Pebblebrook Hotel Trust (PEB), a lodging investment company that announced three acquisitions over the past month, plans to spend as much as $600 million more this year amid a slew of properties for sale.
“I’ve gone through five real estate cycles, and I have never seen a time where so many high-quality hotels are available to be purchased,” Jon Bortz, president and chief executive officer, said in a telephone interview.
Pebblebrook, based in Bethesda, Maryland, wants to spend an additional $400 million to $600 million in 2011, Bortz said. The company last week paid $51.2 million for the Hotel Monaco in Seattle and completed its $110 million purchase of the Westin Gaslamp Quarter in San Diego from Starwood Hotels & Resorts Worldwide Inc. (HOT) In March, Pebblebrook agreed to buy the W Hotel in Boston for $89.5 million.
Hotel sales in the Americas are likely to jump as much as 25 percent this year, Jones Lang LaSalle Inc.’s hotel investment-services unit said on Jan. 4. Loans secured by more than 1,540 hotels in the U.S. with a total outstanding balance of $39.2 billion are on Realpoint LLC’s watch list and have already experienced default or are at risk of default, according to the Horsham, Pennsylvania-based credit-rating company.
“The number of those needing to sell has increased pretty much on a monthly basis,” Bortz said. “So more assets are on the market today, and we expect that to continue over the course of the year.”
Pebblebrook raised $226.3 million, excluding costs, in a share sale on April 1, according to a statement. The real estate investment trust raised $402.5 million in a December 2009 initial public offering as a “blind pool” company, which seeks to raise money before owning any assets.
The shares gained 5.1 percent through yesterday since the Dec. 8, 2009, IPO, compared with a 47 percent rise in the Bloomberg REIT Hotels Index in that period.
Five of the company’s 11 completed acquisitions were from San Francisco-based Kimpton Hotels & Restaurants, including the Monaco properties in Seattle and Washington, D.C.
Pebblebrook is focused on “four-diamond” properties -- a notch below the highest-rated, luxury category -- in 15 major U.S. cities concentrated in coastal areas, Bortz said. It is seeking hotels priced at 20 percent to 50 percent of what they would cost to build from the ground up.
“There are many bidders in the luxury sector,” Bortz said. “We have a much less competitive situation with the kind of assets we are pursuing. We don’t really pursue those that trade for ego value and not for economics. We are totally economically focused. Our shareholders aren’t in it for the picture on the brochure.”
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