WASHINGTON, DC—Pebblebrook Hotel Trust andRLJ Lodging, two REITs headquartered here,continue to invest in high-growth markets. Unfortunately,for the moment that does not include localsubmarkets.

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Pebblebrook Hotel Trust just announced that it has acquiredThe Nines Hotel in Portland, OR, for $127million. Earlier this month, RLJ Lodging Trust reportedthat it had snapped up the 194-room Hyatt AtlantaMidtown for $49.5 million.

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These REITs are, of course, going where the high-growth marketsare for this asset class, which in this cycle means the West Coastand select markets in the Southeast. Also in general,the hotel REIT cycle is particularly bullish rightnow, spurring companies to make acquisitions.

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Pebblebrook's new 331-room luxury hotel is located across fromPioneer Square, in downtown Portland. It will keep its Starwood'sLuxury Collection flag and continue to be operated by SageHospitality and Sage Restaurant Group. The REIT acquired a feesimple condominium interest in the historic building, which wasoriginally constructed in 1909 as the Meier & Frank Buildingand subsequently underwent a $140 million adaptive reuse renovationin October 2008. Last year, The Nines Hotel operated at 88%company, with an average daily rate of $193 and room revenue peravailable room of $170. Pebblebrook forecasts that the hotel willgenerate EBITA of $12 to $12.6 million and NOI of $10.4 to $11million. Pebblebrook is assuming three secured, non-recourse loanstotaling $50.7 million with a weighted average interest rate of7.4% as part of the transaction.

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As for RLJ Lodging Trust, its acquisition of the 194-room HyattAtlanta Midtown clocked in at approximately $255,000 per key and aforward cap rate of approximately 8% on the hotel's projected 2015net operating income.

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Originally opened in 1987 as a Wyndham, the hotel was closed andunderwent a $23 million renovation and conversion to a full-serviceHyatt in July 2013. RLJ projects that during its first year of fullownership, the hotel's revenue per available room will be more thana 16% premium to the company's reported 2013 RevPAR.

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Hotel REITs in general are positioned to do well in this cycle,various analysts have said. Cowen & Co., forexample, which recently rated Pebblebrook as outperform, points tothe sector's "low levels of new room supply growth combined withhealthy demand growth." MLV & Co. analystsnote that 2Q RevPAR is tracking materially above guidance and priorestimates, and predicts that RevPAR will continue to exceed currentexpectations.

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For various reasons, starting with the government cutbacks ofthe last few years, hotels in DC have not been performing as wellas their West Coast counterparts.

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Pebblebrook first-quarter's performance was better than the REITexpected on all operating metrics—but no thanks to its hotels inDC, according to CFO Raymond Martz, who noted during the earningscall that RevPAR growth exceeded expectation largely due to thestrong performance from its West Coast hotels. "This strengthhelped to offset weaker performance from our hotels in the DCarea…"

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LaSalle Hotel Properties, another local REIT,reported a RevPAR decline of 10.1% for its Washington DC propertiesin that same quarter, which was comprised of a 7.6% decrease inoccupancy and a 2.7% decrease in ADR. Excluding Washington DC, itsfirst quarter portfolio RevPAR increased 7.7%.

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Many REITs made the same observation about the DC market: thepresidential inauguration in 2013 made for a very tough comparisonin the first quarter of 2014, although as Host Hotels and ResortsCEO Edward Walter noted, the inauguration "was not as beneficial in2013 as we would have hoped. So it still was a challenge for themarket for this year, but perhaps not as big as in a historicalcontext." The Bethesda-based REIT reported flat RevPAR for the cityfor Q1.

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None of this is to say that DC hotel assets are completelyshunned by the investor community. Recent examples include the $69million trade of Twelve & K Hotel; the $42.3 million sale ofthe Hilton Garden Inn at 1225 1st St NE and the rumored trade ofthe Park Hyatt Washington for $100 million.

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And of course, there is the new convention center hotel,The Marriott Marquis Washington, which has openedits doors and is rapidly booking space.

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