NEW YORK CITY-DiamondRock Hospitality Co. said Monday that ithas acquired the 169-room Hilton Garden Inn Chelsea New York Cityfrom a joint venture of Inland America and Winston Hotels in anall-cash deal marking its third acquisition here. The $68.4-millionpurchase price represents a 12.9 multiple of 2010 EBITDA and a 7%capitalization rate on forecasted NOI for the year, says theBethesda, MD-based DiamondRock.

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In a release, DiamondRock CEO Mark Brugger says thethree-year-old property in Manhattan’s Chelsea District wasespecially attractive to his company “because of its ability tocharge essentially full-service room rates with a more profitablelimited service cost structure as a result of its strong HiltonGarden Inn branding, access to Hilton Worldwide’s powerfulreservations system and traveler loyalty generated from the Hiltonguest rewards program.”

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Additionally, the Hilton Garden Inn Chelsea at 121 W. 28th St.has outperformed its competitive set, with a RevPAR penetration ofmore than 100% for the first seven months of this year, saysDiamondRock. More generally, DiamondRock says the New York Cityhotel market has remained strong, with market occupancy of close to80% and average daily rate of over $200 through July of ’10.

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The hospitality REIT plans to retain the property’s currentmanager subject to a new, short-term management agreement.Following the acquisition of the Hilton Garden Inn Chelsea,DiamondRock now owns 23 hotels with over 10,700 rooms as well asthe senior note on a 443-key hotel.

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.