BETHESDA, Md.– 6/3/2019 — Pebblebrook Hotel Trust (NYSE: PEB) (the “Company”) today announced that it executed a contract to sell the 132-room Hotel Amarano Burbank in Los Angeles, California for approximately $72.9 million to a third party.
The contracted sale price reflects a 15.8x EBITDA multiple and a 5.7% net operating income capitalization rate (after an assumed annual capital reserve of 4.0% of total hotel revenues) based on the hotel’s operating performance for 2018. Based on the trailing 12-month period ended March 2019, the contracted sales price reflects a 16.9x EBITDA multiple and a 5.3% net operating income capitalization rate (after an assumed annual capital reserve of 4.0% of total hotel revenues). Both the EBITDA multiples and net operating income capitalization rates are adjusted for the estimated annualized impact of real estate taxes for California’s Proposition 13.
The sale of Hotel Amarano Burbank is subject to normal closing conditions, and the Company offers no assurances that this sale will be completed on these terms, or at all. The Company is targeting to complete the sale in the third quarter of 2019 and continues to be encouraged with pricing levels and overall buyer interest in the investment markets. Following the completion of the sale, the Company’s estimated total net debt to trailing 12-month corporate EBITDA ratio will decline to approximately 4.6 times.
The Company also continues to make progress on its strategic property redevelopment plan and provided the following updates:
- Mason & Rook Hotel: On July 1, 2019, Viceroy Hotels & Resorts will become the third-party operator of this 178-room upper-upscale hotel in downtown Washington, D.C. Following the completion of a comprehensive property renovation and improvement program by early 2020, the hotel will become Viceroy Hotel Washington, D.C., a part of the luxury Viceroy Hotels & Resorts brand family; and
- Donovan Hotel: On July 1, 2019, Viceroy Hotel & Resorts will become the third-party operator of this 193-room upper-upscale hotel in downtown Washington, D.C. The Company plans to reconcept, redevelop and relaunch this hotel as part of the “Unofficial Z Collection” in 2020.
“We are very excited to bring Viceroy to Washington, D.C. to manage these two unique lifestyle hotels, which have so much upside potential,” noted Jon E. Bortz, Chairman, President and Chief Executive Officer of Pebblebrook Hotel Trust. “We expect that Viceroy will generate significant long-term revenue improvement and increased operating efficiencies at both of these hotels, given their extensive experience operating urban lifestyle hotels including Viceroy Santa Monica, Hotel Zeppelin, Hotel Zelos and Hotel Zetta for our company. In addition to bringing the luxury Viceroy brand to D.C., we are also excited to create our first ‘Unofficial Z Collection’ hotel on the east coast following the comprehensive and transformative redevelopment and renovation of Donovan Hotel.”