Pebblebrook Hotel Trust Acquires Hotel Monaco Seattle (United States)
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Pebblebrook Hotel Trust Acquires Hotel Monaco Seattle (United States)
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Category: North America & West Indies / Carribean islands - United States - Industry economy -
Group or hotel buyout
This is a press release selected by our editorial committee and published online for free on 2011-04-08
Pebblebrook Hotel Trust (NYSE: PEB) (the “Company”) today announced that it has acquired the Hotel Monaco Seattle for $51.2 million. The 189-room, upper upscale, full-service boutique hotel is located in the central business district of downtown Seattle, Washington. The hotel will continue to be managed by Kimpton Hotels & Restaurants (“Kimpton”). The transaction was funded by the Company entirely with available cash.
“We are very pleased to be acquiring the Hotel Monaco Seattle and further diversifying our portfolio through this investment in the Seattle market,” said Jon Bortz, Chairman, President and Chief Executive Officer of Pebblebrook Hotel Trust. “The hotel is located in the center of downtown Seattle, in close proximity to all of the city’s major shopping, office, entertainment and dining locations. The hotel is near Pike Place Market, Pioneer Square, the Washington State Trade & Convention Center and five of Seattle’s largest and highest quality office buildings, all of which provide the hotel with a diverse array of demand drivers. Furthermore, the Seattle market historically has been subject to strong recoveries in demand and RevPAR following economic downturns. Increased demand, coupled with minimal lodging supply growth and high barriers-to-entry, provide for excellent operating fundamentals at the hotel moving forward.”
The Hotel Monaco Seattle is located at the corner of Fourth Avenue and Spring Street in the high barrier-to-entry downtown submarket of Seattle, Washington. Downtown Seattle offers premier office, dining, convention, entertainment and shopping locations, all of which provide for a diverse collection of corporate, convention and leisure demand. The hotel is in close proximity to Pike Place Market, one of the nation’s longest-running farmers markets and an attraction of Seattle that draws approximately 10 million visitors annually. Pike Place Market is home to more than 220 year-round commercial businesses and is generally known as “The Soul of Seattle.” In addition, the hotel is within a short walk of Pioneer Square, Seattle’s most historic area, which offers sightseeing opportunities, nightlife activities and boutique shopping, and is the epicenter of the Seattle art scene. Downtown Seattle contains over 33 million square feet of office space, and the 726,000-square foot Washington State Trade & Convention Center, one of Seattle’s main lodging demand drivers, which hosts between 40 and 50 city-wide events annually.
The Hotel Monaco Seattle is a boutique-style hotel located in the geographic center of downtown Seattle in what was originally constructed in 1969 as the Pacific Northwest Bell office building. The property was converted by Kimpton to a hotel in 1997 and features 189 upper upscale guestrooms, including 45 suites, with plush pillow-top beds and premium bath amenities. The hotel has over 6,000 square feet of flexible meeting space spread across nine meeting rooms, including the 2,160-square foot Paris Ballroom. Additionally, the Hotel Monaco Seattle has 56 subterranean parking spaces and is home to Sazerac, a 135-seat, award-winning, three-meal-a-day, stand-alone restaurant and bar that offers southern-style cuisine in a contemporary and inviting atmosphere that is popular with both Seattle locals and visitors to the city.
In 2010, the Hotel Monaco Seattle operated at 81% occupancy, with an average daily rate of $147, and RevPAR of $119, a decline of approximately 27% from the property’s prior peak in RevPAR in 2007. During the next 12 months, the Company currently forecasts that the hotel will generate earnings before interest, taxes, depreciation and amortization (“EBITDA”) of approximately $2.8 to $3.1 million and net operating income after capital reserves of approximately $2.3 to $2.6 million.
The Company expects to commence a comprehensive $3.0 million rooms renovation in the fourth quarter of 2011, with completion expected by the end of the first quarter of 2012, typically the slowest period in Seattle’s lodging market. The Company expects these improvements to allow the hotel to regain its prior competitive positioning by substantially outperforming the market’s recovery in 2012 and beyond.
The hotel will continue to be managed by Kimpton Hotels & Restaurants, which has managed the hotel since 1997. In addition to the Hotel Monaco Seattle, Kimpton also manages Pebblebrook’s 416-room Sir Francis Drake Hotel and 252-room Argonaut Hotel in downtown San Francisco, California, the 183-room Hotel Monaco Washington DC in downtown Washington, DC and the 140-room Grand Hotel Minneapolis in downtown Minneapolis, Minnesota.
“We are very excited to further our relationship with Kimpton Hotels & Restaurants,” continued Mr. Bortz. “They are well-educated about the urban hotel market and have a unique history of operating high-quality boutique properties such as the Hotel Monaco Seattle.”
“We are thrilled to be expanding our relationship with Pebblebrook Hotel Trust,” said Kimpton’s President, Mike Depatie. “We are extremely pleased that our strong relationship with Pebblebrook continues to grow, and we believe this shows a strong vote of confidence in Kimpton’s operational expertise. We look forward to continued collaborative success from our relationship going forward.”
The Company expects to incur approximately $0.5 million of costs related to the acquisition of the Hotel Monaco Seattle that will be expensed as incurred.
The Hotel Monaco Seattle is the eleventh acquisition for the Company, which has invested an aggregate of $860 million in 11 hotel properties since completing its initial public offering in December 2009.
The Company has previously announced a signed agreement to purchase one other hotel:
$89.5 million for a hotel in the Boston, Massachusetts region
Closing for this hotel is subject to bankruptcy court approval, as well as the satisfaction of customary closing requirements and conditions. Accordingly, the Company can give no assurance that the transaction will be consummated on the terms initially disclosed, or at all.
About Pebblebrook Hotel Trust
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 large urban and resort markets with an emphasis on the major coastal cities. The company owns 11 hotels, totaling 3,191 guest rooms in six states and the District of Columbia, including 10 markets: Bethesda, Maryland; San Francisco, California; Buckhead, Georgia; Washington, DC; Minneapolis, Minnesota; Stevenson, Washington; Santa Monica, California; Philadelphia, Pennsylvania; San Diego, California and Seattle, Washington.
About Kimpton
San Francisco-based Kimpton Hotels & Restaurants, a collection of boutique hotels and chef-driven restaurants in the US, is an acknowledged industry pioneer and was the first to bring the boutique hotel concept to America. Celebrating its 30th anniversary in 2011, Bill Kimpton founded the company in 1981 and today it is well-known for making travelers feel welcomed and comfortable while away from home through intuitive and unscripted customer care, stylish ambience and having a certain playfulness in its approach to programs and amenities. Adjacent to the hotels are locally-loved, top-rated, destination Kimpton restaurants. Kimpton leads the hospitality industry in ecological practices through its innovative EarthCare program that spans all hotels and restaurants. Market Metrix, a recognized authority and leader in feedback solutions, consistently ranks Kimpton above other hotel companies in luxury and upper upscale segments for customer satisfaction. Privately held Kimpton operates 51 hotels and 54 restaurants in 24 cities.
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