InterContinental Buckhead Atlanta and Sofitel Washington DC Lafayette Square Sold for $331.0 Million

InterContinental Buckhead Atlanta - Exterior at night
InterContinental Buckhead Atlanta

Pebblebrook Hotel Trust (NYSE: PEB)  today announced that it executed a contract to sell the 422-room InterContinental Buckhead Atlanta in Atlanta, Georgia and the 237-room Sofitel Washington DC Lafayette Square in Washington, D.C. for $331.0 million to a third party.

For InterContinental Buckhead Atlanta, the contracted sale price reflects a 13.7x EBITDA multiple and a 6.4% net operating income capitalization rate based on the hotel’s operating performance for 2018. Based on the hotel’s estimated 2019 operating performance, the contracted sales price reflects a 13.0x EBITDA multiple and a 6.8% net operating income capitalization rate. Both the EBITDA multiple and net operating income capitalization rate based on estimated 2019 operating performance are adjusted for the estimated impact of one-time extraordinary events.

For Sofitel Washington DC Lafayette Square, the contracted sale price reflects a 15.1x EBITDA multiple and a 5.7% net operating income capitalization rate based on the hotel’s operating performance for 2018. Based on the hotel’s estimated 2019 operating performance, the contracted sales price reflects a 15.2x EBITDA multiple and a 5.7% net operating income capitalization rate.

For both properties combined, the contracted sale price reflects a 14.2x EBITDA multiple and a 6.1% net operating income capitalization rate based on the hotels’ operating performance for 2018. Based on the hotels’ estimated 2019 operating performance, the contracted sales price reflects a 13.7x EBITDA multiple and a 6.4% net operating income capitalization rate. All the above net operating income capitalization rates are after an assumed annual capital reserve of 4.0% of total hotel revenues.

The sale of InterContinental Buckhead Atlanta and Sofitel Washington DC Lafayette Square is subject to normal closing conditions, and the Company offers no assurances that this sale will be completed on these terms, or at all. The Company is targeting to complete the sale in the first quarter of 2020 and continues to be encouraged with pricing levels and overall buyer interest in the investment markets.

Pebblebrook Hotel Trust (NYSE: PEB) is a publicly traded real estate investment trust (“REIT”) and the largest owner of urban and resort lifestyle hotels in the United States. The Company owns 56 hotels, totaling approximately 14,000 guest rooms across 16 urban and resort markets with a focus on the west coast gateway cities.

Pebblebrook Hotel Trust
InterContinental Buckhead Atlanta
Reconciliation of Hotel Net Income to Hotel EBITDA and Hotel Net Operating Income
Trailing Twelve Months
(Unaudited, in millions)
 

Twelve months ended
December 31,

2018

 
Hotel net income

$12.3

 

 
Adjustment:
Depreciation and amortization

2.9

 

 
Hotel EBITDA

$15.2

 

 
Adjustment:
Capital reserve

(1.9

)

 
Hotel Net Operating Income

$13.3

 

 
Pebblebrook Hotel Trust
InterContinental Buckhead Atlanta
Reconciliation of Hotel Net Income to Hotel EBITDA and Hotel Net Operating Income
Trailing Twelve Months
(Unaudited, in millions)
 

Twelve months ended
December 31,

2019

 
Hotel net income

$13.2

 

 
Adjustment:
Depreciation and amortization

2.8

 

 
Hotel EBITDA

$16.0

 

 
Adjustment:
Capital reserve

(1.9

)

 
Hotel Net Operating Income

$14.1

 

 
Pebblebrook Hotel Trust
Sofitel Washington DC Lafayette Square
Reconciliation of Hotel Net Income to Hotel EBITDA and Hotel Net Operating Income
Trailing Twelve Months
(Unaudited, in millions)
 

Twelve months ended
December 31,

2018

Hotel net income

$3.5

 

 
Adjustment:
Depreciation and amortization

4.7

 

 
Hotel EBITDA

$8.2

 

 
Adjustment:
Capital reserve

(1.2

)

 
Hotel Net Operating Income

$7.0

 

 
Pebblebrook Hotel Trust
Sofitel Washington DC Lafayette Square
Reconciliation of Hotel Net Income to Hotel EBITDA and Hotel Net Operating Income
Trailing Twelve Months
(Unaudited, in millions)
 

Twelve months ended
December 31,

2019

 
Hotel net income

$4.1

 

 
Adjustment:
Depreciation and amortization

4.0

 

 
Hotel EBITDA

$8.1

 

 
Adjustment:
Capital reserve

(1.1

)

 
Hotel Net Operating Income

$7.0