NEW YORK CITY-DiamondRock Hospitality Co. has agreed to buy the 712 room Radisson Lexington Hotel, located at 511 Lexington Ave., for $335 million. The company has paid a 10% deposit on the property and is currently reviewing whether or not to keep Radisson as the hotel’s brand, according to a release. However, it anticipates entering into a short-term franchise agreement with Radisson.
The hotel--which has seen $54 million devoted to infrastructure, room upgrades and other improvements since 1999--is projected to bring in $198 RevPAR in 2011.
“We are excited to acquire this significant full service hotel located in Midtown New York at a material discount to replacement cost,” DiamondRock CEO Mark Brugger says in a release announcing the REIT's purchase and sale agreement. “The hotel’s forecasted 2011 RevPAR is $198, which is 70% above our portfolio average and it is expected to generate Hotel Adjusted EBITDA margins that are 14 percentage points higher than our portfolio average.”
Calls to Bethesda, MD-based DiamondRock for comment weren’t returned in time for publication. Management of the hotel’s day-to-day operations will remain the responsibility of Highgate Hotels, which has operated the hotel since 1999 and will ink a new management agreement with DiamondRock. “We look forward to furthering our business relationship with Highgate Hotels, the leading independent hotel operator in New York City," DiamondRock president and COO John Williams says.
The sale marks continued interest on the part of investors in New York’s hotel industry and is the latest in recent transactions.
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