Another day, another dollar, or in this case 558 million dollars. Earlier this week a startling $558 million worth in hotel deals were made. Pebblebrook invested in two boutiques while DiamondRock acquired four hotels.
Pebblebrook now owns 23 hotels in the United States. The first hotel that Pebblebrook CFO Ray Mark reports investing in is the Hotel Vintage Park located in Seattle, Washington. The hotel was purchased for $32.5 million and Mark feels very positively about the future of the property in the the strong urban market of Seattle with a year to date RevPAR increase of 11%.
Additionally, Seattle is experiencing a high occupancy rate of 75%. But the Hotel Vintage Park tops the average occupancy rate with its 85% occupancy rate. The Hotel Vintage Park was converted into a hotel 20 years ago by Kimpton and has scheduled plans to renovate rooms and common areas in 2014.
Pebblebrook also bought the Hotel Vintage Plaza in Portland, Oregon for $30.5 million. As is in Seattle, Portland’s occupancy rate is 75% while The Hotel Vintage Plaza is at 87%. The hotel was built in 1984 and was fully renovated in 2008 and until now has been managed by Kimpton like it’s Seattle counterpart.
Both of Pebblebrook’s newly acquired hotel’s were bought from private equity firms at a 25-35% discount to replacement cost and will continue to be managed by Kimpton. While both hotel’s have occupancy rates higher than the averages in their respective cities, there is not any new foreseeable supply in the future, so Pebblebrooke was wise to strike now.
While Pebblebrook made impressive investments in their newly obtained hotels, DiamondRock acquired an even more astounding four hotels from Blackstone this past Monday. DiamondRock now owns the 362-room Hilton Boston Downtown/Financial District, 406-room Westin Washington DC City Center, 436-room Westin San Diego, and 258-room Hilton Burlington. When all the math is said and done this $495 million of-the-market deal pans out to $339k/key. In addition to this, Blackstone will receive a $75 million stake in DiamonRock once the deal closes at the end of this month.