Pebblebrook Hotel Trust bought the 196-room Hotel Palomar San Francisco on Thursday from Griffin Capital Corp. for US$58 million.
Pebblebrook Hotel Trust, Bethesda, Maryland, will own a leasehold interest in the property through a long-term hotel lease with Jamestown Properties, Atlanta, which owns the land the leased building is on. There are currently 85 years remaining on the long-term lease, which expires in 2097.
The hotel will continue to be managed by Kimpton Hotels & Restaurants, San Francisco, and includes the assumption of a US$27.2 million secured loan, according to Jones Lang LaSalle Hotels, with the balance of the purchase price funded by Pebblebrook with available cash.
“The strong leisure and business demand in this market, coupled with the extremely high barriers to entry, makes the Hotel Palomar San Francisco a very exciting addition to our portfolio,” said Jon Bortz, Chairman, Pebblebrook’s president and CEO.
Built in 1907, the hotel opened as the Hotel Palomar San Francisco in 1999 and offers 3,000 sq ft (278 sq m) of flexible meeting space across four rooms, as well the Fifth Floor Restaurant & Lounge, featuring New American cuisine.
In 2011, the Hotel Palomar San Francisco operated at 81% occupancy, with an ADR of US$222 and RevPAR of US$178. During the next 12 months, Pebblebrook currently forecasts that the hotel will generate EBITDA of US$4.1 million to US$4.5 million and an NOI of US$3.4 million to US$3.8 million.
San Francisco’s hotel transaction market remains one of the hottest in the U.S., with year-to-date volume over US$518 million, according to Jones Lang LaSalle Hotels. Meanwhile year-to-date RevPAR for upper upscale and luxury in San Francisco is at US$185.94, up 10.8% over last year, while occupancy for upper-upscale hotels has stabilized at 83% year-to-date and ADR for upper upscale and luxury in the market for hotels is US$223.98, up 11.5% over last year.
