LAGUNA BEACH, CA—Strategic Hotels & Resorts, Inc has acquired the 250-room Montage Laguna Beach from an affiliate of Ohana Real Estate Investors LLC for $360.0 million, plus customary working capital adjustments.

Montage Hotels & Resorts will continue to manage the Forbes Five-Star destination resort, which features 250 ocean facing guestrooms and is located on approximately 30 acres of fee simple owned land sitting atop a 50-foot bluff overlooking the Pacific Ocean. Opened in 2003, the hotel features 60 suites, 16,000 square feet of indoor meeting space, a 20,000 square foot spa, and multiple acclaimed food and beverage outlets. Strategic funded the acquisition, in part, through the issuance of 7,347,539 shares of common stock to an affiliated designee of the seller, priced at $13.61 per share, or an implied valuation of $100.0 million. In addition, the company assumed a $150 million mortgage loan encumbering the property, priced at a fixed interest rate of 3.90%, which matures in August 2021. The remaining portion of the purchase price was funded with existing cash balances.
"We are thrilled to acquire Montage Laguna Beach, a truly iconic luxury hotel located on one of the best resort settings in the continental United States. The acquisition is consistent with our strategy of expanding our best-in-class portfolio of irreplaceable and world-class luxury hotels located in North America," said Raymond Gellein, Chairman and CEO. "The Southern California market generally, and the coastal Orange County market specifically, have been among the highest rated markets in the country and are poised to continue their strong growth given the diverse set of demand drivers and no competitive supply in the current pipeline as the result of extremely high barriers to entry."
Alan Fuerstman, founder & CEO of Montage added: "We are excited to be working with Strategic Hotels & Resorts, who, as one of the leading luxury hotel owners in our business, share our ongoing commitment to the outstanding hospitality established at Montage Laguna Beach over many years."
The purchase price represents a 16.5 times multiple on forecasted 2015 EBITDA of $21.8 million and a 5.0 percent capitalization rate on forecasted 2015 NOI of $18.1 million.
"Montage Laguna Beach is one of the Southern California resort market leaders with a trailing twelve month RevPAR penetration index of 185 times and a 2015 budgeted ADR of nearly $600 and Total RevPAR over $1,000, both of which meaningfully exceed the average of these respective metrics in our already industry leading portfolio," continued Gellein.
JLL acted as an advisor on the transaction. Strategic was represented by Greenberg Traurig LLP and Paul Hastings LLP on the transaction and Ohana was represented by Dentons.