PHILADELPHIA Pebblebrook Hotel Trust has acquired the 306-key Hotel Sofitel Philadelphia for US$87 million, or US$284,000 per key.
The transaction includes the assumption of a US$56.1 million secured loan, with the remaining proceeds funded with available cash. The property will continue to be managed by Accor under the Sofitel flag.
“We are pleased to establish a new relationship with Accor and the Sofitel brand. They have exhibited strong success in the Philadelphia market and have a great reputation of offering a unique hotel experience, blending French elegance with American style,” says Jon Bortz, chairman, president and CEO of Pebblebrook. “This is a tremendous opportunity to launch a relationship with an operator that has demonstrated a strong track record in offering high levels of service and value to group, corporate and transient customers alike.”
The upper-upscale Sofitel Philadelphia is located in the heart of downtown Philadelphia, just two blocks from historic Rittenhouse Square and a block from the chic Walnut Street retail corridor and Liberty Place. The hotel includes 15,000 sq. ft. of meeting space in a historic building that once housed the Philadelphia Stock Exchange.
In 2009, Sofitel Philadelphia operated at approximately 77% occupancy, with an ADR of approximately US$169. During the next 12 months, Pebblebrook forecasts that the hotel will generate EBITDA of US$4.7 million to US$5.3 million and net operating income after capital reserves of US$3.8 million to US$4.4 million.
“The hotel is well located in the center of Philadelphia’s financial district and within close proximity to many of the city’s historic landmarks. In addition, the Sofitel Philadelphia Hotel is just steps away from the Philadelphia Convention Center, which is completing an expansion that will double its size,” Bortz says. “These demand-drivers combine to provide the hotel with a diversified mix of corporate, convention and leisure travelers, which we expect will continue to strengthen in line with the economic and lodging recovery which is under way in Philadelphia.”
Philadelphia has experienced considerable growth in the lodging market in recent years, with substantial increases to RevPAR over the past decade. This trend is expected to continue with the expansion of the Philadelphia Convention Center, which is expected to be complete in the first half of 2011. This is estimated to result in an 8% increase in hotel demand throughout the Philadelphia market.
Sofitel Philadelphia marks the eighth acquisition for the REIT since completing its initial public offering in December 2009. Pebblebrook has previously announced an agreement to purchase a ninth hotel, an unidentified property in the greater San Francisco market, for US$84 million.