LaSalle Hotel Receives Revised Proposal From Pebblebrook

BETHESDA, MD–Pebblebrook Hotel Trust has revised its original offer to acquire LaSalle Hotel Properties on Friday, according to announcements from the two REITs earlier this morning.

The revised unsolicited proposal is based on 0.8944 common shares of Pebblebrook per common share of LaSalle, with the option for LaSalle shareholders to elect to receive cash up to a maximum of 15% in aggregate of the consideration, subject to proration.

The new bid is 5.8% over what it offered at the end of March — an offer that LaSalle rejected as “insufficient from both a price and mix of consideration perspective.” The new offer implies a share price of $31.75; Pebblebrook’s earlier offer had clocked in at $29.95 per share.

The new offer represents a premium of 30.2% above LaSalle’s closing price on March 27, 2018, the day before Pebblebrook’s initial offer was announced.

LaSalle says it will consider the offer and will respond in due course.

Pebblebrook is the logical buyer of LaSalle Hotel Properties, RBC Capital Markets writes in a research note. “The company’s share the same founder, PEB’s CEO Jon Bortz, and have a similar portfolio with hotels in many of the same cities and a large mix of independent hotels.”

It estimates the bid will equate to a 5.84% – 5.97% cap rate by year end 2018, based on its estimates of 2019 earnings for LaSalle.

That all said, RBC Capital is viewing the chances of the bid succeeding at 50-50, given that Pebblebrook has not had direct contact with LaSalle’s board.

When it made its first offer, Pebblebrook reported that it already acquired 4.8% of LaSalle shares.

LaSalle pushed back against the original proposal, noting that Pebblebrook had a history of missing RevPAR guidance.