Under the terms of the Pebblebrook-LaSalle agreement, each LaSalle shareholder will receive either a fixed amount of $37.80 in cash or a fixed exchange ratio of 0.92 Pebblebrook common share. A maximum of 30% of the outstanding LaSalle common shares may be exchanged for cash.

LaSalle president and CEO Michael D. Barnello said that the transaction represents a 48% premium to LaSalle's unaffected share price. “We are committed to working closely with Pebblebrook to quickly bring this transaction to closure.”

The transaction, which is subject to customary closing conditions, including approval by LaSalle shareholders and Pebblebrook shareholders, is expected to close in the fourth quarter of 2018.

Following the close of the transaction, Pebblebrook will have a portfolio of 66 assets in or near 16 key urban markets, and will remain headquartered in Bethesda, MD.

A Strong Sector

The competition for LaSalle has been in part driven by the hotel industry's strong fundamentals and rising property valuations. According to CBRE, hotel demand grew 3.1% in Q2 2018, up from the 2.9% rate in Q1. Supply growth, meanwhile, remained at 2%. National occupancy rose by 1.1% year-over-year, continuing a growth trend in quarterly occupancy to record levels. Separately, Green Street Advisors found that hotel valuations gained more than 5% in the last 12 months.