Pebblebrook Shopping 2 More LaSalle Hotels
Pebblebrook Hotel has begun marketing two more properties, in Boston and Washington, that it will assume via its pending $5.2 billion takeover of LaSalle Hotel Properties.
The 803-room Westin Copley Place in Boston could attract bids of about $500 million, or $623,000/room. Eastdil Secured has the listing. Meanwhile, Pebblebrook has tapped JLL to pitch the 335-room Hotel Palomar in Washington. The estimated value is unclear. That property last traded for $143.8 million, or $429,000/room, in 2012.
The two are among a handful of LaSalle properties that Pebblebrook has identified for disposition as the two Bethesda, Md., REITs prepare to complete their merger in late November.
Deals amounting to $715 million are already in place for the 681-room Park Central Hotel in San Francisco and two adjoining properties in Manhattan: the 761-room Park Central Hotel and the 172-room WestHouse Hotel. New York-based Highgate Hotels, which operates all three properties and has a right of first offer to acquire them, is seen as the probable buyer, likely with an equity partner. Those trades are expected to close around the same time as the merger.
The planned asset sales, totaling well over $1 billion, would enable Pebblebrook to reduce the combined portfolio’s debt load, executives said on a September conference call.
The Westin Copley Place backs a $225 million loan with a floating rate that expires in August 2019. The hotel is subject to a management agreement with Marriott International, also based in Bethesda.
The hotel underwent an extensive renovation of its guestrooms that began in the fourth quarter of last year and was completed this summer. The work depressed operating revenue as rooms were taken off line, according to LaSalle’s latest quarterly report. But with the upgrades, the property is positioned to better compete with comparable upper-upscale hotels. That segment of the Boston hotel market was 80.4% occupied through the first eight months of the year, up slightly from the same period last year, according to STR. Rates were down nominally, to an average of $231.24, translating to roughly flat average revenue of $185.94 per room.
The hotel is one of seven in Boston where Marriott workers walked off the job last week to demand higher salaries, as part of a larger nationwide strike. The job action includes housekeepers, cooks, bellmen, bartenders and dishwashers. Marriott is keeping the hotels open, but it’s unclear how the work stoppage may impact revenues.
The Westin Copley Place, in the trendy Back Bay neighborhood, has 47,000 square feet of meeting and event space. There are five restaurants and bars and 10 shops. The hotel is connected by pedestrian bridge to the Hynes Convention Center and the Copley Place and Prudential Center malls.
The Hotel Palomar in Washington is managed by Kimpton Hotel & Restaurant, a unit of InterContinental Hotels of Denham, U.K. It underwent a round of renovations in 2016 that updated its rooms and its 10,000 sf of meeting space. It also has a restaurant, a heated outdoor pool and a sundeck.
Performance figures were unavailable, but upper-upscale hotels in Washington’s Central Business District were 79.9% occupied from January to August, down from 80.6% a year earlier. Rates dropped 5.5% to an average of $210.58/room, and revenue fell by 6.4% to $168.17/room.
The hotel is at 2121 P Street NW, about two blocks west of Dupont Circle.