Pebblebrook Hotel Trust Sells Coral Gables Hotel for $63M

Pebblebrook Hotel Trust has closed on the sale of its Hotel Colonnade Coral Gables property for $63 million. 

The 157-room hotel is part of the Autograph Collection and is located in Coral Gables, FL.

The hotel’s net operating income was $4.1 million for the calendar year 2022, and its EBITDA was $4.8 million. Based on the hotel’s operating performance for 2019, the $63 million sales price reflects a 15.4x EBITDA multiple and a 5.5% net operating income cap rate.

Pebblebrook acquired the hotel in 2014 for approximately $59 million and disclosed an undepreciated cost basis in the property of approximately $79 million as of the fourth quarter of 2022. “This suggests a relatively uninspiring round trip on the investment, particularly considering Miami’s strong fundamental performance over this time frame,” noted Green Street in a report on the transaction. 

Proceeds from the sale will be used for general corporate purposes, which may include reducing the company’s outstanding debt and repurchasing common and preferred equity shares, Pebblebrook said. The transaction represents Pebblebrook’s seventh disposition since the middle of last year, representing a total of roughly $395 million and 6% of assets. 

“Despite a more difficult transaction environment, Pebblebrook’s pivot towards dispositions has made plenty of sense given the steep discount to net asset value at which the company has traded (~40%, on average, since October 2022),” Green Street’s report stated. “Thus far, sale proceeds have been used for a combination of share repurchases as well as to pay down debt. However, the company’s elevated leverage profile suggests that a greater focus on paying down debt is warranted, especially given an increasingly tenuous economic backdrop.”