W Los Angeles Hotel Changes Hands for $125M
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LOS ANGELES-Those who follow @GlobeStcom on Twitter and @GlobeStLIVE may have seen a post teasing the announcement late yesterday, but GlobeSt.com has learned that Pebblebrook Hotel Trust has acquired the W Los Angeles-Westwood hotel for $125 million. Starwood Hotels & Resorts Worldwide Inc., the seller, will continue to manage the property since it has entered into a 40-year agreement to continue operating the hotel under the W flag. Starwood also manages two of the Company’s other hotels: The Westin Gaslamp Quarter hotel in San Diego, California and W Boston in Boston, Massachusetts.
As part of the sale, Pebblebrook has agreed to continue with the planned property renovations to expand and re-define the hotel’s Living Room, bar and public spaces. The 258-room, all-suite, luxury, full-service hotel is located in the Westwood neighborhood of Los Angeles.
In terms of reasons for selling, Simon Turner, president of global development for Starwood, says that the firm “continues to pursue opportunities to sell our owned real estate at the right time to the right owners in the best interest of shareholders.
According to Job Bortz, chairman, president and CEO of Pebblebrook, “The hotel is ideally located adjacent to UCLA and Westwood Village, one of Los Angeles’ most popular shopping, dining and entertainment destinations, and is near the iconic Wilshire Corridor and Century City.” He adds that Los Angeles attracts more than 25 million total visitors annually and is the second-most visited city by overseas visitors. Steady demand growth along with a historically highly constrained supply environment, provide excellent operating fundamentals for the market and the hotel.”
In 2011, W Los Angeles - Westwood operated at 84% occupancy, with an average daily rate of $258 and room revenue per available room of $216, 16% below the property’s prior RevPAR peak in 2008. During the next 12 months, according to a prepared statement, Pebblebrook forecasts that the hotel will generate earnings before interest, taxes, depreciation and amortization of $8.3 to $8.8 million and net operating income after capital reserves of $7-million to $7.5 million. Pebblebrook says it expects to incur approximately $0.5 million of costs related to the acquisition of the hotel that will be expensed as incurred.
Pebblebrook and Starwood are planning a multi-million dollar public space renovation that will re-concept and renovate the NineThirty restaurant, completely renovate the ground floor lobby, lobby bar and public space, and upgrade and refurbish the meeting space, pool area and The Backyard.
The acquisition of W Los Angeles - Westwood brings the total number of properties in Pebblebrook’s portfolio to 24, comprising $1.9 billion of invested capital since it completed its initial public offering in December 2009. This acquisition marks its third investment in the Los Angeles market, including the 237-room Mondrian Los Angeles in West Hollywood and the 310-room Sheraton Delfina Santa Monica in Santa Monica, CA.
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