Pebblebrook Hotel Trust
), a real estate investment trust (REIT), has recently acquired W
Los Angeles - Westwood - a 258-room luxury full-service hotel in
the Westwood neighborhood of Los Angeles, California, for $125.0
million. The transaction is the third of its kind in the Los
Angeles market, after the acquisition of the 237-room Mondrian Los
Angeles in West Hollywood in April 2011, and the 310-room Sheraton
Delfina Santa Monica in Santa Monica in November 2010.
The hotel was acquired from
Starwood Hotels & Resorts Worldwide Inc.
). Post-acquisition, the hotel will continue to be managed by
Starwood according to a 40-year agreement to continue operating the
hotel under the W flag. The deal reinforces a long-term association
with Pebblebrook as it manages two of its other hotels, namely The
Westin Gaslamp Quarter hotel in San Diego, California, and W Boston
in Boston, Massachusetts.
The acquired property is strategically located in a dynamic,
high-barrier-to-entry market adjacent to one of the most popular
shopping, dining and entertainment destinations of the region. With
an estimated 25 million tourist visits annually, Los Angeles is
arguably the second-most visited city by overseas visitors. This
has fueled steady growth in demand for upscale accommodation over
the years, which in turn has also benefited from a historically
high supply-constrained environment.
With the acquisition Pebblebrook has added a prize cap in its
feather that is likely to be accretive to its earnings. On the
other hand, the asset sale is part of the long-term asset-light
strategy of Starwood, which aims to unlock real estate value by
giving away ownership of selective assets and retaining the brand
name instead. This in turn ensures a steady management fee while
lowering variable costs, thereby offering more financial
The hotel features luxurious all-suite guest rooms with
state-of-the-art technology and entertainment facilities. In
addition, the hotel showcases expansive landscaped outdoors, a
heated modern pool and cabana filled relaxation area, a casual
poolside bar and restaurant. The hotel also offers 3,300 square
feet of indoor meeting space and an upscale spa, a fully-equipped
24-hour fitness center, a 132-space parking garage with valet
service, and a high-design music-oriented bar.
Pebblebrook and Starwood are further mulling over a multi-million
dollar public space renovation exercise to renovate the restaurant,
the ground floor lobby, lobby bar and public space, and upgrade and
refurbish the meeting space and pool area. With the current
acquisition, Pebblebrook has increased its portfolio tally to 24,
comprising $1.9 billion worth of invested capital since its initial
public offering in December 2009.
Pebblebrook currently retains a Zacks #3 Rank, which translates
into a short-term Hold rating. We have a long-term Neutral
recommendation on the stock.
STARWOOD HOTELS (HOT): Free Stock Analysis
PEBBLEBROOK HTL (PEB): Free Stock Analysis
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