Pebblebrook Hotel Trust (NYSE:PEB) (the “Company”) today announced that
it has acquired the Prescott Hotel for $49.0 million. The 160-room hotel
is located in the heart of Union Square in San Francisco, California.
The property will continue to be managed by Kimpton Hotels & Restaurants
(“Kimpton”).
“We’re excited about our acquisition of the Prescott Hotel and our
opportunity to further expand our already strong presence in the highly
desirable San Francisco market,” said Jon Bortz, Chairman and Chief
Executive Officer of Pebblebrook Hotel Trust. “Just one block west of
Union Square, this hotel, which represents our sixth hotel investment in
San Francisco, is attractively located in the city’s world-renowned
shopping and entertainment district. The property is central to San
Francisco’s primary business demand drivers, including the Financial
District, the Moscone Convention Center and the Union Square submarket,
which has historically outperformed all other submarkets within San
Francisco due to its well-balanced, diversified mix of leisure,
corporate, group and convention demand.”
The 160-room, upper upscale, full-service Prescott Hotel is located on
Post Street just one block from Union Square, the city’s most popular
retail and visitor attraction. This hotel is also just three blocks from
the Company’s Sir Francis Drake Hotel, as well as just blocks away from
the Moscone Convention Center, the world famous Powell & Market cable
car turntable and the Westfield San Francisco Centre urban shopping
mall. San Francisco consistently ranks among the top tourist
destinations in the world and serves as a West Coast hub for tourism,
technology, biomedical, life sciences, banking and financial services.
The Prescott Hotel is comprised of two buildings, 545 Post Street, in
which the Company will own a fee simple interest consisting of 96 guest
rooms (seven stories), and 555 Post Street, an adjacent attached
building, in which the Company will own a leasehold interest consisting
of 64 guest rooms (located on floors three though seven). The Company’s
leasehold interest in the 555 Post Street building currently has 75
years remaining and expires in 2089.
545 Post Street was originally built in 1913 as the Cecil Hotel and 555
Post Street was originally built in 1922 for the Union League Club. Both
buildings were renovated, repositioned and opened as The Prescott Hotel
in 1989. The hotel’s 160 guest rooms feature high-speed wireless
internet access, fully stocked honor bars, 37” LG flat screen
televisions, upscale bath amenities and Kimpton signature leopard-print
bathrobes. The hotel also includes 600 square feet of meeting space, a
fitness center and offers valet parking.
In 2013, the Prescott Hotel operated at 88 percent occupancy, with an
average daily rate (“ADR”) of $206 and room revenue per available room
(“RevPAR”) of $181. During the next 12 months, the Company currently
forecasts that the hotel will generate earnings before interest, taxes,
depreciation and amortization (“EBITDA”) of $3.2 to $3.8 million and net
operating income after capital reserves (“NOI”) of $2.7 to $3.3 million.
The Company plans to undertake a comprehensive renovation and
repositioning of the hotel sometime between 2015 and 2016, including all
guest rooms, bathrooms and public areas. The property’s design will be
overseen by Dawson Design Associates, the same design team that helped
reposition the Company’s Hotel Zetta and that is helping reposition the
Company’s Radisson Hotel Fisherman’s Wharf, both of which are also
located in San Francisco, California. The full scope and timing of the
renovation are not yet fully defined, but concept and design work will
commence shortly.
“We are thrilled with the opportunity to creatively reposition the
Prescott Hotel,” noted Mr. Bortz. “We believe a renovated and
repositioned product will be positively received in the vibrant Union
Square market and the comprehensive nature of the repositioning will
bring a new and unique guest experience to San Francisco – stay tuned.”
The Prescott Hotel will continue to be managed by Kimpton, which has
managed the Prescott Hotel since 1989. In addition to the Prescott
Hotel, Kimpton also manages eight of the Company’s other hotels:
Argonaut Hotel in Fisherman’s Wharf; Hotel Palomar in SOMA just off
Market Street; Sir Francis Drake Hotel on Powell Street; Hotel Monaco
Seattle and Hotel Vintage Seattle in downtown Seattle, Washington; Hotel
Vintage Plaza Portland in downtown Portland, Oregon; Hotel Monaco
Washington DC in downtown Washington, DC; and Grand Hotel Minneapolis in
downtown Minneapolis, Minnesota.
“We’re pleased with the opportunity to expand our very successful
relationship with Kimpton Hotels & Restaurants,” continued Mr. Bortz.
