Dealmaker: Xenia Hotels Acquires Park Hyatt Aviara Resort for $170M

Xenia Hotels & Resorts, Orlando, acquired Park Hyatt Aviara Resort, Golf Club & Spa, a 327-room Carlsbad, Calif., resort for $170 million, or $520,000 per key.

To fund the acquisition, the real estate investment trust sold the 300-room Hilton Garden Inn Washington D.C. Downtown for $128 million or $427,000 per key. The sale price represented a 5.8 percent capitalization rate on the hotel’s trailing 12-month net operating income on October 31.

Xenia Chairman and CEO Marcel Verbaas said the firm purchased Park Hyatt Aviara Resort substantially below replacement cost and below the values of comparable resorts nearby. Part of the 1,443-acre Aviara master-planned community, Park Hyatt Aviara in north San Diego sits adjacent to the Four Seasons Residence Club.

Verbaas said Park Hyatt Aviara’s submarket benefits from high barriers to entry and very limited luxury resort supply in the development pipeline. He noted “substantial” opportunity to improve the resort’s financial performance through better asset management and capital investment.

On 222 acres, the property includes 78,000 square feet of meeting space and an 18-hole golf course designed by Arnold Palmer.

Verbaas noted Xenia remains “bullish” on the long-term strength of the Washington D.C. hotel market, but said the Hilton Garden Inn sale reflects the firm’s long-term plan to upgrade its portfolio with targeted investments and selective dispositions.

After completing the Park Hyatt Aviara acquisition and Hilton disposition, Xenia’s portfolio includes 40 hotels with its 11 luxury hotels and 27 upper-upscale hotels representing 24 percent and 72 percent, respectively, of its total room count.