Sunstone Pays $230M for Riverwalk Hotel

Sunstone Hotel Investors acquired the 630-room Hyatt Regency San Antonio Riverwalk for a gross purchase price of $230 million. The Hotel is situated directly between San Antonio’s famous Riverwalk and the Alamo, the two most visited tourist sites in Texas. The acquisition includes nearly two acres of riverfront land and a 516-space parking garage, located adjacent to the Alamo Visitor Center and Museum which is currently under development. An affiliate of Hyatt was the seller.

The Hotel recently underwent a comprehensive $37 million guestroom renovation and does not have any meaningful required near-term capital needs. Hyatt will continue to manage the Hotel under the Hyatt Regency brand and will contribute approximately $8 million of key money as part of the transaction, subject to the terms of the Company’s management agreement with Hyatt.

Inclusive of the incentives offered by Hyatt, the net purchase price implies a value of approximately $352,000 per key and represents an 11.1x multiple on the midpoint of the Company’s estimate of 2024 hotel EBITDA and a 8.0% capitalization rate based on the midpoint of projected hotel net operating income.