SAN DIEGO-Pebblebrook Hotel Trust of Bethesda, MD has acquired the 450-room Westin Gaslamp hotel in this city’s Gaslamp Quarter from Starwood Hotels and Resorts for $110 million in an all-cash transaction. The hotel will continue to be managed by Starwood.

The hotel, which was originally developed in 1987, operated at 72% occupancy in 2010, with an average daily rate of $157. It is undergoing a $25-million renovation. Pebblebrook forecasts that the hotel will generate EBITDA of approximately $7.5 million to $8 million and net operating income after capital reserves of approximately $6.5 to $7 million. These operating estimates “include the significant negative impact that is expected to result from the multi-phase, $25-million comprehensive hotel renovation,” Pebblebrook said.

The renovation includes all guestrooms and public areas. The recently completed guestrooms' renovation--the first phase of the overall renovation--accounted for a total investment of $12 million. Pebblebrook will fund $10 million for this phase of the renovation through a reimbursement to Starwood, with Starwood funding the remaining $2 million.

The hotel’s comprehensive public area improvements are expected to commence in the summer of this year and are projected to be completed late this year or early in 2012, through an additional total investment by the REIT estimated at $13 million. The renovation will include upgrades to the hotel’s public restrooms, lighting and the exterior arrival experience, including the circular drive, plaza, porte coch