Pebblebrook Enters Private Placement Market with Eye on $100M Offering

BETHESDA, MD—Pebblebrook Hotel Trust has announced it will be securing $100 million in debt financing through the private placement market. It appears to be the first time the REIT has tapped this debt sector niche.

The REIT has an agreement with a private placement group to issue $100 million of senior unsecured notes to a group of institutional investors.

There will be $60 million of notes with an eight-year term maturing December 2023 priced at a fixed interest rate of 4.70%. Another tranche of $40 million of notes with a ten-year term maturing December 2025 are priced at a fixed interest rate of 4.93%.

Closing and funding of the new private placement of senior unsecured notes will happen on December 1, 2015, subject to the satisfaction of standard closing conditions.

These are very attractive terms, CFO Raymond D. Martz pointed out in a prepared statement.

Pebblebrook will be using the proceeds to pay down existing outstanding borrowings on its unsecured credit facility and for other working capital needs.

Earlier this year Pebblebrook negotiated an expansion of its senior unsecured revolving credit facility and executed a new $100 million term loan -- transactions that appeared to be part balance sheet re-engineering and part acquisition financing. In May, Pebblebrook increased the capacity of its senior unsecured revolving credit facility from $600 million to $750 million. In April, it reported that it had a new 7-year, $100 million term loan that matures in April 2022. The term loan also included an accordion option, allowing the REIT to request up to $200 million.

Shortly after it secured the financing, it acquired the Naples, FL-based LaPlaya Beach Resort, a 189-room, waterfront, luxury resort and LaPlaya Beach Club, for a combined $185.5 million.