and projected higher labor costs, the Company estimates the stabilized cap rate on the sale is approximately 7.8%, or 6.5% on a fee simple basis.
• Performance Growth: From 2019 to 2025, the hotel’s Net Operating Income more than doubled, reflecting effective asset management.
• Rationale for Sale: Despite strong historical performance, projected returns did not meet the Company’s investment thresholds due to upcoming expense headwinds and capital needs.
• Revised 2026 Guidance: The Company has adjusted its full-year 2026 guidance to reflect the sale. The main financial impacts include:
  • Adjusted EBITDA: Lowered by \$5.9 million, now expected in the range of \$290.2 million to \$302.2 million.
  • Adjusted FFO: Reduced by \$5.1 million, now expected between \$228.4 million and \$240.4 million.
  • Adjusted FFO per share: Lowered by \$0.025 per share, now expected between \$1.10 and \$1.16.
  • Comparable RevPAR and Total RevPAR Growth: No change; guidance remains at 1.5% to 3.5% and 1.75% to 3.75%, respectively.

Details for Investors

The sale is part of DiamondRock’s strategy to focus capital allocation on assets that generate stronger, sustainable returns and to grow free cash flow per share for shareholders. The decision reflects the Company’s disciplined approach in light of rising capital and structural costs at the sold property.

Company Profile

DiamondRock Hospitality Company (Nasdaq: DRH) is a self-advised real estate investment trust (REIT) with a geographically diversified portfolio of 34 premium hotels and resorts totaling approximately 9,400 rooms. The portfolio includes both leading global brands and independent boutique hotels focused on leisure destinations and top gateway markets.

Financial Metrics and Reconciliations

• Full-Year 2026 Guidance (Revised):
  • Net Income: \$103.2M – \$116.2M
  • Adjusted EBITDA: \$290.2M – \$302.2M
  • Adjusted FFO: \$228.4M – \$240.4M
  • Adjusted FFO per share: \$1.10 – \$1.16
  • Diluted weighted average shares and units: 208M
• Hotel Operating Performance (2025):
  • ADR: \$286.57
  • Occupancy: 71.6%
  • RevPAR: \$205.36
  • Total RevPAR: \$318.95
  • Total Revenues: \$1.095B
  • Hotel Adjusted EBITDA: \$310.09M
  • Adjusted EBITDA Margin: 28.32%
  • Available rooms: 3,433,190

Shareholder Considerations & Potential Share Price Impact

• Price Sensitive Information: The sale of a major New York City asset at a substantial cap rate, combined with a downward revision in 2026 Adjusted EBITDA and FFO guidance, is highly relevant for investors. While the sale strengthens the Company’s balance sheet and focuses the portfolio, it temporarily lowers projected earnings and cash flow per share.
• Potential Share Price Impact: The downward revision in earnings guidance and FFO per share could weigh on the share price in the near term, while the long-term impact will depend on how successfully the Company redeploys the sales proceeds and manages its remaining portfolio.
• Strategic Implications: The transaction underscores the Company’s commitment to disciplined capital allocation and long-term value creation, signaling to investors that underperforming or capital-intensive assets may be divested in favor of higher-return opportunities.

Forward-Looking Statements

This article contains forward-looking statements based on management’s current expectations, projections, and assumptions regarding future events. Actual results may differ materially due to risks and uncertainties including, but not limited to, those identified in the Company’s SEC filings.

Disclaimer: This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Please review official filings and consult with a financial advisor before making investment decisions.

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