Sunstone Hotel Investors, Inc. announced it has completed the acquisition of the 259-room W San Diego located in the heart of downtown San DiegoThe hotel is within walking distance of the Gaslamp Quarter, Little Italy and the convention center.
The W San Diego features 240 guestrooms and 19 suites. The purchase price was approximately $96 million, or approximately $370,000 per room. The hotel was constructed in 2002 by a venture comprised of Starwood Hotels & Resorts, Worldwide, Inc., Gatehouse Capital and Multi-Employer Development Partners (the hotel’s majority owner).
Based upon the hotel’s 2006 forecast, the purchase price equates to approximately 12x 2006 EBITDA (reconciliation to net income below). Concurrent with the acquisition, the Company closed on a fixed-rate first mortgage loan totaling $65.0 million at a rate of 6.14%. The loan is interest only for 69 months and will mature in 2018. The balance of the purchase price was funded through a draw on the Company’s revolving credit facility.
Robert A. Alter, Sunstone’s Chief Executive Officer, stated, “We are excited to announce the acquisition of our first W Hotel and our first management relationship with Starwood Hotels & Resorts Worldwide, Inc. The W San Diego is a one-of-a-kind asset that leads the downtown market in both ADR and RevPAR. We believe that San Diego will continue to be one of the top performing U.S. hotel markets benefiting from a combination of strong business demand drivers, robust convention business and a healthy tourism industry.”