NATIONAL REPORT—Hotel Business is tracking transactions. Pebblebrook Hotel Trust, Rockbridge, Las Vegas Sands Corp. and HREC are making deals across the industry. Here’s a closer look:
Pebblebrook Hotel Trust Completes Sale of Onyx Hotel
Pebblebrook Hotel Trust has closed on the sale of the 112-room Onyx Hotel in Boston for $58.3 million. The sale price of $58.3 million reflects a 15.3x EBITDA multiple and a 5.9% net operating income capitalization rate (after an assumed annual capital reserve of 4% of total hotel revenues) based on the hotel’s operating performance for 2018. Proceeds from the sale of the Onyx Hotel will be utilized for general business purposes which may include reducing the company’s outstanding debt. As a result of this completed sale, the company estimates its total net debt to trailing 12-month corporate EBITDA will be approximately 4.7 times at the end of the second quarter 2019.
Pebblebrook Hotel Trust Provides Update on Sales and Redevelopment Plan
Pebblebrook Hotel Trust has executed a contract to sell the 132-room Hotel Amarano Burbank in Los Angeles 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, 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 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, Viceroy Hotels & Resorts will become the third-party operator of this 178-room upper-upscale hotel in downtown Washington, DC. Following the completion of a comprehensive property renovation and improvement program by early 2020, the hotel will become Viceroy Hotel Washington, DC, a part of the luxury Viceroy Hotels & Resorts brand family; and
- Donovan Hotel: On July 1, Viceroy Hotel & Resorts will become the third-party operator of this 193-room upper-upscale hotel in downtown Washington, DC. The company plans to reconcept, redevelop and relaunch this hotel as part of the “Unofficial Z Collection” in 2020.
Rockbridge Acquires the Courtyard Philadelphia City Avenue Hotel
Rockbridge has acquired the 333-room Courtyard by Marriott Philadelphia City Avenue Hotel. Pinnacle Hotel Management will manage the hotel. The acquisition is the seventh deal overall with Pinnacle. The hotel will remain a Marriott-branded property. Located close to downtown Philadelphia, the convention center and local historic landmarks as well as St. Joseph’s University, the hotel was recently renovated including all guestrooms and suites. Other updates include the Bistro Restaurant with all-day dining, bar, and patio, The Market, more than 6,300 sq. ft. of meeting space, a 3,000-sq.-ft. ballroom, 24-hour fitness center and indoor heated pool.
Las Vegas Sands Closes $1.3 Billion Sale of Sands Bethlehem
Las Vegas Sands Corp. has completed the sale of Sands Bethlehem in Pennsylvania. Wind Creek Hospitality, an affiliate of the Poarch Band of Creek Indians of Alabama, purchased the property for a total enterprise value of $1.3 billion.
HREC Arranges Sale of the Courtyard by Marriott Springfield, VA
HREC Investment Advisors has arranged the sale of the 191-guestroom Courtyard Springfield located in Springfield, VA. HREC Investment Advisors exclusively represented the seller during the transaction. The marketing, negotiations and final sale were led by Ketan Patel, managing director in the Washington, DC office; Mike Armstrong, principal in the San Diego office; and Dana Weinberg, an affiliate broker in Virginia.