Ryman Hospitality Properties, Inc. (NYSE:RHP), a lodging and hospitality real estate investment trust (REIT), has entered into an agreement to acquire JW Marriott San Antonio Hill Country Resort & Spa from Blackstone’s REIT for $800 million. The acquisition is expected to be completed in the second or third quarter of 2023.
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The company explained that the acquisition price was based on trailing twelve months (through March 31, 2023) adjusted EBITDAre (earnings before interest, taxes, depreciation, and amortization for real estate) multiple of about 12.6x. Ryman expects the acquisition to complement its Gaylord Hotels portfolio and enhance its offering for the group and leisure sides of its business.
Further, Ryman expects the acquisition to be accretive to its adjusted funds from operation per share in the first full year of ownership. The acquired resort will continue to operate under the JW Marriott banner.
Separately, Ryman announced a common stock offering of 3.5 million shares. The net proceeds from this offering will fund a portion of the JW Marriott San Antonio Hill Country acquisition. The balance of the acquisition will be funded with a combination of cash on hand and debt, which may include borrowings under Ryman’s revolving credit facility and/or unsecured debt financing.
Is RHP a Good Stock to Buy?
Reacting to the acquisition news, Deutsche Bank analyst Chris Woronka said that while less than 300 miles separate the San Antonio property from Ryman’s 1,814 room Gaylord Texan property in the Dallas area, he views San Antonio as a clearly distinct destination from a convention and group meetings perspective. He believes the region’s favorable demographic trends in terms of population migration would help the company capture rising demand from local visitors.
Overall, Woronka is optimistic about the acquisition and appreciated the company’s “prudently conservative” approach to finance the acquisition. He reiterated a Buy rating on Ryman with a price target of $128.
Wall Street is cautiously optimistic on RHP stock, with a Moderate Buy consensus rating based on three Buys and one Sell. The average price target of $109 implies nearly 13% upside. Shares have risen 17% year-to-date.
