News for the Hospitality Executive
Pebblebrook Hotel Trust Acquires The Grand Hotel Minneapolis
for $33 million
Appoints Kimpton to Manage the 140-room Hotel
BETHESDA, Md.-September 29, 2010 - Pebblebrook Hotel Trust (NYSE: PEB) (the “Company”) today announced that it has acquired The Grand Hotel Minneapolis for $33.0 million. The 140-room, AAA four-diamond, upper-upscale, full-service hotel, featuring the 58,000-square foot Life Time Athletic Club and Life Spa, is located in the heart of downtown Minneapolis. The hotel will be managed by Kimpton Hotels and Restaurants (“Kimpton”). The transaction was funded entirely with available cash.
“We are excited about the acquisition of one of Minneapolis’ most iconic and historic hotels,” said Jon Bortz, Chairman, President and Chief Executive Officer of Pebblebrook Hotel Trust. “We view the acquisition of The Grand Hotel Minneapolis as a unique opportunity to invest in a distinguished and high-quality hotel with a rich and celebrated heritage that is able to offer one-of-a-kind amenities in a superior location.”
The Grand Hotel Minneapolis is located in the central business district of downtown Minneapolis. The hotel links directly to the Minneapolis Skyway System, a climate-controlled pedestrian walkway, which connects the property to key entertainment, retail, convention and office locations in the downtown area. The Minneapolis Skyway System is over seven miles in length and connects 69 city blocks in the downtown area. In addition to the Skyway connection, the hotel is connected to the 225 South Sixth building, a trophy 53-story, 1.4-million square foot office tower and is also connected underground to the Northstar Center, a 813,000-square foot office building. Both buildings have a diverse array of tenants that provide a strong corporate demand base.
The hotel is in close proximity to many of the city’s key demand generators, including the Financial District, the Mall of America, Walker Art Center, the Metrodome, Target Field, the Minneapolis Convention Center and the Riverfront District. The cultural, dining and entertainment options, coupled with over 6,800 businesses and a high density of major Fortune 500 companies in the Minneapolis-St. Paul metro statistical area, provides The Grand Hotel Minneapolis with a high-demand and diverse guest mix of leisure, corporate and convention travelers.
The Grand Hotel Minneapolis, a 14-story building situated in downtown Minneapolis at 2nd Avenue and 6th Street, was originally opened in 1912 as the famed Minneapolis Athletic Club. From 1999 through 2001, the property underwent a conversion totaling approximately $50 million to what is now The Grand Hotel Minneapolis. In conjunction with the hotel and its notable history, the property houses the 58,000-square foot Life Time Athletic Club and Life Spa and Zahtar, a three-meal-a-day restaurant that features modern American cuisine with Mediterranean flair.
The hotel features 140 traditionally appointed guest rooms, including 21 suites and an expansive 3,500-square foot Presidential Suite. The property has over 6,500-square feet of flexible meeting space, including one of the largest luxury ballrooms in the downtown area. Additionally, The Grand Hotel Minneapolis features The Grand Finale Lounge, 24-hour room service, valet parking and a full-service business center.
The Grand Hotel Minneapolis is an institution within the Minneapolis
market. In 2009, the hotel operated at approximately 61% occupancy, with
an average daily rate of approximately $176. During the next 12 months,
the Company currently forecasts that the hotel will generate earnings before
interest, taxes, depreciation and amortization (“EBITDA”) of approximately
$2.3 to $2.8 million and net operating income after capital reserves of
approximately $2.0 to $2.5 million. The Company plans to invest approximately
$4.5 million over the next 12 to 24 months in a refurbishment of guest
rooms, the lobby and other various public area improvements.
“We are thrilled to be able to bring Kimpton in to manage this unique hotel,” continued Mr. Bortz. “Kimpton has a tremendous track record of operating boutique hotels, especially hotels that are historically significant to their communities. Kimpton’s comprehensive and thoughtful approaches to marketing and the guest experience, combined with a national corporate and group customer platform, are expected to yield immediate benefits for the hotel.”
“We are continuously looking for new and exciting management opportunities like The Grand Hotel Minneapolis,” said Michael Depatie, CEO of Kimpton Hotels and Restaurants. “This is an incredible opportunity to grow our relationship with Pebblebrook Hotel Trust, and to bring our proven industry experience to the Minneapolis market for the first time. We look forward to future success at The Grand Hotel Minneapolis as well as with Pebblebrook.”
The Life Time Athletic Club and Life Spa and Zahtar restaurant are leased and operated by Life Time Fitness (NYSE: LTM) and have a lease term through June 2019.
The Company expects to incur approximately $0.3 million of costs related to the acquisition of this hotel that will be expensed as incurred.
The Grand Hotel Minneapolis marks the fifth acquisition for the Company since completing its initial public offering in December 2009.
About Pebblebrook Hotel Trust
About Kimpton Hotels and Restaurants
About Life Time Fitness, Inc.
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.
Pebblebrook Hotel Trust
|Also See:||Pebblebrook Extending its Due Diligence on the Grand Hotel Minneapolis an Additional 30 Days to Resolve Significant and Unanticipated Matters before Finalizing Acquisition of Hotel for $36 million / August 2010|