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April 12, 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. 1 to
Registration Statement on Form S-11 Filed April 1, 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 are currently reviewing the supplemental materials you
provided
in response to comment 3 and may have additional comments.
2. We note that you have more than 500 holders of record and, as
of
December 31, 2004, assets in excess of $10 million. Please
supplementally advise us whether you are required to file a Form
10
registration statement pursuant to Section 12(g) of the Exchange
Act.
Please include in your analysis a statement regarding your holders
of
record as of December 31, 2004.
3. We note your response to comment 3. Please provide a more
detailed explanation of your determination that Smith Travel
Research
should not be named an expert in the prospectus.
Prospectus Summary, page 1
Our Company, page 1
4. Please clarify your statement that you and Marriott "intend to
develop and strengthen [your] investment sourcing relationship."
Are
you negotiating or do you intend to enter into a binding agreement
with respect to your sourcing relationship? If not, does this
statement mean that you intend to continue with the same non-
binding
arrangement but expect to increase the amount of sourcing
opportunities? Since you relationship with Marriott is critical
to
your business, please avoid including descriptions of the
relationship that may be vague to an investor.
Risk Factors, page 17
Our results of operations are highly dependent on the management
of
our hotel properties by third-party hotel management companies,
page
20
5. We note your response to comment 18 and your additional
disclosure. Since four of your seven hotel management agreements
are
not currently terminable for performance and two of your hotel
management agreements are never terminable for performance, and
since
Marriott has the ability to avoid termination by making a cure
payment, please consider removing the specific reference to
performance as an exception.
Dividend Policy and Distributions, page 41
6. We note your statement that you intend to distribute at least
$2.3
million to eliminate any 2004 non-REIT earnings and profits
regardless of your 2005 REIT taxable income. Please revise here
and
throughout, as appropriate, to disclose to whom such distribution
will be made and when the upper limit will be determined.
7. Please disclose the estimated portion of your initial dividend
that will be a tax free return of capital based on your 12-month
estimated cash available for distribution.
Our Business, page 63
Our Competitive Strengths, page 63
8. We note your response to comment 43. We may have further
comment
after our review of your supplemental materials. We also note
that
the table is dependent on information provided by, and assessments
made by, Marriott International. Please include a consent from
Marriott International for this information.
Our Properties, page 70
9. We note your response to comment 49 and the additional
disclosure.
However, the additional disclosure provided is generic, identical
for
each of your properties and applicable to practically every hotel
in
the midscale, upscale and upper-upscale market segments. Please
include disclosure regarding your assessment of the general
competitive conditions to which each of your properties is
subject.
Our Principal Agreements, page 83
Our Ground Lease Agreements, page 90
10. We note your disclosure that the Courtyard Manhattan/ Fifth
Avenue ground lease includes percentage rent. Please revise the
rent
table to reflect the percentage rent provision.
Certain Relationships and Related Transactions, page 103
11. We note that in response to comment 59 you have disclosed
Marriott`s cost basis rather than the purchase price. Please
revise
or advise.
12. Please revise footnote 4 of the hotel management agreement
payment table to reflect the information as of a current date. We
note that the current disclosure includes information for periods
prior to 2002.
Lock-up Agreements, page 116
13. Please disclose the "specified exceptions" to the lock-up
agreements.
Description of Capital Stock and Certain Material Provisions of
Maryland Law, Our Charter and Bylaws, page 117
14. We note your response to comment 69. Since the opinion will
be
included as an exhibit to the registration statement, please
confirm
that you will update this disclosure prior to effectiveness.
Underwriting, page 145
15. We note your response to comment 71. However, it still may
not
be clear to an investor whether the total expense figure includes
your reimbursement of the underwriter. If so, please move the
parenthetical to after "total expenses payable by us."
Financial Statements
Unaudited Pro Forma Consolidated Statement of Operations, pages F-
7 -
F-10
Note F, page F-9
16. We read your response to comment 79 and revised Note F.
However,
the penultimate paragraph on page F-8 suggests that your pro forma
corporate expense only includes costs for which you are currently
obligated. Please revise or advise.
17. It is unclear from the penultimate paragraph on page F-8 and
from
Note F whether the $2.5 million in restricted stock awards that
are
not to be issued in connection with the offering have been
included
in the pro forma corporate expense adjustment. Revise to clarify
and
if the expense associated with these restricted stock awards have
not
been included in the pro forma adjustment, explain to us the basis
for their exclusion.
Part II. Information Not Required in Prospectus
Item 33. Recent Sales of Unregistered Securities
18. Please disclose whether the executive officers that received
150,000 shares in a private placement pursuant to Rule 506 were
accredited investors.
Exhibits
Legal Opinion
19. Please provide blacklined opinions reflecting revisions made
in
response to the following comments.
20. We note the reference to Maryland General Corporation Law.
Please have counsel revise the opinion to reflect, or
supplementally
confirm, that it concurs with our understanding that the reference
and limitation to Maryland General Corporation Law includes the
statutory provisions and also applicable provisions of the
Maryland
Constitution and reported judicial decisions interpreting these
laws.
If counsel chooses to supplementally confirm, please file
counsel`s
supplemental confirmation as correspondence on the EDGAR system.
21. Please delete the second paragraph on page 2 regarding
interpretation of the opinion.
22. The limitation on reliance in the penultimate paragraph of the
opinion is not appropriate because stockholders must be able to
rely
on the opinion. Please provide a revised opinion that removes the
limitation on reliance.
Tax Opinion
23. Please revise the opinion to reflect that the Operating
Partnership agreement reviewed is the agreement in effect on the
date
of the opinion.
24. Please have counsel revise its references to its reliance on
your
"representations" so that such reliance is limited to "factual
representations."
25. Please have counsel revise its opinion to include an opinion
that
the operating partnership will be treated as a "partnership" for
federal income tax purposes.
26. Since investors do not have access to the REIT certificate,
please have counsel revise the first opinion to refer to the
prospectus instead of the REIT certificate.
27. Please delete the second full paragraph on page 3 regarding
interpretation of the opinion.
* * * *
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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