HUNTINGTON BEACH, CA—After acquiring the Shorebreak Hotel here, DiamondRock Hospitality Co. has brought in Kimpton Hotels & Restaurants to manage the property, looking for enhanced operating results for its purchase. DiamondRock has acquired the beachfront hotel here for $58.5 million from an undisclosed seller.
The purchase price represents a 12.8 multiple on 2015 hotel EBITDA. According to Mark Brugger, president and CEO of DiamondRock, “This was a rare opportunity to buy a truly unique beachfront property in one of Southern California's premier resort destinations. With 10 miles of pristine beaches, Huntington Beach is one of the highest-rated markets in the country, with excellent RevPAR growth potential and high barriers to entry.”
In bringing Kimpton on as manager, Brugger says his firm believes “there is untapped potential at this asset. Kimpton has a strong track record of operating popular, successful hotels throughout Southern California, including desirable beach destinations, which made them a natural choice for us with this exciting new property.”
Kimpton assumed management of the hotel upon closing of the acquisition and plans to use its experience operating boutique hotels to drive enhanced operating results. Kimpton plans to implement an aggressive sales and marketing effort for the property.
GlobeSt.com was unable to reach DiamondRock before deadline to discuss the identity of the seller/manager or the firm's future plans for the hotel.
The Shorebreak Hotel was constructed and opened six years ago and is a premier beachfront hotel on Pacific Coast Highway overlooking the Pacific Ocean. Designed as a unique surfing-inspired resort, the hotel features 157 guestrooms, including 37 suites, and the Zimzala Restaurant & Bar.
The acquisition of the Shorebreak Hotel brings the total number of properties in DiamondRock's portfolio to 28; it is the firm's seventh resort property and fourth property located on the West Coast. The company match-funded the acquisition with proceeds from equity issuance under its at-the-market program.
The hotel sector is making the news this week. As GlobeSt.com reported earlier this week, in one of the largest securitizations backed by lodging properties since the CMBS market cratered amid the 2008 financial crisis, Blackstone Real Estate Partners VII is preparing to issue $1.8 billion of commercial mortgage pass-through certificates on a first-mortgage loan for some 500 Motel 6 properties. The improvement in the portfolio's performance since 2012, when it secured a $1.05-billion pass-through issue, roughly parallels the progress the hotel sector has made in that time.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
