DiamondRock Hospitality Company announced that it will redeem all 4,760,000 shares of its 8.250% Series A Cumulative Redeemable Preferred Stock on December 31, 2025. The company will use approximately $121.5 million in cash on hand to pay a redemption price of $25.00 per share, plus accrued and unpaid dividends up to the redemption date. The redemption will eliminate the Series A Preferred Stock from the company’s capital structure, ending the accrual of dividends on those shares.
The cash outlay of $121.5 million represents the full cost of the preferred equity, which had a coupon rate of 8.25%—significantly higher than the company’s unsecured credit facility. By calling the preferred shares, DiamondRock removes a costly source of financing and stops the quarterly dividend of $0.515625 per share that was declared on November 19, 2025. The final dividend will be paid on December 31, 2025, to shareholders of record as of December 19, 2025.
Strategically, the redemption aligns with DiamondRock’s goal of achieving a fully unencumbered portfolio. The company plans to prepay the Westin Boston Seaport mortgage in September 2025, which will leave the balance sheet free of debt covenants. Eliminating the preferred equity reduces leverage, improves debt‑to‑equity ratios, and provides additional liquidity that can be deployed for asset recycling, internal investments, or share repurchases in line with the firm’s disciplined capital allocation strategy.
Management emphasized the financial benefits of the move. CEO Jeff Donnelly said the redemption “strengthens our balance sheet and enhances our ability to invest in high‑return opportunities.” CFO Briony R. Quinn added that the company’s focus on low leverage and extending debt maturities is “critical to maintaining financial flexibility and delivering shareholder value.”
In prior periods, DiamondRock’s preferred equity represented a notable portion of its capital structure, and the 8.25% coupon added annual interest expense that could have been avoided by using cheaper debt. By removing this cost, the company improves its operating leverage and positions itself to take advantage of favorable market conditions without the burden of high‑rate preferred dividends. The redemption also signals confidence in the company’s cash‑flow generation and its ability to fund future growth initiatives without external financing.
The content on BeyondSPX is for informational purposes only and should not be construed as financial or investment advice. We are not financial advisors. Consult with a qualified professional before making any investment decisions. Any actions you take based on information from this site are solely at your own risk.