Pebblebrook Picks Up Hotel Modera

PORTLAND, OR-Pebblebrook Hotel Trust has acquired the Hotel Modera for $47.5 million. The 174-room, urban, boutique, upper upscale, full service hotel is located in downtown Portland. The property will be managed by OLS Hotels and Resorts. As a part of this transaction, Pebblebrook is assuming a $23.7 million secured, non-recourse loan, with the balance of the purchase price being self-funded.

“We're thrilled to acquire the Hotel Modera in the west coast gateway city of Portland and expand our presence in the highly-desirable downtown Portland market,” said Jon Bortz, chairman and CEO of Pebblebrook Hotel Trust. “This distinctive hotel benefits from its central downtown location, consistently high occupancy levels and strong positive cash flows. The hotel is located within one block of Portland Plaza, five blocks from both the Portland Art Museum and the Tom McCall Waterfront Park, and a half mile from Pebblebrook's Hotel Vintage Plaza Portland. The already healthy operating performance of the property, coupled with a strong rebound in demand fundamentals and the implementation of Pebblebrook's best practice and asset management initiatives, makes the Hotel Modera a great investment opportunity for our company.”

The 174-room Hotel Modera is well-located between 5th Avenue and 6th Avenue on Clay Street, just steps from fine restaurants, art galleries, museums and nightlife venues. The hotel is also proximate to major area tenants, including US Bank, Deloitte, NRC, Wells Fargo, Intel, Nike, Providence Health Systems, Portland State University and other top-tier institutions. Downtown Portland is one of the most successfully integrated downtown districts in the country, with more than 10 million square feet of class A office space, over 3,500 condominium and residential units, accessible parks and outdoor venues, over 800 retail shops, two large urban malls and one of the best multimodal transportation networks in the nation. Portland is also home to the Oregon Convention Center, the largest convention center in the Pacific Northwest, which hosts over 650 events and more than 700,000 visitors annually.

Built in 1962, the hotel underwent a comprehensive $13.0 million renovation and repositioning that was completed in 2008. The hotel boasts luxury and comfort, balanced with a chic atmosphere that includes numerous pieces of local art, elegant Italian Carrera marble, black walnut floors and modern architecture. The hotel's guest rooms include iPod docking stations, 32-inch LCD flat screen TVs, pillow-top mattresses and plush microfiber robes. The hotel offers 2,000 square feet of meeting space in three meeting rooms and an additional 600 square feet of space in two private dining rooms. The hotel also features Nel Centro (leased), a modern Italian restaurant open daily, serving classic Italian cuisine for breakfast, lunch and dinner. In addition, the hotel's inner courtyard projects a tranquil, elegant symmetry that is home to Portland's first “Living Wall,” a fully sustainable 63-by-15 foot living work of art. The hotel also provides a business center and sundry shop, as well as valet parking in the hotel's 72 underground parking spaces.

In 2012, the Hotel Modera operated at 79 percent occupancy, with an average daily rate (“ADR”) of $135, room revenue per available room (“RevPAR”) of $106, earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $3.8 million and net operating income after capital reserves (“NOI) of $3.5 million.

“OLS has an extensive amount of industry experience, particularly with high-quality boutique hotels, and we believe their approach to managing the property will maximize its long term value while also taking advantage of the strength of the Portland market,” continued Bortz. “We're delighted to be developing a strategic relationship with OLS and we look forward to working with them at the Hotel Modera.”

“We are excited to be renewing a long and prior relationship with the senior executives of Pebblebrook Hotel Trust and to bring our extensive experience with boutique hotels to the Hotel Modera,” said OLS's Chief Executive Officer, John Fitts. “The Hotel Modera offers strong growth potential and we are enthusiastic about unlocking additional value in the hotel.”

Pebblebrook expects to incur approximately $0.4 million of costs related to the acquisition of the hotel and $0.4 million of costs related to the transition of a new management team that will be expensed as incurred.

The acquisition of the Hotel Modera brings the total number of properties in the Company's portfolio to 28, comprising $2.2 billion of invested capital. This acquisition marks the Company's third investment in the Portland area, including the 117-room Hotel Vintage Plaza in downtown Portland, Oregon and the 254-room Skamania Lodge in Stevenson, Washington.

About Pebblebrook Hotel Trust

Pebblebrook Hotel Trust is a publicly traded real estate investment trust (“REIT”) organized to opportunistically acquire and invest primarily in upper upscale, full-service hotels located in urban markets in major gateway cities. The Company owns 28 hotels, including 22 wholly owned hotels with a total of 5,191 guest rooms and a 49% joint venture interest in six hotels with a total of 1,733 guest rooms.

OLS Hotels & Resorts is a limited partnership based in Encino, CA, formed in 1988 by John Fitts, its president/CEO, a veteran hotelier with over four decades of lodging experience. OLS currently owns and/or operates 14 hotels with approximately 1,900 rooms throughout the United States with a concentration in upscale, boutique hotels providing creative management and sales support to ensure they are successfully operated. In addition, OLS currently operates or has operated a full range of hotel products, including Marriott, Sheraton, Hilton, Residence Inn, Holiday Inn, Radisson, and many limited-service products as well.