BETHESDA, MD-DiamondRock Hospitality recently gave the local hotel industry a peek at what is happening with the Westin at City Center. The REIT acquired the hotel from Blackstone last year for $495 million along with Hilton Boston Downtown, the Hilton Burlington, and the Westin San Diego. In December of 2012, it closed on a $74 million, 10-year loan secured by a mortgage on the property. It has also been renovating the project to grand success, according to comments made by COO Rob Tanebaum in the company's earnings call earlier this month.

The reaction from meeting planners has already been very encouraging, he said, "and the 2014 booking pace is up approximately 22%."

"This transformative renovation will reposition the hotel to attract a higher rate of transient and incremental group business," Tanebaum said. "There's been pent-up demand for this hotel and the new product will allow us to gain significant market share and profitability."

Tanebaum went on to tell listeners that the REIT is a long-term believer in the DC market "and the successful implementation of our strategy at this hotel should allow us to outperform the market for several years."

Presumably the Westin asset is among the REIT's core holdings. The company has, like so many other real estate investors, been recycling its assets in order to focus on its core holdings. To that end, the REIT just announced it has completed the sale of the non-core Torrance Marriott South Bay for $76 million.

It plans to redeploy those proceeds into a core hotel, the Hilton Garden Inn being completed in Times Square. So far this cycle the REIT has sold four non-core hotels at "extremely strong EBITDA multiples," CEO Mark Brugger said in the earnings call.

"We will continue to pursue our capital recycling program and we will look to sell one or two more non-core hotels over the next 18 months," he also said.

Instant Insights /

DiamondRock's Westin 2014 Bookings Up 22%

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