Sunstone Hotel to acquire Hyatt Regency San Antonio Riverwalk from Hyatt

Sunstone Hotel Investors (SHO) announced that it has entered into a definitive agreement with an affiliate of Hyatt Hotels Corporation (H) to acquire the fee-simple interest in the 630-room Hyatt Regency San Antonio Riverwalk hotel. “The exceptionally well-located hotel is situated directly between San Antonio’s famous Riverwalk and the Alamo, the two most visited tourist sites in Texas. The acquisition includes nearly two acres of riverfront land and a 516-space parking garage, located adjacent to the Alamo Visitor Center and Museum which is currently under development. The hotel recently underwent a comprehensive $37M guestroom renovation and does not have any meaningful required near-term capital needs. Sunstone is acquiring the hotel for a gross purchase price of $230M. Hyatt will continue to manage the hotel under the Hyatt Regency brand and will contribute approximately $8M of key money as part of the transaction, subject to the terms of the company’s management agreement with Hyatt,” Sunstone stated. “Inclusive of the incentives offered by Hyatt, the net purchase price implies a value of approximately $352,000 per key and represents an 11.1x multiple on the midpoint of the company’s estimate of 2024 hotel EBITDA and a 8.0% capitalization rate based on the midpoint of projected hotel net operating income. The acquisition will be funded from cash on hand using a portion of the sale proceeds from the previously completed disposition of Boston Park Plaza. The company currently expects to close the acquisition in late April and that the hotel will contribute $12 to $13M of hotel EBITDA and approximately 6c of adjusted FFO per diluted share during the company’s ownership period in 2024. The Company will provide additional details on the transaction, including the impact on its previously provided full year outlook as part of its first quarter earnings call in early May,” Sunstone added.