Pebblebrook Hotel Trust Acquires Florida Hotel for $156M

NAPLES, FL – Pebblebrook Hotel Trust has entered into an agreement to acquire the AAA Four Diamond, Inn on Fifth in Naples, FL for $156 million.

The transaction is expected to close at the end of Q2, subject to customary closing conditions.

Located at the center of historic downtown Naples, the independent luxury resort property spans 119 guestrooms, including 43 suites, across two buildings. The Main building features 87 guestrooms and suites, more than 10,000 square feet of recently-renovated indoor and outdoor flexible meeting space, a 3,600-square-foot outdoor pool deck, a day spa and a fitness center. The Club Level building features 32 suites, a private rooftop with a jacuzzi and an exclusive private lounge. Hotel guests additionally have access to 12 tennis courts at the adjacent Cambier Park Arthur Allen Tennis Center.

Situated five blocks from Fifth Ave. Beach, the hotel includes more than 21,000 square feet of ground-level retail space, which is fully-leased to Truluck’s Restaurant, Ocean Prime restaurant, Vineyard Vines and an international luxury residential sales brokerage.

Pebblebrook is currently evaluating operating and physical enhancements at the property for additional upside and increased cash flow, including a development opportunity on an adjacent 0.6-acre land parcel that is included in the acquisition.

“We are extremely excited to acquire this premier Naples landmark resort in the high-barrier to entry Naples market,” states Jon E. Bortz, chairman, president and CEO of Pebblebrook Hotel Trust. “The Inn on Fifth exemplifies South Florida’s effortless blend of upscale, laid-back luxury and was developed flawlessly and cared for meticulously by the current owner. This unique leisure-focused property is centrally located at the main intersection of Old Naples and is surrounded by over 30 restaurants, cafés, art galleries, and boutiques.”

Upon acquisition, Pebblebrook will retain Noble House Hotels & Resorts to manage the property.

Bortz adds, “The Inn on Fifth is well-positioned to benefit from Naples’ ongoing growth and desirability as an exclusive destination along South Florida’s Gulf Coast. In addition, Noble House’s expertise and track record in managing and marketing luxury hotels, including our LaPlaya Beach Resort & Club, should create tremendous value and operating synergies for the Inn on Fifth. The resort will also become part of Curator Hotel & Resort Collection, which is expected to generate a wide array of expense reductions combined with enhanced technology and operating initiatives.”

Pebblebrook plans to fund the acquisition by utilizing $78 million in cash, and it intends to issue the seller $77.6 million of perpetual preferred operating partnership units, with an annual distribution rate of 6% and $0.4 million of common units.

The Inn of Fifth generated a total revenue per available room of $431, hotel earnings before interest, taxes, depreciation and amortization of $11.3 million, and a hotel net operating income, after a 4% capital reserve, of $10.5 million, based on the estimated February 2022 trailing-twelve-month performance. Preliminary March 2022 results indicate further growth with March room revenues and total revenues beating March 2021 by more than 40%, with a March 2022 average daily rate of more than $1,000.

Once complete, the acquisition would bring Pebblebrook’s portfolio to total 54 properties, including 12 unique drive-to, independent lifestyle resorts and six properties in South Florida.