Pebblebrook Hotel Trust, Bethesda, Maryland, announced on Wednesday it is acquiring from KSL Capital Partners the leasehold interest in the 369-room Margaritaville Hollywood Beach Resort in Hollywood, Florida for US$270 million (US$732,000/key). The acquisition is anticipated to be funded from existing cash on hand and is targeted to be completed by the end of the third quarter of 2021.
As part of the acquisition, Pebblebrook may assume up to US$161.5 million of secured, non-recourse debt currently in place. KSL acquired the property in April 2018 for US$194 million and added 20 keys by splitting suites into standard guest rooms.
Pricing for the Margaritaville Hollywood acquisition is approximately 15x EBITDA and a low-5% cap rate on 2019A metrics, according to a note from R.W. Baird analyst Michael Bellisario, who said the transaction further reinforces Pebblebrook’s capital re-allocation strategy away from New York City and San Francisco into better-performing markets and assets. This property will join Pebblebrook’s two other pending Margaritaville conversions in San Diego.
Pebblebrook also announced on Wednesday that it intends to market for sale the 189-room Villa Florence San Francisco on Union Square in San Francisco, California, which is currently closed. The company recently sold the Sir Francis Drake in San Francisco and The Roger in New York City.