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$31M Buys 332-Unit Mexico Resort

CANCUN-The Virginia-based lodging REIT Highland Hospitality Corp. picks up the Tucancun Beach Resort & Villas for $93,400 per room and hires Barcelo Hotels & Resorts to manage the property.

By Brian K. Miller | Updated on April 18, 2005

CANCUN-Highland Hospitality Corporation has acquired the Tucancun Beach Resort & Villas here from a private seller in Mexico for $31 million or $93,400 per room. It is the first purchase in Mexico for the McLean, VA-based lodging REIT, which has allocated a portion of its capital in all-includive beachfront resorts outside of the US. Highland’s global partner Barcelo Hotels & Resorts of Spain will manage the property. With the acquisition, Highland now owns 19 hotel properties with an aggregate of 5,475 rooms in ten states and Mexico. The Tucancun Beach Resort & Villas is located within the Hotel Zone on Cancun Island, approximately 20 minutes from Cancun International Airport and downtown Cancun. The resort consists of four multiple-story towers and villas situated on about 4.5 acres of fee-owned land, including approximately 600 feet of direct beachfront. Approximately two- thirds of the 332 rooms have private terraces and ocean views. On-site amenities include three pools, four restaurants, three lounges, on-site car rental and travel agencies, concierge services, aqua sports & dive services, fitness room, tennis court, business center and a 3,000 sf ballroom.A source at Highland tells GlobeSt.com the hotel’s average occupancy in 2004 was about 71% and the average daily room rate was $107, but adds that the numbers are expected to improve in 2005 due national branding and management and property upgrades. In a prepared statement, Highland president James Francis describes the purchase price for the complex “attractive” and says Barcelo’s ability to “efficiently” market and operate the resort “will help to generate significant current returns and create value over time for our shareholders.”

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