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Pebblebrook Hotel Trust Acquires The Redbury Hotel in Hollywood, CA



  Pebblebrook Hotel Trust Acquires The Redbury Hotel in Hollywood, CA

Business Wire

BETHESDA, Md. -- August 8, 2013

Pebblebrook Hotel Trust (NYSE: PEB) (the “Company”) today announced that it
has acquired the award-winning Redbury Hotel for $34.0 million. The 57-room,
all-suite, luxury, full-service hotel is located in the center of Hollywood,
California. The property will continue to be managed by sbe Hotel Group
(“sbe”).

The Redbury Hotel (Photo: sbe)

The Redbury Hotel (Photo: sbe)

“We’re thrilled with the acquisition of the Redbury in the dynamic,
high-barrier-to-entry Hollywood neighborhood,” said Jon Bortz, Chairman,
President and Chief Executive Officer of Pebblebrook Hotel Trust. “The hotel
is ideally located at the corner of Hollywood Boulevard and Vine Street in the
center of Hollywood and overlooks historic locations such as The Pantages
Theater and the Capitol Records Tower. The property’s location provides
convenient access to all of the tourist attractions, restaurants, nightlife
and entertainment industry activity that the Hollywood and West Hollywood
areas have to offer. The Redbury complements our hotels in West Hollywood
(Mondrian Hotel), Westwood (W Los Angeles - Westwood) and Santa Monica
(Sheraton Delfina, soon to be rebranded Le Méridien Delfina). Los Angeles
attracts over 25 million total visitors annually and is the second-most
visited city by overseas visitors. The steady demand growth of the market,
along with a historically constrained supply environment, provides excellent
operating fundamentals for the market and the hotel.”

Designed by Creative Director and renowned photographer Matthew Rolston, in
collaboration with sbe Founder and CEO Sam Nazarian, The Redbury Hotel is
situated at the iconic convergence of Hollywood and Vine, and is just steps
away from the center of the Hollywood Walk of Fame. In addition to being just
a block away from the Hollywood / Vine Metro Red Line, the hotel is
well-located for access to the greater Los Angeles area’s attractions,
including the Hollywood Bowl, Beverly Hills, Century City, UCLA, the Getty
Center, Downtown Los Angeles, Santa Monica and Los Angeles International
Airport.

The Redbury Hotel boasts 57 well-appointed, all-suite guest rooms that average
790 square feet, each with sophisticated design elements drawn from a variety
of old-world cultures. Each spacious suite offers a home-like atmosphere with
40- or 46-inch high-definition LCD TVs with DVD and DVR, high-speed wi-fi,
oversized walk-in rain showers, floor-to-ceiling windows, private patio or
balcony and European-style kitchens with gas burners. The hotel’s signature
dining concept, Cleo, is a celebrated and award-winning Mediterranean
restaurant and bar, and The Library is a private indoor-outdoor lounge on the
second floor that offers hand-crafted specialty cocktails and select menu
items from Cleo in a relaxed, intimate setting. In addition, the property
contains 154 on-site parking spaces and provides valet parking.

In 2012, The Redbury Hotel operated at 84% occupancy, with an average daily
rate (“ADR”) of $274 and room revenue per available room (“RevPAR”) of $230.
During the next 12 months, the Company currently forecasts that the hotel will
generate earnings before interest, taxes, depreciation and amortization
(“EBITDA”) of $2.75 to $3.0 million and net operating income after capital
reserves (“NOI”) of $2.25 to $2.5 million.

“We’re thrilled to be building a strategic relationship with sbe,” continued
Mr. Bortz. “sbe has a strong presence in the Los Angeles market and terrific
expertise in operating boutique hotel properties with high-quality restaurants
and bars.”

“Partnering with Pebblebrook on the Redbury is a venture with tremendous
upside and positions the property for continued success for years to come,”
added Mr. Nazarian. “Our collective knowledge of the Los Angeles market and
vast hotel industry expertise will add tremendous value to the property and
provide a strong foundation for our partnership to thrive.”

The Company expects to incur approximately $0.5 million of costs related to
the acquisition of the hotel that will be expensed as incurred.

