DiamondRock Hospitality Company announced that it has acquired two luxury coastal Florida resorts the 170-room Henderson Beach Resort in Destin, Florida, and the 103-unit (231 bedrooms) Tranquility Bay Beachfront Resort in Marathon, Florida. The total investment for the two separate transactions was $175.5 million. These investments conclude an active year of capital recycling for DiamondRock that strategically shifted the portfolio to almost two-thirds destination leisure hotels and resorts. Henderson Beach Resort (Destin, FL): The company purchased the 170-room Henderson Beach Resort in Destin, Florida for $112.5 million in an off-market transaction on December 23, 2021. The recently constructed luxury oceanfront resort offers 40,000 square feet of meeting space, a lazy river pool, separate family and adult pools, a world-class spa, as well as numerous restaurant and bar outlets, including Destin's only rooftop bar. The acquisition also includes income from 46 luxury residences adjacent to the hotel currently participating in the hotel's rental management program. The Henderson Beach Resort is adjacent to the oceanfront Henderson Park Inn, acquired by the Company earlier in 2021. Together, the two resorts command the highest ADRs in the market; Henderson Beach Resort at $430 and Henderson Park Inn at $520. Consolidated ownership and management of the adjacent resorts will create beneficial revenue and expense synergies. Each resort is unencumbered by brand and management enabling the Company to swiftly implement DiamondRock's asset management best practices. The purchase price of the Henderson Beach Resort represents a 6.4% yield on 2021 forecasted hotel net operating income (NOI) and is expected to stabilize above an 8.0% yield. Tranquility Bay Beachfront Resort (Marathon, FL): The company also purchased the 103-unit Tranquility Bay Beachfront Resort (or Tranquility Bay), a luxury beachfront resort with 1,000 linear feet of shoreline located on 12 acres in Marathon, Florida for $63 million on January 6, 2022. The resort has a total of 231 bedrooms in 87 two-bedroom and three-bedroom beach houses, as well as 16 tropical garden guest rooms. Guest accommodations at Tranquility Bay average over 950 square feet, which is a meaningful advantage over competitive resorts and results in one of the highest ADRs ($650 in 2021) in the Florida Keys. The purchase price represents an 11.5% yield on 2021 forecasted NOI. DiamondRock's investment in Tranquility Bay is comprised of: (1) ownership of 16 tropical garden guestrooms, plus all resort amenities and infrastructure including the lobby, restaurants, back-of-house facilities, as well as the trademark and exclusive use of the name Tranquility Bay, (2) exclusive room revenue sharing agreements (rental management agreements or RMAs) for all of the 84 third-party owned beach houses, and (3) a majority of the intervals in three beach houses structured as vacation ownership. All beach houses participate in the rental management program. The typical RMA has a 15-year term that automatically and perpetually renews for additional 15-year terms. No units have ever been rented outside of the rental program, and the RMAs provide DiamondRock with an exclusive right of first refusal to purchase upon sale. Third-party unit owners bear 100% of the maintenance and capital costs associated with their unit. Tranquility Bay has highly durable income. Over the five years from 2015-2019, Tranquility Bay generated an average annual NOI of approximately $4.5 million, representing a capitalization rate of 7.0% on the Company's purchase price. Tranquility Bay is a rare opportunity to capture a premium yield from a luxury beachfront resort, unencumbered by brand and management, in the supply-constrained Florida Keys while minimizing exposure to on-going capital requirements.