Hyatt Hotels Corporation (NYSE: H) announced the sale of Playa Hotels & Resorts NV’s real estate portfolio for $2 billion to Tortuga Resorts, a joint venture between an affiliate of KSL Capital Partners LLC and Rodina.
Hyatt acquired Playa earlier this year for $2.6 billion. The real estate portfolio includes 15 all-inclusive resort assets located across Mexico, the Dominican Republic, and Jamaica. Concurrent with the real estate sale, Hyatt and Tortuga will enter into 50-year management agreements for 13 of the 15 properties, with terms consistent with Hyatt’s existing all-inclusive management fee structure, while the remaining two properties are under separate contractual arrangements. Hyatt will retain $200 million of preferred equity in connection with the real estate transaction.
The Chicago-headquartered Hyatt said it could achieve up to an additional $143 million earnout if “certain operating thresholds are met.” Upon completion of the real estate sale, Hyatt is required to use the proceeds to repay the delayed draw term loan used to fund a portion of the Playa acquisition and expects pro forma net leverage to be consistent with thresholds necessary to maintain its investment-grade credit profile.
The real estate transaction is expected to close before the end of this year and is subject to regulatory approval in Mexico and other customary closing conditions.
“The planned real estate sale to Tortuga transforms the acquisition of Playa Hotels & Resorts into a fully asset-light transaction and increases Hyatt’s fee-based earnings,” said Mark Hoplamazian, president and CEO of Hyatt. “Hyatt has secured long-term, durable management agreements and the planned real estate sale demonstrates Hyatt’s commitment to its asset-light business model and ability to deliver value to shareholders that is accretive in the first full year.”
