CORAL GABLES, FLA. — Pebblebrook Hotel Trust (NYSE: PEB) has acquired The Westin Colonnade Coral Gables for $59.4 million. The 157-room hotel is located in Miami on Miracle Mile in the heart of Coral Gables, a suburb of Miami. The hotel will continue to be operated by Davidson Hotels and Resorts.
“We’re excited about the acquisition of The Westin Colonnade Coral Gables and the ability to further expand our presence in Miami, one of the fastest growing markets in the country,” says Jon Bortz, chairman and CEO of Pebblebrook. “This hotel is our second hotel investment in Miami and our first in the Coral Gables submarket. The property’s excellent location in this affluent and dynamic market makes the hotel a leader among its competitors, and its upside opportunity makes it an excellent addition to our high-quality portfolio.”
The hotel is located in the Coral Gables commercial district, just south of downtown Miami. It is located near Merrick Park, Miami Marlins Park, the University of Miami, Coral Gables Museum, golf courses and abundant shopping.
The hotel’s location is also near corporate tenants including Club Med, ExxonMobil, IBM, Bacardi, Intelsat and Del Monte Fresh Produce. The immediate area includes 140 gourmet restaurants, cafes, designer boutiques, art galleries and retail shops.
Pebblebrook, a publicly traded REIT, acquired a fee simple condominium interest in The Westin Colonnade. The hotel, which was originally built in 1989, was converted into a Westin in 2007. Its meeting and banquet spaces include 23,000 square feet of meeting space, including a 9,000-square-foot rotunda. The hotel’s first floor includes a 4,460-square-foot restaurant space, currently leased to SUSHISAMBA, which offers a blend of Japanese,-Brazilian-and Peruvian-inspired cuisine, music and design. The Westin Colonnade also features an outdoor heated pool and deck to accommodate social functions and parties, as well as a gym and valet parking.
For the 12-month period ending in September 2014, the Westin Colonnade operated at 80 percent occupancy, with an average daily rate (ADA) of $198 and room revenue per available room (RevPAR) of $159. During the next 12 months, the company forecasts the hotel will generate earnings before interest, taxes, depreciation and amortization of $2.9 to $3.4 million and net operating income after capital reserves of $2.3 to $2.8 million. These forecasted numbers have been reduced by $1 million due to the forecasted negative impact of a comprehensive $7 to $9 million renovation Pebblebrook is planning for the second half of 2015.
“We’re thrilled with the opportunity to further develop our relationship with Davidson,” says Bortz. “We believe their expertise in operating high-quality hotels and their extensive market knowledge will allow us to unlock significant additional long-term value at The Westin Colonnade.”
“We are excited about the opportunity to work with Pebblebrook Hotel Trust at another exceptional hotel property, as this marks our third property managed for Pebblebrook,” says Davidson president and CEO John Belden. “We believe the hotel has immense long-term growth potential and upside opportunity, and we look forward to positioning the property as the market leader in the strong and growing Coral Gables submarket.”
Pebblebrook expects to incur $300,000 of costs related to the acquisition of the hotel that will be expensed as incurred.
The acquisition of The Westin Colonnade Coral Gables brings the total number of properties in the company’s portfolio to 32 and marks the company’s second investment in the Miami market.
Pebblebrook’s stock price closed at $42.09 per share on Wednesday, Nov. 12, up from $29.43 per share a year ago.
— Haisten Willis