Pebblebrook Hotel (PEB) Announces Renovation of Donovan Hotel
Pebblebrook Hotel Trust PEB has announced an overhaul of the Donovan Hotel to Hotel Zena. The company plans to spend $25 million for the hotel’s transformation. With this, the company adds the property to its "Unofficial Z Collection" — its selective portfolio of urban lifestyle hotels.
Hotel Zena is anticipated to open in second-quarter 2020 in Washington, D.C. The upscale lifestyle hotel is located in the sough-after neighborhood of Logan Circle. This property will offer a cocktail-focused lobby lounge a rooftop pool at the 14th floor and meeting space for private functions. It will also feature a robust property-wide art program.
The hotel will be the seventh addition to Pebblebrook’s expanding "Unofficial Z Collection". It will be managed by Viceroy Hotel Group and will join The Viceroy Urban Retreats portfolio — a group of boutique hotels.
Other hotels in the "Unofficial Z Collection" are Hotel Zelos San Francisco, Hotel Zeppelin San Francisco, Hotel Zephyr Fisherman’s Wharf, Hotel Zetta San Francisco, The Hotel Zags Portland and Hotel Zoe Fisherman’s Wharf.
Management believes the renovation will enable the property to attract hotel guests as well as the local neighborhood.
The company has also been advancing with its asset-disposition plan, aimed at optimizing the portfolio and reducing the leverage level. In fact, this November, the company completed the sale of its 99-room Topaz Hotel in Washington, D.C. to a third party for $33.1 million. Such timely asset disposition will likely boost the long-term operating profitability and aid in value creation for the company.
However, amid global uncertainties, businesses have taken a cautious stance. This has resulted in a decline in business-transient demand. With the absence of any near-term catalyst to reverse the softer operating environment, the muted performance of hotel real estate investment trusts (REITs) is expected to continue in the upcoming period.
Pebblebrook currently carries a Zacks Rank #3 (Hold). In the past year, shares of the company have declined 6.5%, as against the industry’s rally of 16.9%.
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