Pebblebrook Hotel Trust Acquires the Hotel Palomar San Francisco
BETHESDA, Md.—Pebblebrook Hotel Trust (the “Company”) announced that it has acquired the Hotel Palomar San Francisco for $58.0 million. The 196-room, AAA four-diamond, upper upscale, full-service boutique hotel is located in downtown San Francisco, California. The property will continue to be managed by Kimpton Hotels & Restaurants. The transaction includes the assumption of a $27.2 million secured loan, with the balance of the purchase price funded by the Company with available cash. READER COMMENTS
“We’re extremely excited about the acquisition of the Hotel Palomar and the opportunity to further expand our presence in the highly desirable San Francisco market,” said Jon Bortz, Chairman, President and chief executive officer of Pebblebrook Hotel Trust, in an announcement. “In addition to the abundant and diverse collection of demand generators, the city’s location on the West Coast makes it a natural gateway to travelers from Asia. The strong leisure and business demand in this market, coupled with the extremely high barriers to entry, makes the Hotel Palomar San Francisco a very exciting addition to our portfolio.”
The 196-room hotel was built in 1907, the hotel opened as the Hotel Palomar San Francisco in 1999 and features 196 guestrooms with high-speed wireless internet access, a fully stocked honor bar, and 37” flat screen televisions. The hotel offers 3,000 square feet of flexible meeting space across four rooms, as well as the Fifth Floor Restaurant & Lounge. The hotel also features a fitness center, hosted evening wine reception and valet parking.
In 2011, the Hotel Palomar San Francisco operated at 81 percent occupancy, with an average daily rate of $222 and room revenue per available room of $178. During the next 12 months, the Company currently forecasts that the hotel will generate earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $4.1 to $4.5 million and net operating income after capital reserves (“NOI”) of $3.4 to $3.8 million.
The Company will own a leasehold interest in the property through a long-term hotel lease with Jamestown Properties. There are currently 85 years remaining on the long-term lease, which expires in 2097. The $27.2 million secured loan that is being assumed in connection with the acquisition is a non-recourse loan, with a fixed annual interest rate of 5.94 percent. The loan matures in September 2017. The hotel will continue to be managed by Kimpton.
The Company expects to incur approximately $1.0 million of costs related to the acquisition of the hotel that will be expensed as incurred.
The acquisition of the Hotel Palomar San Francisco brings the total number of properties in the Company’s portfolio to 25, comprising $2.0 billion of invested capital since the Company completed its initial public offering in December 2009