DiamondRock Hospitality Company (NYSE:DRH) today announced that it has acquired the fee-simple interest in the Chico Hot Springs Resort, a lifestyle resort in Paradise Valley, Montana and near Yellowstone National Park. The purchase price for the Resort and adjacent ranch is $33 million. Chico was acquired from an individual owner-operator and is an independent resort, completely unencumbered by brand and management agreements
The $27 million purchase price for the 117-room, 153-acre Resort represents an 8.1% capitalization rate on 2022 net operating income. Year-to-date comparable RevPAR growth through the second quarter 2023 was 8.7%. The adjacent ranch, a 595-acre parcel purchased for approximately $6 million, provides extensive on-site trails for hiking and horseback riding as well as potential for future expansion of the Resort or residential lot sales. We expect Chico will generate a 10.5% NOI yield on the total $33 million purchase price upon stabilization. The acquisition was funded from corporate cash on hand.
"Chico Hot Springs Resort is another example of DiamondRock's leadership in identifying attractive investment opportunities that align with our focus on unique, leisure-oriented experiential hotels and resorts," said Mark W. Brugger, President and Chief Executive Officer of DiamondRock Hospitality Company. "Acquiring owner-operated properties in unique markets often allows DiamondRock to achieve superior returns on high quality real estate. Moreover, Chico has numerous of the attractive attributes we target, such as durable cash flow, significant ROI opportunities, irreplaceable location, fee-simple and fully unencumbered by brand and management."
