Pebblebrook Hotel Trust (PEB), a real estate investment trust, declared that it has purchased Hotel Modera for $47.5 million. This urban, boutique, upper upscale, full service hotel comprising 174 rooms is situated at downtown Portland, OR. Moreover, OLS Hotels and Resorts would act as the manager of the property.
As per the transaction, Hotel Modera’s secured, non-course loan worth $23.7 million would now be repaid by Pebblebrook Hotel Trust. The loan carries a fixed rate of interest at 5.257%, having a maturity date of Jul 2016. Further, the remaining balance of the purchase price would be paid in cash terms by Pebblebrook Hotel Trust.
Hotel Modera is advantageously located between 5th and 6th Avenue on Clay Street with easy access to fine restaurants, art galleries, museums and nightlife venues. Moreover, the hotel is surrounded by major area corporate tenants US Bank, Wells Fargo, NRC, Deloitte, Nike, Intel, Providence Health Systems, Portland State University, among other top-tier institutions.
Hotel Modera was originally constructed in 1962. However, in 2008, it underwent extensive renovation and repositioning worth $13.0 million. The hotel possess luxury and comfort along with an elegant atmosphere that exhibits various pieces of local art, stylish Carrera marble, black walnut floors and contemporary architecture.
Moreover, Modera Hotel’s guest rooms are furnished with iPod docking stations, 32-inch LCD flat screen TVs, pillow-top mattresses and plush microfiber robes. The hotel also offers 3 meeting rooms spanning 2,000 square feet of space along with 2 private dining rooms spanning over 600 square feet of space.
Modera Hotel also has a contemporary Italian restaurant – Nel Centro – that offers traditional Italian cuisine for breakfast, lunch and dinner. Additionally, the hotel provides a business center and sundry shop along with 72 valet parking spaces.
In 2012, Hotel Modera had 79% occupancy rate. The hotel had an average daily rate (ADR) amounting to $135 and revenue per available room of $106. Moreover, the hotel’s earnings before interest, taxes, depreciation and amortization (EBITDA) came in at $3.8 million and net operating income after capital reserves (NOI) came in at $3.5 million.
Pebblebrook Hotel Trust anticipates EBITDA in the range of $3.8 – $4.3 million and NOI in the range of $3.4 to $3.9 million in 2014.
Further, Pebblebrook Hotel Trust anticipates incurring costs of about $0.4 million in connection with the acquisition of the hotel and an additional expense of $0.4 million associated with the transition of a new management team.
The acquisition of Hotel Modera is Pebblebrook Hotel Trust’s third investment in the Portland area following the acquisition of Hotel Vintage Plaza comprising 117 rooms in downtown Portland, Ore. and Skamania Lodge comprising 254 rooms in Stevenson, Wash.
Moreover, the acquisition of Hotel Modera would increase the total number of properties owned by Pebblebrook Hotel Trust to 28 including $2.2 billion of invested capital.
Pebblebrook Hotel Trust currently carries a Zacks Rank #3 (Hold). Some better performing stocks worth considering include CubeSmart (CUBE), Douglas Emmett Inc. (DEI) and EastGroup Properties Inc. (EGP). All these carry a Zacks Rank #2 (Buy).
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