Pebblebrook Boosts West Coast Presence in Portland

Zacks

Capitalizing on the growth opportunities in the U.S. West Coast market, Pebblebrook Hotel Trust (PEB) bought a Portland, OR-based property, The Nines Hotel, for $127.0 million. It is the third hotel investment of this lodging real estate investment trust (:REIT) in Portland’s central business district and totals its overall U.S. property count to 31.

The Nines Hotel will continue to be managed by Sage Hospitality and Sage Restaurant Group. Moreover, Pebblebrook will maintain its existing franchise deal with Starwood Hotels & Resorts Worldwide Inc.’s (HOT) Luxury Collection brand.

Positioned on SW Morrison Street, The Nines Hotel is a 331-room, luxury, full-service hotel. The property is within a mile of renowned Oregon Convention Center and draws significant business travelers demand from there. Also, the property experiences leisure demand owing to its proximity to Powell’s Books, Portland Rose Garden, Portland Aerial Tram and Pioneer Square.

The Nines Hotel enjoyed occupancy of 88% in 2013 and generated room revenue per available room (RevPAR) of $170. Pebblebrook further expects this property to reap EBITDA of $12.0 – $12.6 million and net operating income after capital reserves of $10.4 – $11.0 million during the next 12 months. However, the company expects incurring around $0.8 million of costs for this buyout.

As a matter of fact, Portland serves as a West Coast hub for not only tourism but also for technology, athletic and footwear, banking and financial services. Furthermore, the location of The Nines Hotel near many of downtown Portland’s most notable demand generators makes this a lucrative buy for Pebblebrook.

Pebblebrook is slated to announce its second-quarter 2014 results on Jul 24, after the closing bell. The company’s Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +1.89%. This, along with a Zacks Rank #2 (Buy), makes us confident of a positive earnings beat.

Other better-ranked lodging REITs include FelCor Lodging Trust Inc. (FCH) and Ashford Hospitality Trust, Inc. (AHT). Both stocks have a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on PEB
Read the Full Research Report on HOT
Read the Full Research Report on FCH
Read the Full Research Report on AHT


Zacks Investment Research

View Comments (0)