The real estate investment trust sold the 618-room, full-service property for $217.5 million.
BETHESDA, Md.--Pebblebrook Hotel Trust (NYSE: PEB) (the “Company”) today announced that it has closed on the sale of the 618-room, upper upscale, full-service Manhattan NYC in New York, New York for $217.5 million.
The sale price of $217.5 million reflects a 19.9x EBITDA multiple and a 4.1% net operating income capitalization rate (after an assumed annual capital reserve of 4.0% of total hotel revenues) based on the hotel’s 2016 projected operating performance.
“We are very pleased with the sale of the Manhattan NYC,” noted Jon E. Bortz, Chairman, President and Chief Executive Officer of Pebblebrook Hotel Trust. “This sale represents our second significant step towards successfully reducing our exposure to the New York market. The Manhattan NYC marks the fourth hotel sold under our strategic disposition plan that we initiated earlier this year, which has generated almost $500 million in gross proceeds. These dispositions have allowed us to take advantage of the imbalance between the higher private market values for our hotels and the lower value of our company as determined by the public market.”
Proceeds from the sale of the Manhattan NYC will be utilized to repay the $140.0 million loan secured by the property and for general business purposes which may include further reducing the Company’s outstanding debt or repurchasing the Company’s common shares. The sale of Manhattan NYC closed on December 20, 2016.
Due to the sale of Manhattan NYC, the hotel will not be reported in the Company’s Same-Property statistics for the fourth quarter; however the results during the Company’s ownership period during the fourth quarter will continue to be included in Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”). As a result of the sale, the Company expects that the Company’s Same-Property EBITDA for the fourth quarter and the year will be reduced by approximately $5.0 million, the Company’s Net Income, Adjusted EBITDA and Adjusted Funds From Operations (“FFO”) will be reduced by approximately $0.7 million and the Company’s Adjusted FFO per diluted share will be reduced by approximately $0.01 per share, representing the portion of the quarter during which the Company will not own the hotel. The Company is not re-projecting or reaffirming its outlook for the fourth quarter or the year issued on October 27, 2016 in any way other than to take into account the sale of Manhattan NYC.
Following the sale of the Manhattan NYC, the Company’s estimated net debt to trailing 12-month corporate EBITDA will decline to 3.8 times.
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