“Their strong track record, market knowledge and extensive experience in
operating high-quality boutique properties such as the Prescott Hotel
gives us immense confidence in the future for this property.”
“We are delighted to be furthering our relationship with Pebblebrook
Hotel Trust,” said Kimpton’s CEO and President, Mike Depatie. “Our
successful relationship continues to grow, and we look forward to
further collaborative successes.”
The Company expects to incur approximately $0.3 million of costs related
to the acquisition of the hotel and $1.4 million of costs associated
with the defeasance of an existing loan.
The acquisition of the Prescott Hotel brings the total number of
properties in the Company’s portfolio to 30 and marks the Company’s
sixth investment in San Francisco, California.
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 urban markets
in major gateway cities. The Company owns 30 hotels, including 24 wholly
owned hotels with a total of 5,707 guest rooms and a 49% joint venture
interest in six hotels with a total of 1,775 guest rooms. The Company
owns, or has an ownership interest in, hotels located in ten states and
the District of Columbia, including: Los Angeles, California (Hollywood,
Santa Monica, West Hollywood and Westwood); San Diego, California; San
Francisco, California; Miami, Florida; Buckhead, Georgia; Bethesda,
Maryland; Boston, Massachusetts; Minneapolis, Minnesota; New York, New
York; Portland, Oregon; Philadelphia, Pennsylvania; Columbia River
Gorge, Washington; Seattle, Washington; and Washington, DC. For more
information, please visit us at www.pebblebrookhotels.com
and follow us on Twitter at @PebblebrookPEB.
About Kimpton Hotels & Restaurants
San Francisco-based Kimpton Hotels & Restaurants is the leading
collection of boutique hotels and restaurants in the United States and
the acknowledged industry pioneer that first introduced the boutique
hotel concept to America. In 1981, Bill Kimpton founded the company that
today is renowned for making travelers feel genuinely cared for while
away from home through thoughtful perks and amenities, distinctive
design that tells a story and inspires a sense of fun at each hotel and
a sincerely personal style of guest service. Out to help people live
full, balanced lives, Kimpton aims to inspire with touches like yoga
mats in every room, complimentary coffee and tea to start the day,
hosted evening Wine Hour, in-room fitness programming and complimentary
bike rentals. The award-winning restaurants and bars are led by talented
chefs and bartenders that offer guests a chance to dine like a local.
Kimpton also leads the hospitality industry in eco-friendly practices
that span all hotels and restaurants, and is consistently ranked as one
of the top companies in the Market Metrix Hospitality Index, Upper
Upscale Segment, for Customer Satisfaction. The company is
highly-regarded for its innovative employee culture and benefits and has
been named a Fortune magazine “Best Place to Work” five times since
2009. Kimpton is continuously growing and currently operates 61 hotels
and nearly 70 restaurants, bars and lounges in 26 cities. For more
information, visit www.KimptonHotels.com
and www.KimptonRestaurants.com.
This press release contains certain “forward-looking statements”
relating to, among other things, potential property acquisitions, hotel
EBITDA, hotel net operating income after capital reserves, acquisitions
costs and projected demand. Forward-looking statements are
generally identifiable by use of forward-looking terminology such as
“may,” “will,” “should,” “potential,” “intend,” “expect,” “seek,”
“anticipate,” “estimate,” “approximately,” “believe,” “could,”
“project,” “predict,” “forecast,” “continue,” “plan” or other similar
words or expressions. Forward-looking statements are based on
certain assumptions and can include future expectations, future plans
and strategies, financial and operating projections or other
forward-looking information. Examples of forward-looking
statements include the following: projections of hotel-level EBITDA and
net operating income after capital reserves; projections of acquisition
costs; descriptions of the Company’s plans or objectives for future
operations, acquisitions or services; forecasts of future economic
performance; and descriptions of assumptions underlying or relating to
any of the foregoing expectations regarding the timing of their
occurrence. These forward-looking statements are subject to
various risks and uncertainties, many of which are beyond the Company’s
control, which could cause actual results to differ materially from such
statements. These risks and uncertainties include, but are not
limited to, the state of the U.S. economy, supply and demand in the
hotel industry and other factors as are described in greater detail in
the Company’s filings with the Securities and Exchange Commission
(“SEC”), including, without limitation, the Company’s Annual Report on
Form 10-K for the year ended December 31, 2013. Unless legally
required, the Company disclaims any obligation to update any
forward-looking statements, whether as a result of new information,
future events or otherwise.
