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May 11, 2005
Mail Stop 0409
William W. McCarten
Chief Executive Officer
DiamondRock Hospitality Company
10400 Fernwood Road, Suite 300
Bethesda, Maryland 20817
Re: DiamondRock Hospitality Company
Amendment No. 2 to
Registration Statement on Form S-11 Filed May 3, 2005
Registration No. 333-123065
Dear Mr. McCarten:
We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
General
1. We note that you are concurrently selling shares directly to
Marriott. Please confirm that this sale is intended to be covered
by
the registration statement for this offering, that no offers were
made to Marriott prior to filing the registration statement, that
no
written offers have been made to Marriott since the filing of the
registration statement and that you have not and will not, prior
to
effectiveness of the registration statement, enter into definitive
agreement with respect to these shares.
Prospectus Summary, page 1
2. Please include a separate discussion of conflicts of interest
as a
result of your relationship with one of your underwriters. In
this
regard, we note from the resale registration statement filed April
4
that you are registering all of the shares of common stock
purchased
or placed by Friedman, Billings, Ramsey & Co., Inc. in your July
2004
private placement, and all of the 3,000,000 shares of common stock
purchased by Marriott. In your discussion please describe these
arrangements and quantify proceeds to be received by them.
3. We note your statement that the number of shares that Marriot
will
own will represent 9.8% ownership in Diamondrock. Please revise
to
explain whether this includes the 3 million shares that are being
resold in the concurrent resale registration statement.
Our Acquisition Properties, page 8
4. Please revise footnote 4 to the table to disclose what you mean
by
"near term."
Our Distribution Policy, page 13
5. Please disclose the percentage of your initial dividend that
you
expect will be a return of capital and the percentage that your
estimated initial dividend will be of your estimated cash
available
for distribution.
Dividend Policy and Distributions, page 46
6. Please disclose in the third paragraph the percentage of your
initial dividend that you expect will be a return of capital and
the
percentage that your estimated initial dividend will be of your
estimated cash available for distribution.
7. Please revise the bullet points on page 47 to reflect that you
are
estimating cash available for distribution as of March 25, 2006.
8. Please revise the table to reflect a build-up to "estimated
cash
available for distribution for the twelve months ending March 25,
2006."
9. Please revise to include disclosure concerning your assumptions
used in determining the amount of cash flows used in investing
activities during the next twelve months. If this is based on
historical expenditures, please disclose the amounts paid during
the
most recent years in order to support the amount estimated.
10. We understand that, in addition to the $12.2 million required
to
be funded in your FF&E escrow, you estimate an additional $13.5
million to be used in capital renovation projects of which $6.5
million will come from your use of proceeds from this offering.
If
you intend on using debt financing to cover the additional $7.0
million in capital expenditures please revise to include such
amounts
in the table along with the cash inflows from the related
financing.
However, you should not include the cash flows from this financing
if
you do not have a signed commitment. Alternatively, if you plan
to
use existing cash to fund the remaining $7.0 million in capital
expenditures, include a note to the table explaining this.
11. Please revise to disclose, in a separate note to the table,
your
total planned capital expenditures during the next twelve months
and
sources of cash for such expenditures.
12. If your ratio of intended initial distribution to cash
available
for distribution exceeds 100%, please identify and disclose the
source of funds for such excess distribution.
Dilution, page 50
13. It appears that the "increase in pro forma net tangible book
value per share attributable to this offering" in the table is
inconsistent with the figure provided in the preceding paragraph.
Please revise or advise.
Selling Stockholders, page 137
14. Please revise footnote 3 to reflect, if accurate, that such
selling stockholders purchased shares in the ordinary course of
business and, at the time of the purchase of the shares, such
selling
stockholders had no agreements or understandings, directly or
indirectly, with any person to distribute the shares.
Registration Rights Agreement, page 138
15. Please revise to reflect that the registration rights
agreement
was filed April 4, 2005.
Underwriting, page 171
16. Please disclose in this section or in the "Selling
Stockholders"
section the fees to be paid to the underwriters by the selling
stockholders.
Financial Statements
Unaudited Pro Forma Consolidated Statement of Operations for the
Year
Ended
December 31, 2004, pages F-12 - F-15
Note O, page F-14
17. We note that you recorded an adjustment to reflect a pro forma
income tax benefit of $7.1 million on income before taxes of $5.1
million, resulting in an effective rate of 138%, assuming you had
elected REIT status as of January 1, 2004. We also note that your
effective tax rate during the quarters ended March 25, 2005 and
March
26, 2004 was approximately 33.4% and (12%), respectively. Please
expand your disclosure to explain the estimates and assumptions
used
in determining your effective rate and income tax benefit for the
year ended December 31, 2004.
18. If your income tax benefit is primarily related to losses
incurred at your taxable REIT subsidiary, as disclosed on page F-
31,
please advise us of the principle differences between income
before
taxes on a consolidated basis and your loss before income taxes at
your taxable REIT subsidiary.
Capital Hotel Investments, LLC
Financial Statements and Notes
Independent Auditors` Report, page F117
19. Please revise to include the auditor`s signature in typed form
within the electronic S-11 filing. Refer to Regulation S-T.
Exhibits
Tax Opinion
20. We note your response to comment 25. Please have counsel
revise
its opinion that the operating partnership will be treated as a
"partnership" for federal income tax purposes, assuming limited
partners are admitted in accordance with the partnership
agreement.
21. Please supplementally advise us what tax certificate covenants
must be relied upon in order to issue the opinion. We note that
the
opinion is already limited to the proposed ownership and
operations.
Directed Share Program
22. Please supplementally confirm that funds are not accepted into
the accounts prior to effectiveness of the registration statement.
* * * *
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
You may contact Josh Forgione at (202) 824-5464 or Linda van
Doorn, Senior Assistant Chief Accountant, at (202) 942-1964 if you
have questions regarding comments on the financial statements and
related matters. Please contact Michael McTiernan, Attorney-
Advisor,
at (202) 824-5445, or me at (202) 942-1766 with any other
questions.
Sincerely,
Elaine Wolff
Branch Chief
cc: Gilbert G. Menna (via facsimile)
Goodwin Proctor LLP
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DiamondRock Hospitality Company
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