LOS ANGELES—Maryland-based DiamondRock has sold the Los Angeles Airport Marriott Hotel for $160 million to Chinese developer XLD Group, which plans to invest an additional $15 million to renovate the property. According to sources unrelated to the deal, this is the largest hotel transaction of the year.

As part of the transaction, XLD Group paid off the hotel's $86 million mortgage plus an additional $1.5 million defeasance cost. The total cost of the hotel, including the $15 million in capital improvements, equates to a 6% cap rate, or a 6.6% cap rate with the additional capital investment excluded The hotel has a $10.5 million operating income for the 12-month period from September 30, 2013 to September 30, 2014. Although DiamondRock does expect to record a gain on the sale, it plans to exclude it and its defeasance cost from its adjusted EBITDA and adjusted FFO.

This isn't the duo's first transaction together. XLD Group also purchased the Torrance Marriott Hotel property from DiamondRock for $76 million last year.

Located at 5855 W. Century Blvd. in Los Angeles, the massive hotel has 18 stories and 1,004 hotel rooms. It is one of the largest hotels in the Los Angeles submarket, and has an average of 90% occupancy per night. The renovations will include the addition of suite-style hotel rooms and an executive lounge on the top floor.

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.

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