Irvine, CA-based Sunstone Hotel Investors, Inc., has acquired the 339-room The Confidante Miami Beach hotel in Miami Beach from an affiliate of Hyatt Hotels Corporation for $232 million ($684,000 per key).
The company will invest approximately $60 million to reposition the hotel into a premiere beachfront resort under Hyatt’s luxury, lifestyle Andaz brand. The renovation program will begin in phases, starting in the fourth quarter of 2022 with completion expected to occur in the first half of 2024 when the Hotel will debut as Andaz Miami Beach.
Sunstone expects the hotel will generate an 8% to 9% stabilized net operating income yield on the total investment in the hotel, including the planned repositioning.
The acquisition was funded from available cash and with $140 million of proceeds received from the company’s previously undrawn revolving credit facility. Based on the Company’s anticipated leverage ratio as of the end of the second quarter, borrowings on the credit facility are expected to bear interest at the rate of one-month LIBOR plus 1.50%.