For further information about the Company’s business and financial
results, please refer to the “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” and “Risk Factors”
sections of the Company’s SEC filings, including, but not limited to,
its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q,
copies of which may be obtained at the Investor Relations section of the
Company’s website at www.pebblebrookhotels.com
and at www.sec.gov.
All information in this release is as of May 22, 2014. The
Company undertakes no duty to update the statements in this release to
conform the statements to actual results or changes in the Company’s
expectations. The Company assumes no responsibility for the
contents or accuracy of the information on any of the non-Company
websites mentioned herein, which are included solely for ease of
reference.
For additional information or to receive press releases via email,
please visit our website at www.pebblebrookhotels.com
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Pebblebrook Hotel Trust
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The Prescott Hotel
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Reconciliation of Hotel Net Income to Hotel EBITDA and Hotel Net
Operating Income
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12-Month Forecast
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(Unaudited, in millions)
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Range
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Low
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High
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Hotel net income
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$
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1.5
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to
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$
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2.1
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Adjustment:
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Depreciation and amortization(1)
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1.7
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1.7
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Hotel EBITDA
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$
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3.2
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$
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3.8
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Adjustment:
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Capital reserve
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(0.5
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)
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(0.5
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)
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Hotel Net Operating Income
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$
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2.7
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$
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3.3
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(1) Depreciation and amortization have been estimated based on a
preliminary purchase price allocation. A change, if any, in the
allocation will affect the amount of depreciation and amortization and
the resulting change may be material.
This press release includes certain non-GAAP financial measures as
defined under Securities and Exchange Commission (SEC) Rules. These
measures are not in accordance with, or an alternative to, measures
prepared in accordance with U.S. generally accepted accounting
principles, or GAAP, and may be different from non-GAAP measures used by
other companies. In addition, these non-GAAP measures are not based on
any comprehensive set of accounting rules or principles. Non-GAAP
measures have limitations in that they do not reflect all of the amounts
associated with the hotel’s results of operations determined in
accordance with GAAP.
The Company has presented forecasted hotel EBITDA and forecasted
hotel net operating income after capital reserves, because it believes
these measures provide investors and analysts with an understanding of
the hotel-level operating performance. These non-GAAP measures do not
represent amounts available for management’s discretionary use, because
of needed capital replacement or expansion, debt service obligations or
other commitments and uncertainties, nor are they indicative of funds
available to fund the Company’s cash needs, including its ability to
make distributions.
The Company’s presentation of the hotel’s forecasted EBITDA and
forecasted net operating income after capital reserves should not be
considered as an alternative to net income (computed in accordance with
GAAP) as an indicator of the hotel’s financial performance. The table
above is a reconciliation of the hotel’s forecasted EBITDA and net
operating income after capital reserves calculations to net income in
accordance with GAAP.
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Pebblebrook Hotel Trust
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Historical Operating Data - Entire Portfolio
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($ in millions, except ADR and RevPAR)
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(Unaudited)
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Historical Operating Data:
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First Quarter
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Second Quarter
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Third Quarter
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Fourth Quarter
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Full Year
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2013
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2013
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2013
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2013
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2013
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Occupancy
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79%
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87%
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88%
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81%
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84%
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ADR
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$196
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$222
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$231
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$226
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$219
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RevPAR
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$156
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$193
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$202
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$182
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$183
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Hotel Revenues
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$135.3
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$164.1
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$167.9
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$159.9
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$627.1
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Hotel EBITDA
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$29.3
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$52.2
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$54.4
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$47.0
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$182.9
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First Quarter
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2014
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Occupancy
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81%
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ADR
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$210
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RevPAR
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$169
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Hotel Revenues
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$145.4
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Hotel EBITDA
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$35.3
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These historical hotel operating results include information for all
of the hotels the Company owned as of May 22,2014. The hotel operating
results for the Manhattan Collection only includes 49% of the results
for the 6 properties to reflect the Company's 49% ownership interest in
the hotels. These historical operating results include periods prior to
the Company's ownership of the hotels. The information above does not
reflect the Company's corporate general and administrative expense,
interest expense, property acquisition costs, depreciation and
amortization, taxes and other expenses. Any differences are a result of
rounding.
The information above has not been audited and has been presented
only for comparison purposes.
Copyright Business Wire 2014