TWST: What is DiamondRock Hospitality?
Mr. McCarten: DiamondRock is a lodging real estate investment trust focused on acquiring and owning premium, full-service hotels. We also own a few urban select-service hotels. DiamondRock started as a blind pool in mid-2004, when we raised $210 million of equity in a 144A private offering. Marriott International (NYSE:MAR) assisted in the formation of the company and invested about $30 million in the initial offering.
We have a strategic relationship with Marriott, where they provide our company with preferential access to their proprietary pipeline. In return, Marriott is DiamondRock's preferred hotel manager. Marriott's primary objective in assisting in our formation was to create a capital partner that could work effectively with them and complement their business model. Marriott grows their company and brands via long-term management agreements and franchising. So they are continually looking for capital partners who want to own hotels and earn a return on that investment. Acquisition of about half of our portfolio benefited directly from the Marriott relationship.
The founding management team was comprised of four former Marriott executives. Collectively, we have extensive lodging, public company, transaction and financing experience. We believed that it was an opportune time in the lodging cycle and that our strategic relationship with Marriott would provide a competitive advantage.
Over our first two and half years, DiamondRock has been quite successful. We have raised over $800 million in equity, including our IPO that was completed in May 2005. I think we have created a very high quality portfolio with 20 hotels and over 9,000 rooms. Over 60% of our EBITDA comes from four key markets - New York, Chicago, LA and Atlanta. We have a relatively high average revenue per available room, or RevPAR, a key metric in the business. High RevPAR is one measure of hotel quality. DiamondRock is balanced in both customer mix (business transient, group and leisure) and hotel type (business, convention and resorts).We're focused on owning successful brands. Most of our hotels are Marriott brands (Marriott Hotels and Resorts, Renaissance and Courtyard) but we also own a Westin and a Hilton (NYSE:HLT) brand, the Conrad, in Chicago.
Our enterprise value today is about $2.2 billion, which is remarkable given that we started as a blind pool just two and a half years ago. We have also put together a very efficient and conservative capital structure. Our net debt is less than 40% of our enterprise value, our average debt maturities are almost nine years and our average interest rate is less than 5.7%. Our stock price set an all time high recently at $18.24 per share, and our total return to shareholders year to date is about 50%, which places DiamondRock as one of the top lodging REIT performers in 2006.