News for the Hospitality Executive
Pebblebrook Hotel Trust Acquires the 183-room Monaco Washington
Hotel for $74.0 million; Kimpton Continues as Manager
BETHESDA, Md.- September 9, 2010 - Pebblebrook Hotel Trust (NYSE:PEB) (the “Company”) today announced that it has acquired the Monaco Washington DC hotel for $74.0 million. The 183-room, AAA Four Diamond, luxury, full-service hotel is located in downtown Washington, DC in the heart of the Penn Quarter district. The hotel will continue to be managed by Kimpton Hotels and Restaurants (“Kimpton”). The transaction includes the assumption of a $35.0 million secured loan, with the remaining $39.0 million funded with proceeds from the Company’s initial public offering.
“We are extremely excited to acquire such a unique and historically important property in the heart of Washington, DC,” said Jon Bortz, Chairman, President and Chief Executive Officer of Pebblebrook Hotel Trust. “The hotel is in an irreplaceable location within the Penn Quarter neighborhood, which is within the East End of downtown Washington, DC, and is one of the most vibrant and dynamic areas of the city. The hotel is surrounded by an abundance of entertainment options, including museums, theaters, restaurants, bars and contemporary art galleries, as well as the Verizon Center, which all provide the hotel with an irreplaceable location. Furthermore, the Washington, DC hotel market continues to be one of the strongest markets in the nation, due to government-related travel, tourism, and associations that generate year-round demand, healthy convention activity and a dynamic office market.”
Monaco Washington DC is located in downtown Washington, DC in the Penn Quarter, an area that is considered to be the commercial and leisure heart of the city. A vibrant, always-on neighborhood, Penn Quarter has been referred to by many as the “Times Square” of Washington, DC due to its theatre district and its quantity of first-rate museums.
The Verizon Center Sports and Entertainment Arena is located directly across the street from the hotel. The arena, which has a capacity of over 20,000, hosts more than 220 sporting, concert and other events each year and is home to the Washington Capitals, Washington Wizards, Washington Mystics and Georgetown University’s men’s basketball team. The hotel is also conveniently located across the street from the Gallery Place Metro Station and the Smithsonian National Portrait Gallery Museum, adjacent to the Spy Museum and a short walk to the Walter E. Washington Convention Center and the National Mall.
Monaco Washington DC initially opened in 2002; however, original construction of the building occurred in 1839 as the original United States Post Office. The building is one of the oldest buildings in Washington, DC. Separated by a courtyard, one half of the building was designed by Robert Mills, who also designed the Washington Monument, while the other half of the building was designed by Thomas Walter, one of the contributing architects to the design of the U.S. Capitol. The property is now a registered national historic landmark and an irreplaceable piece of history that offers a truly unique lodging experience. The hotel provides over 7,000 square feet of elegant meeting space and one of the area’s most popular restaurants, Poste Moderne Brasserie, which is also managed by Kimpton. The hotel also offers a fitness center, 24-hour room service and a business center.
During 2009, the hotel achieved occupancy of 80 percent, with an average daily rate of $257. During the next 12 months, the Company currently forecasts that the hotel will generate earnings before interest, taxes, depreciation and amortization (“EBITDA”) of approximately $5.3 to $5.8 million and net operating income after capital reserves of approximately $4.5 to $5.0 million, both of which are below the levels at which the hotel operated during 2007 and 2008.
The Company will own a leasehold interest in the property through a ground lease with the General Services Administration (“GSA”) by way of the United States of America. There are currently 49 years remaining on the lease, which expires in 2059. The $35 million secured loan that is being assumed in connection with the acquisition is a non-recourse, interest-only loan, subject to a rate of 5.68%, with a maturity of March 2012.
The hotel will continue to be managed by Kimpton, which has managed the property since 2002. In addition to the Monaco Washington DC, Kimpton also manages the Sir Francis Drake and Scala’s Bistro in San Francisco, California for the Company.
“Kimpton has a significant presence in the Washington, DC market and a strong track record and extensive knowledge in operating historically rich and distinctive properties such as Monaco Washington DC. We are eager to continue to grow our relationship with them,” said Mr. Bortz.
“We are thrilled we can continue to develop our relationship with Pebblebrook Hotel Trust,” commented Michael Depatie, CEO of the Kimpton Hotel & Restaurants. “We have a tremendous history of managing hotels in Washington, DC and look forward to working with Pebblebrook on the Monaco Washington DC and future projects.”
The Company expects to incur approximately $1.3 million of costs related to the acquisition of this hotel that will be expensed in the third quarter.
Monaco Washington DC marks the fourth acquisition for the Company since completing its initial public offering in December of 2009.
The Company has previously announced a signed agreement to purchase one other hotel:
• The Grand Hotel Minneapolis for $36.0 million
Closing for The Grand Hotel Minneapolis, as previously disclosed, is subject to the satisfactory completion of ongoing due diligence and the satisfaction of customary closing requirements and conditions. As with any potential acquisition, the Company can give no assurance that it will elect to move forward with the purchase of the hotel or that if it does elect to move forward, that the acquisition will close under the specific terms initially disclosed.
About Pebblebrook Hotel Trust
This press release contains certain “forward-looking” statements relating to, among other things, potential property acquisitions and projected earnings, expenses and demand.
Pebblebrook Hotel Trust
|Also See:||The Architectural Transformation of the Tariff Building in Washington DC Puts Kimpton's Monaco Hotel in the National Trust Historic Hotels Program / April 2003|
|In Three Separate Transactions LaSalle Hotel Properties Acquires the Hotel Monaco San Francisco for $68.5 million, the Westin Philadelphia for $145.0 million and the Embassy Suites Philadelphia -- Center City for $79.0 million / September 2010|