Strategic Hotels makes $330mn acquisition

Strategic Hotels & Resorts are planning to acquire the Ritz-Carlton Laguna Niguel for $330.0 million plus assumed debt of approximately $8.5 million. The acquisition, which is expected to close in July, remains subject to customary closing conditions.

The Ritz-Carlton Laguna Niguel, a 393-room luxury resort in Dana Point, California, sits upon 18 acres perched atop a bluff overlooking the Pacific Ocean. The hotel recently completed a $40.0 million repositioning including the renovation of all guestrooms and lobby areas, a new ocean view restaurant, and the development of a 6,500 square foot spa and 2,500 square foot fitness center. The resort contains 25,600 square feet of executive meeting space, 54,000 square feet of outdoor meeting space, five premium food and beverage outlets, and full beach access.

The company forecasts a period of ramp-up during the next twelve months after the renovation and estimates that the property will contribute between $11.0 million and $12.0 million of EBITDA in the last six months of 2006, and between $23.0 million and $24.0 million in the first twelve months of ownership.

Additionally, the company entered into an agreement with KSL RLP Holdings, LLC, an affiliate of KSL Capital Partners, LLC, to sell the Marriott Rancho Las Palmas Resort & Spa in Rancho Mirage, California, for $56.0 million, or $126,000 per room.

The 444-room property was projected to contribute approximately $3.0 million in EBITDA in 2006, resulting in an 18.7x EBITDA multiple on the sale. The transaction, subject to customary closing conditions, is anticipated to close in July.
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