Pebblebrook Hotel Trust and Denihan Hospitality Group Execute Agreement to Joint Venture Six Manhattan Hotels for $910 Million
Pebblebrook Hotel Trust Common Shares of Beneficial Interest (NYSE:PEB)
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Today : Wednesday 22 June 2011
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Pebblebrook Hotel Trust (NYSE: PEB) (“Pebblebrook”) and the Denihan Hospitality Group (“Denihan”) today announced that they have entered into agreements pursuant to which Pebblebrook will invest in a joint venture with affiliates of Denihan that own six upper upscale hotels in Manhattan. The six upper upscale hotels – Affinia Manhattan, Affinia Shelburne, Affinia Dumont, Affinia 50, Affinia Gardens and The Benjamin – currently comprise 1,640 guestrooms, which will be increased to 1,730 guestrooms following the completion of a renovation at the Affinia Manhattan this fall.
The transaction values the six hotels at approximately $910 million. The hotels are currently subject to approximately $600 million in existing first mortgage and mezzanine debt and Pebblebrook will make an approximate $152 million equity investment in the joint venture in exchange for its 49% interest. Affiliates of Denihan will continue to own the remaining 51% interest in the joint venture. Pebblebrook and Denihan will share joint control of all operating and financial decisions for the joint venture.
Pebblebrook expects to fund its investment with available cash and borrowings from its credit facility. The hotels will be leased to a joint venture lessee owned by Pebblebrook and Denihan. The hotels will continue to be managed by Denihan.
The consummation of the transaction is subject to approval of the lenders to the joint venture. Pebblebrook expects the transaction to close within the next 90 days; however, because the transaction is subject to customary closing conditions, the Company can give no assurance that the transaction will be consummated during this time period, or at all.
