Pebblebrook Hotel Trust has completed its $5.2 billion acquisition of Bethesda, Maryland-based LaSalle Hotel Properties. The transaction includes the sale of five former LaSalle properties for $820.8 million in gross proceeds. Pebblebrook is slated to sell up to $1.3 billion worth of LaSalle hotels over the next year in an effort to reduce its debt.
The five hotels include the Park Central San Francisco and the Park Central New York/WestHouse New York, which were sold for a combined $715 million. Gild Hall, also in New York, was sold for $38.8 million, while the Embassy Suites Philadelphia Center City was released for $67 million. The agreement between the two hotel entities was first announced in September, when Pebblebrook won the bid over the Blackstone Group.
Jon Bortz, previously CEO of LaSalle from 2001 to 2009, will now serve as chairman and CEO of the merged companies, which comprise a combined portfolio of luxury addresses in or near 18 key urban markets.
”We are thrilled to bring together these two outstanding companies to create the premier, best-in-class lodging REIT, which we expect will maximize long-term value for all of our shareholders,” said Jon E. Bortz, Chairman, President and Chief Executive Officer of Pebblebrook. “We are eager to begin realizing the substantial benefits of this strategic combination as we execute our proven strategies with our newly expanded and diversified portfolio of unique hotels and resorts. I want to acknowledge Michael Barnello for his two decades of accomplishments at LaSalle and welcome LaSalle’s employees to our Pebblebrook family as we take the next step in the evolution of our company.”
In connection with the closing of the merger, five hotels were sold, generating $820.8 million of gross proceeds. The aggregate gross sales proceeds reflect a 15.6x EBITDA multiple and a 5.5% net operating income capitalization rate (after an assumed annual capital reserve of 4.0% of total hotel revenues) based on the trailing twelve-month operating performance for the period ended October 31, 2018.
Pebblebrook Hotel Trust is a publicly traded real estate investment trust (“REIT”) organized to opportunistically acquire and invest primarily in upper upscale, full-service hotels located in urban markets in major gateway cities. The Company owns 64 hotels, totaling approximately 15,400 guest rooms, located in 11 states and the District of Columbia, in the following markets: Del Mar, California; Los Angeles, California (Beverly Hills, Santa Monica and West Hollywood); San Diego, California; San Francisco, California; Santa Cruz, California; Washington, DC; Coral Gables, Florida; Key West, Florida; Naples, Florida; Buckhead, Georgia; Chicago, Illinois; Boston, Massachusetts; Minneapolis, Minnesota; New York, New York; Portland, Oregon; Philadelphia, Pennsylvania; Nashville, Tennessee; Columbia River Gorge, Washington; and Seattle, Washington.
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