SAN FRANCISCO-Griffin Capital Corp., sponsor ofthe Hotel Palomartenant-in-common ownership platform, has sold thehotel for $58 million to Pebblebrook Hotel Trust,a publicly traded REIT. The property is a 196-room luxury boutiquehotel located on 4^th Street in theSouth of Market submarket. The hotel and itsrenowned Fifth Floor Restaurant andLounge are managed by previous owner KimptonHotels and Restaurants.

Griffin was represented in the sale by a Jones LangLaSalle Hotels team led by John Strauss.The firm had acquired the luxury boutique hotel located in theSouth of Market submarket here from Kimpton in August 2007 for$36.3 million, which included a $27.2-million first mortgage loanand $18.2 million the firm had raised from 31 tenant-in-commoninvestors. At the time of purchase, a number of reserve accountswere funded to provide operating cash balances and renovationcapital to be deployed at the Palomar for planned room andcommon-area upgrades.

By the end of 2008, the operating performance of the propertyhad suffered as a result of the recession, and in 2009, Griffinrestricted investor distributions to preserve capital and persuadedthe tenant-in-common investors to reallocate a portion of thecapital reserves toward the payment of debt service to avoid adefault as it worked with the lender toward restructuring theloan.