Hotel Transaction Manhattan

Pebblebrook Hotel Trust Completes Sale of the Manhattan NYC Hotel 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.
Manhattan NYC Hotel - Lobby
Pebblebrook Hotel Trust Sells Manhattan NYC Hotel for $217.5 million

Pebblebrook Hotel Trust

Pebblebrook Hotel Trust (NYSE: PEB) 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.

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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.

Pebblebrook Hotel Trust is a publicly traded real estate investment trust (REIT) organized to opportunistically acquire and invest primarily in upper upscale, full-service hotels located in urban markets in major gateway cities. The Company owns 29 hotels, with a total of 7,219 guest rooms. The Company owns hotels located in 10 states and the District of Columbia, including: Los Angeles, California (Beverly Hills, Santa Monica and West Hollywood); San Diego, California; San Francisco, California; Washington, DC; Coral Gables, Florida; Naples, Florida; Buckhead, Georgia; Boston, Massachusetts; Minneapolis, Minnesota; New York, New York; Portland, Oregon; Philadelphia, Pennsylvania; Nashville, Tennessee; Columbia River Gorge, Washington; and Seattle, Washington.

 
Pebblebrook Hotel Trust
Manhattan NYC
Reconciliation of Hotel Net Income to Hotel EBITDA and Hotel Net Operating Income
12-Month Forecast
(Unaudited, in millions)
 

Twelve - Month Forecast

Ending December 31,

2016
 
Hotel net income $ 6.4
 
Adjustment:
Depreciation and amortization 4.5
 
Hotel EBITDA $ 10.9  
 
Adjustment:
Capital reserve (2.0 )
 
Hotel Net Operating Income $ 8.9  
 
 

 

 

The Company has presented forecasted hotel EBITDA and forecasted hotel net operating income after capital reserves, because it believes these measures provide investors and analysts with an understanding of the hotel-level operating performance. These non-GAAP measures do not represent amounts available for management’s discretionary use, because of needed capital replacement or expansion, debt service obligations or other commitments and uncertainties, nor are they indicative of funds available to fund the Company’s cash needs, including its ability to make distributions.

 

The Company’s presentation of the hotel’s forecasted EBITDA and forecasted net operating income after capital reserves should not be considered as an alternative to net income (computed in accordance with GAAP) as an indicator of the hotel’s financial performance. The table above is a reconciliation of the hotel’s forecasted EBITDA and net operating income after capital reserves calculations to net income in accordance with GAAP. Any differences are a result of rounding.

 
 

These historical hotel operating results include information for all of the hotels the Company owned as of December 20, 2016. These historical operating results include periods prior to the Company's ownership of the hotels. The information above does not reflect the Company's corporate general and administrative expense, interest expense, property acquisition costs, depreciation and amortization, taxes and other expenses. Any differences are a result of rounding.

 

The information above has not been audited and has been presented only for comparison purposes.

 



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