News for the Hospitality Executive
Pebblebrook Hotel Trust Acquires the 416-room
Sir Francis Drake Hotel for $90.0 million
Kimpton Continues as Manager of the Downtown San Francisco Hotel
BETHESDA, Md. - Pebblebrook Hotel Trust (NYSE: PEB) (the “Company”) today announced that it has acquired the Sir Francis Drake Hotel for $90.0 million from a partnership led by The Chartres Lodging Group, LLC. The 416-room, upper upscale, full-service hotel is located in downtown San Francisco, California in the heart of Union Square. The hotel will continue to be managed by Kimpton Hotels & Restaurants (“Kimpton”). The transaction was funded entirely with proceeds from the Company’s initial public offering.
“We are very excited to acquire one of San Francisco’s most recognizable hotels,” said Jon Bortz, Chairman, President and Chief Executive Officer of Pebblebrook Hotel Trust. “We are also extremely pleased to invest in San Francisco, which is one of our top target markets. The historic Sir Francis Drake Hotel is located in the heart of the city’s world-renowned shopping and entertainment district and is central to San Francisco’s primary business demand drivers, including the Financial District and the Moscone Convention Center. This provides the hotel with a diversified mix of leisure, corporate and convention travelers which we expect will continue to strengthen in-line with the economic and lodging recovery which has begun to take hold.”
“We considered numerous offers, but chose to transact the property with Pebblebrook because they recognized the property’s significant potential given its strong location,” said Robert Kline, president and co-founder of The Chartres Lodging Group, LLC.
The Sir Francis Drake Hotel is located at the center of Union Square, San Francisco’s most popular retail and visitor attraction. The hotel is adjacent to Saks Fifth Avenue’s San Francisco flagship store, and is located within a half block of some of the world’s other leading retailers, including Prada, Gucci, Tiffany’s and countless other boutiques and department stores. The Sir Francis Drake Hotel is surrounded by numerous dining establishments, nightclubs and entertainment venues and is adjacent to the city’s celebrated Theatre District.
Originally constructed in 1928, the iconic 23-story hotel offers 416 well-appointed guest rooms, as well as the award-winning Scala’s Bistro and the Wine Room at Scala’s. The hotel’s rooftop also features the famed Harry Denton’s Starlight Room, featuring 180-degree views of Union Square and downtown San Francisco from the hotel’s twenty-first floor. Other property amenities include 18,000 square feet of meeting space, a 24-hour fitness center, a 24-hour business center, off-site valet parking, Bar Drake in the hotel’s historic lobby and a Starbucks store.
The Sir Francis Drake Hotel has been well maintained, with approximately $23 million in capital investment since 2005, including the addition of the lobby bar, full modernization of the hotel’s HVAC system, full renovation of guestroom bathrooms and other guestroom upgrades.
During 2009, the hotel achieved occupancy of approximately 76 percent, with an average daily rate of approximately $139. During the next 12 months, the Company currently forecasts that the hotel will generate earnings before interest, taxes, depreciation and amortization (“EBITDA”) of approximately $3.8 to $4.3 million and net operating income after capital reserves of approximately $2.5 to $3.0 million, both of which are well below the levels at which the hotel operated during 2007 and 2008.
The hotel will continue to be managed by Kimpton, which has managed the property since 2002.
“Kimpton has a remarkable track record in San Francisco, its hometown, as well as around the country, of operating high-end, unique boutique hotels,” continued Mr. Bortz. “We are extremely delighted to be developing a strategic relationship with their organization and look forward to working with Kimpton on the Sir Francis Drake Hotel, as well as future opportunities.”
“We are very pleased to be partnering with Pebblebrook on this special property,” commented Michael Depatie, President and CEO of the Kimpton Hotel & Restaurant Group, LLC. “We have a long history of managing hotels in the competitive San Francisco market and currently operate nine hotels in the city. We look forward to developing a relationship with Pebblebrook through their first investment in San Francisco.”
The Company and Kimpton believe the hotel has tremendous upside and will be working closely to realize its potential. The downtown San Francisco hotel market has already begun to recover, exhibiting strong growth in 2010 as business travelers have gotten back on the road. According to Smith Travel Research, room demand in the San Francisco – Market Street tract has increased 8.6 percent on a year-to-date basis through April as compared to the same period last year. Occupancy in the market on a trailing 12 months basis has climbed to 74.6 percent, providing strong support for potential increases in average daily rate. The Company anticipates investing approximately $7.0 million over the next 12 to 24 months on guestroom and meeting space refurbishments and is evaluating the implementation of several value-creation opportunities at the property.
The Company expects to incur approximately $1.1 million of costs related to the acquisition of this hotel that will be expensed as required by SFAS 141-R.
The Sir Francis Drake Hotel marks the second acquisition for the Company since completing its initial public offering in December of 2009.
The Company has previously announced signed agreements to purchase three other hotels, including:
$74 million for a hotel in the Washington, D.C. / Baltimore region
Closings for each of these properties are expected to occur within 45 to 60 days from the filing date of the corresponding Current Report on Form 8-K. However, because these acquisitions are subject to customary closing requirements, conditions and due diligence, the Company can give no assurance that the transactions will be consummated during that time period, or at all.
About Pebblebrook Hotel Trust
About The Chartres Lodging Group, LLC
This press release contains certain “forward-looking” statements relating to, among other things, potential property acquisitions and projected earnings, expenses and demand. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “seek,” “anticipate,” “estimate,” “approximately,” “believe,” “could,” “project,” “predict,” “forecast,” “continue,” “plan” or other similar words or expressions. Forward-looking statements are based on certain assumptions and can include future expectations, future plans and strategies, financial and operating projections or other forward-looking information. Examples of forward-looking statements include the following: projections of hotel-level EBITDA, the Company’s expenses, share count or other financial items; descriptions of the Company’s plans or objectives for future operations, acquisitions or services; projected completions of acquisitions; forecasts of the Company’s future economic performance, potential increases in average daily rate, occupancy and room demand; and descriptions of assumptions underlying or relating to any of the foregoing expectations regarding the timing of their occurrence. These forward-looking statements are subject to various risks and uncertainties, many of which are beyond the Company’s control, which could cause actual results to differ materially from such statements. These risks and uncertainties include, but are not limited to, the state of the U.S. economy, supply and demand in the hotel industry and other factors as are described in greater detail in the Company’s filings with the Securities and Exchange Commission (“SEC”), including, without limitation, the Company’s Prospectus filed pursuant to rule 424(b)(1) filed on December 9, 2009. Unless legally required, the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
For further information about the Company’s business and financial results, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of the Company’s SEC filings, including, but not limited to, its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, copies of which may be obtained at the Investor Relations section of the Company’s website at www.pebblebrookhotels.com and www.sec.gov .
All information in this release is as of June 22, 2010. The Company undertakes no duty to update the statements in this release to conform the statements to actual results or changes in the Company’s expectations. The Company assumes no responsibility for the contents or accuracy of the information on any of the non-Company websites mentioned herein, which are included solely for ease of reference.
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via email, please visit our website at www.pebblebrookhotels.com
Pebblebrook Hotel Trust
|Also See:||Pebblebrook Hotel Trust Names Thomas Fisher Chief Investment Officer / December 2009|
|Joint Venture Led by Oxford Lodging Acquires San Francisco Landmark Sir Francis Drake Hotel; Will Undergo $20-million Renovation, Kimpton Remains as Manager of the Property / July 2005|