Pebblebrook Hotel Trust Completes Sale of Sir Francis Drake Hotel and Provides an Update on Hotel Reopenings

Rhea-AI Summary

Pebblebrook Hotel Trust (NYSE: PEB) announced the successful sale of the 416-room Kimpton Sir Francis Drake Hotel in San Francisco, generating net proceeds of $157.6 million as of April 1, 2021. This sale reflects an 11.8x EBITDA multiple and a 7.2% capitalization rate based on the hotel's 2019 performance. The hotel was initially purchased for $90 million in 2010, providing an 11-year internal rate of return over 12%. Proceeds will be used for general business purposes, including potential debt reduction. The company has also reopened five additional urban hotels, bringing the total to 44 of its 52 properties.

Positive

• Generated $157.6 million in net proceeds from the sale of the Kimpton Sir Francis Drake Hotel.
• Realized an 11.8x EBITDA multiple and a 7.2% net operating income capitalization rate from the sale.
• Achieved an 11-year compounded internal rate of return of over 12% on the hotel investment.
• Reopened five hotels, totaling 44 reopened properties, representing 86% of 2019 Hotel EBITDA.

Negative

• None.

Pebblebrook Hotel Trust (NYSE: PEB) (the “Company”) today announced that it closed on the sale of the 416-room Kimpton Sir Francis Drake Hotel in San Francisco, CA to a third party on April 1, 2021, generating $157.6 million of net proceeds after customary closing costs.

Based on the hotel’s operating performance for 2019, the $157.6 million of net proceeds reflects an 11.8x EBITDA multiple and a 7.2% net operating income capitalization rate (after an assumed annual capital reserve of 4.0% of total hotel revenues). The Company purchased Sir Francis Drake Hotel for $90.0 million in 2010 as its second hotel. The property was a very successful investment for the Company, delivering a significant gain on sale and an 11-year compounded internal rate of return of over 12% a year.

Proceeds from the sale of Sir Francis Drake Hotel will be utilized for general business purposes, which may include reducing the Company’s outstanding debt.

Reopening of Additional Hotels

The Company has recently reopened operations at the following five urban hotels:

- Argonaut Hotel San Francisco;
- Harbor Court Hotel San Francisco;
- Hotel Monaco Washington DC;
- Hotel Zelos San Francisco; and
- Revere Hotel Boston Common.

With these recent hotel reopenings, the Company has now reopened 44 of the 52 hotels and resorts in its portfolio. These 44 properties accounted for 86% of the Company’s 2019 Hotel EBITDA. The Company’s remaining suspended hotels are expected to reopen in the coming weeks and months as demand recovers.

About Pebblebrook Hotel Trust

Pebblebrook Hotel Trust (NYSE: PEB) is a publicly traded real estate investment trust (“REIT”) and the largest owner of urban and resort lifestyle hotels in the United States. The Company owns 52 hotels, totaling approximately 12,800 guest rooms across 14 urban and resort markets with a focus on the west coast gateway cities. For more information, visit www.pebblebrookhotels.com and follow us at @PebblebrookPEB.

For additional information or to receive press releases via email, please visit our website at
www.pebblebrookhotels.com

View source version on businesswire.com: https://www.businesswire.com/news/home/20210405005045/en/

FAQ

What was the sale price of the Kimpton Sir Francis Drake Hotel by Pebblebrook Hotel Trust?

Pebblebrook Hotel Trust sold the Kimpton Sir Francis Drake Hotel for $157.6 million.

How much were the net proceeds from the Kimpton Sir Francis Drake Hotel sale?

The net proceeds from the sale were $157.6 million after closing costs.

What was the internal rate of return on the Kimpton Sir Francis Drake Hotel investment?

The internal rate of return on the investment in the Kimpton Sir Francis Drake Hotel was over 12% annually.

How many hotels has Pebblebrook reopened recently?

Pebblebrook Hotel Trust has recently reopened five additional urban hotels.

What percentage of Pebblebrook's 2019 Hotel EBITDA is represented by the reopened hotels?

The reopened hotels accounted for 86% of Pebblebrook's 2019 Hotel EBITDA.