DiamondRock Hospitality Company Announces Pricing Of Public Offering Of Its 8.250% Series A Cumulative Redeemable Preferred Stock

Rhea-AI Summary

DiamondRock Hospitality Company (NYSE: DRH) has announced an underwritten public offering of 4,400,000 shares of its 8.250% Series A Cumulative Redeemable Preferred Stock, priced at $25.00 per share. The gross proceeds are estimated at $110 million before deductions. Closing is anticipated on August 31, 2020. Proceeds will be utilized for general corporate purposes including debt repayment and property improvements. The Series A Preferred Stock is expected to be listed on the NYSE under the symbol DRH Pr A.

Positive

• Net proceeds of approximately $110 million expected to strengthen financial position.
• The offering enables repayment of debt, potentially reducing future financial costs.
• Funding allocated for capital expenditures and property improvements may enhance asset value.

Negative

• Potential dilution of existing shares if underwriters exercise their option for additional shares.

BETHESDA, Md., Aug. 20, 2020 /PRNewswire/ -- DiamondRock Hospitality Company (the "Company") (NYSE: DRH) today announced it has priced an underwritten public offering of 4,400,000 shares of its 8.250% Series A Cumulative Redeemable Preferred Stock ("Series A Preferred Stock"), liquidation preference $25.00 per share. Gross proceeds to the Company will be approximately $110,000,000 before deducting underwriting discounts and offering expenses. The offering is expected to close on August 31, 2020, subject to customary closing conditions. As a part of the offering, the Company granted the underwriters a 30-day option to purchase up to an additional 600,000 shares of Series A Preferred Stock solely to cover over-allotments, if any. The Company has applied to list the Series A Preferred Stock on the New York Stock Exchange under the symbol "DRH Pr A."  

The Company intends to use the net proceeds of this offering for general corporate purposes, which may include the repayment of amounts outstanding under its senior unsecured credit facility, capital expenditures, the improvement of properties in its portfolio, working capital and other general purposes.

Wells Fargo Securities, LLC is serving as representative of the underwriters for the offering and joint book-running manager with BofA Securities, Inc. and Citigroup Global Markets Inc. TD Securities (USA) LLC and U.S. Bancorp Investments, Inc. are acting as joint lead managers for the offering. BMO Capital Markets Corp., PNC Capital Markets LLC, KeyBanc Capital Markets Inc. and Regions Securities LLC are acting as senior co-managers for the offering. Barclays Capital Inc. and Deutsche Bank Securities Inc. are acting as co-managers for the offering.

The offering was made pursuant to the Company's existing shelf registration statement, which automatically became effective upon filing with the Securities and Exchange Commission (the "SEC") on August 8, 2018. The offering of these securities was made only by means of a prospectus and a related prospectus supplement, which will be filed with the SEC. A copy of the prospectus supplement and accompanying prospectus relating to these securities may be obtained, when available, by contacting Wells Fargo Securities, LLC, Attention: WFS Customer Service, 608 2^nd Avenue South, Minneapolis, Minnesota 55402, at (800) 645-3751 or emailing a request to wfscustomerservice@wellsfargo.com. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. 

About the Company

DiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) that is an owner of a leading portfolio of geographically diversified hotels concentrated in top gateway markets and destination resort locations.  The Company owns 31 premium quality hotels with over 10,000 rooms.  The Company has strategically positioned its hotels to be operated both under leading global brand families such as Hilton and Marriott as well as unique boutique hotels in the lifestyle segment.

This press release contains forward-looking statements within the meaning of federal securities laws and regulations, which reflect the Company's expectations regarding future events and plans, including, but not limited to, statements regarding the closing of the offering, the underwriters' option to purchase additional shares of common stock, and the Company's anticipated use of net proceeds from the offering.  These forward-looking statements are identified by their use of terms and phrases such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "predict," "project," "should," "will," "continue" and other similar terms and phrases, including references to assumptions and forecasts of future results.  Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made.  These risks include, without limitation, that the closing of the aforementioned offering is subject to, among other things customary closing conditions and customary rights of the underwriters to terminate the underwriting agreement and the other risks and uncertainties detailed from time to time in the Company's filings with the SEC, including its Annual Report on Form 10-K filed on February 28, 2020, its Quarterly Report on Form 10-Q for the three months ended March 31, 2020, filed on May 11, 2020 and its Quarterly Report on Form 10-Q for the three months ended June 30, 2020, filed on August 10, 2020. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that the expectations will be attained or that any deviation will not be material.  All information in this release is as of the date of this release, and we undertake no obligation to update any forward-looking statement to conform the statement to actual results or changes in our expectations.

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SOURCE DiamondRock Hospitality Company

FAQ

What is the purpose of DiamondRock Hospitality's public offering of Series A Preferred Stock?

The proceeds will be used for general corporate purposes, including debt repayment and property improvements.

How many shares of Series A Preferred Stock did DiamondRock Hospitality offer?

DiamondRock Hospitality offered 4,400,000 shares of its 8.250% Series A Cumulative Redeemable Preferred Stock.

What is the expected closing date for the offering of Series A Preferred Stock?

The offering is expected to close on August 31, 2020, subject to customary closing conditions.

What are the financial implications of the offering on DiamondRock Hospitality shareholders?

The offering could lead to dilution of existing shares if the underwriters exercise their overallotment option.

What is the ticker symbol for DiamondRock Hospitality's Series A Preferred Stock?

The Series A Preferred Stock is expected to be listed under the symbol DRH Pr A on the NYSE.