DiamondRock Hospitality Company has sold its leasehold interest in the 189-key Courtyard by Marriott New York Manhattan/Fifth Avenue to an undisclosed buyer for $33.0 million. The sale price represents a 6.3x multiple on 2025 adjusted EBITDA and a 13.3% cap rate on 2025 hotel NOI.
Given $12 million of upcoming capital expenditures, a contractual increase in the ground lease payment and higher labor costs over the next several years, DiamondRock estimates a stabilized cap rate on the sale of approximately 7.8%, or 6.5% on a fee simple basis.
“From 2019 to 2025, the hotel’s NOI more than doubled, reflecting the value created by our asset management team and operating partners,” said CEO Jeffrey J. Donnelly. “When evaluating the hotel’s upcoming capital expenditure needs and structural expense headwinds, the expected returns did not meet our investment thresholds. This transaction reflects our continued commitment to disciplined capital allocation and growing free cash flow per share for the benefit of our shareholders.”
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