The acquisition of The Redbury Hotel brings the total number of properties in
the Company’s portfolio to 27, comprising $2.1 billion of invested capital.
This acquisition marks the Company’s fourth investment in west Los Angeles,
including the 236-room Mondrian Los Angeles in West Hollywood, the 310-room
Sheraton Delfina Santa Monica (soon to be rebranded Le Méridien) in Santa
Monica and the 258-room W Los Angeles – Westwood in Westwood.

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 27 hotels, including 21 wholly owned hotels with a total of
5,017 guest rooms and a 49% joint venture interest in six hotels with a total
of 1,733 guest rooms. The Company owns, or has an ownership interest in,
hotels located in ten states and the District of Columbia, including 16
markets: Los Angeles, California; San Diego, California; San Francisco,
California; Santa Monica, California; West Hollywood, 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 on Twitter at @PebblebrookPEB.

About sbe Hotel Group

sbe is a creative hospitality company that develops, manages and operates
award-winning hotels, residential, casinos, restaurants and nightlife. Through
exclusive partnerships with cultural visionaries, sbe is dedicated to
delivering the best in design, culinary and entertainment. Already a proven
leader in the hospitality and real estate industries, sbe has over 80
properties currently operating or in development and has expanded several of
its flagship brands, including SLS Hotels, Katsuya by Starck, The Bazaar by
José Andrés and Hyde Lounge, nationally and internationally. Founded in 2002
by Chairman and CEO Sam Nazarian, sbe is a privately held company. More
information about sbe can be obtained at www.sbe.com, or by downloading the
sbe app.

This press release contains certain “forward-looking statements” relating to,
among other things, 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, 2012. 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 August 8, 2013. 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

 
Pebblebrook Hotel Trust
The Redbury Hotel
Reconciliation of Hotel Net Income to Hotel EBITDA and Hotel Net Operating
Income
12-Month Forecast
(Unaudited, in millions)
                                     
                                                                 
                                          Range
                                          Low                   High
                                                                 
Hotel net income                          $1.9           to     $2.1
                                                                 
Adjustment:
Depreciation and amortization^(1)         0.9                   0.9
                                                                 
Hotel EBITDA                              $2.8                  $3.0      
                                                                 
Adjustment:
Capital reserve                           (0.5     )            (0.5     )
                                                                 
Hotel Net Operating Income                $2.3                  $2.5      
                                                                          

(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.
 

 
Pebblebrook Hotel Trust
Historical Operating Data - Entire Portfolio
($ in millions, except ADR and RevPAR)
(Unaudited)
                                                                      
                                                                        
Historical Operating
Data:
                           First      Second     Third      Fourth     Full
                           Quarter    Quarter    Quarter    Quarter    Year
                           2012       2012       2012       2012       2012
                                                                        
Pro forma Occupancy        76%        85%        87%        79%        82%
Pro forma ADR              $196       $218       $219       $222       $214
Pro forma RevPAR           $148       $185       $190       $177       $175
                                                                        
Pro forma Hotel Revenues   $118.5     $143.6     $145.5     $140.7     $548.2
Pro forma Hotel EBITDA     $23.1      $43.1      $44.9      $38.9      $149.9
                                                                        
                           First      Second
                           Quarter    Quarter
                           2013       2013
                                                                        
Pro forma Occupancy        79%        86%
Pro forma ADR              $203       $228
Pro forma RevPAR           $160       $196
                                                                        
Pro forma Hotel Revenues   $125.7     $151.6
Pro forma Hotel EBITDA     $26.3      $46.8
                                                                        

These historical hotel operating results include information for all of the
hotels the Company owned as of August 8, 2013, except for the operating
results of Hotel Zetta (formerly Hotel Milano) for the first quarter of 2012.
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 expenses, 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.
 

Photos/Multimedia Gallery Available:
http://www.businesswire.com/multimedia/home/20130808006465/en/

Multimedia
Available:http://www.businesswire.com/cgi-bin/mmg.cgi?eid=50688210&lang=en

Contact:

Pebblebrook Hotel Trust
Raymond D. Martz, Chief Financial Officer
240-507-1330
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