Pebblebrook Hotel Trust (NYSE:PEB) today announced that it has acquired Union Station Hotel, Autograph Collection for $52.3 million. The 125-room iconic historic landmark hotel is located on Broadway, in the center of downtown Nashville, Tennessee. The property will maintain its association with Marriott’s Autograph Collection and will be operated by Sage Hospitality.
“We’re thrilled with the acquisition of Union Station Hotel and the opportunity to further expand our growing portfolio into the high-growth Nashville market,” said Jon Bortz, Chairman and Chief Executive Officer of Pebblebrook Hotel Trust. “This iconic hotel represents our first hotel investment in Nashville’s central business district. The property is adjacent to the Frist Center for Visual Arts, down the street from the recently opened and well received Music City Center Convention Center, and just blocks from both Vanderbilt University and the city’s financial district, downtown Nashville’s most prominent demand generators. The hotel’s excellent accessibility and irreplaceable, historic architecture, including its spectacular lobby and public spaces, make this acquisition an impressive addition to our high-quality portfolio.”
Union Station Hotel is a 125-room, upper-upscale, full-service hotel located on Broadway, in the heart of downtown Nashville. The hotel is within easy walking distance to the various existing and proposed attractions in the Southeast’s fourth largest city, including the 1.2-million-square-foot Music City Convention Center, the Frist Center for the Visual Arts, Vanderbilt University, Bridgestone Arena, Honky Tonk Row, The Gulch, Ryman Auditorium and the State Capitol. The hotel’s excellent location places it nearby many major area corporate tenants in downtown Nashville’s 8 million square feet of office space, including AT&T, HCA, WEB MD, BMI, Johnson & Johnson and regional banking headquarters for Regions Bank, Bank of America and SunTrust Bank. The recently constructed convention center is projected to further strengthen Nashville’s visitor industry along with producing significant additional demand. Furthermore, Nashville is home to many major leisure attractions including the Country Music Hall of Fame and Museum, Opry Mills shopping mall, Bridgestone Arena, Tennessee Performing Arts Center and the 11-acre Riverfront Park and Amphitheater, which is currently under development.
The hotel, a National Historic Landmark, first opened in 1900 as the L&N Railroad Station. The property was converted to a hotel in 1986, underwent an $11.0 million renovation in 2007, and benefitted from an additional $1.9 million renovation to convert the property to an Autograph Collection by Marriott hotel in 2012. The hotel features the Grand Lobby, with a 65-foot-high, barrel-vaulted ceiling, and the Veranda, an outdoor covered terrace. Union Station Hotel has 125 guest rooms, including 12 suites, and 12,000 square feet of meeting and event space. The property’s restaurant, Prime 108, is a Forbes Four Diamond winning restaurant and offers a wide array of signature cocktails and an extensive wine list. Prime 108 lounge features premium cocktails and is located directly off the Grand Lobby. Union Station Hotel also features a fitness center, business center and valet parking.
For the trailing twelve months ended October 2014, Union Station Hotel operated at 82 percent occupancy, with an average daily rate (“ADR”) of $249 and room revenue per available room (“RevPAR”) of $204. In 2015, the Company currently forecasts that the hotel will generate earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $4.5 to $5.0 million and net operating income after capital reserves (“NOI”) of $3.8 to $4.3 million.
The Company expects to invest $5.0 to $7.0 million of capital to refresh the guestrooms and public areas, which it anticipates completing by no later than the middle of 2016.
Union Station Hotel will be managed by Sage under a new hotel operating agreement, and the Company will assume the hotel’s existing franchise agreement with Marriott’s Autograph Collection. The Company will own a leasehold interest in the property through a ground lease which will expire in 2105.
“We’re thrilled to be growing our successful relationship with Sage Hospitality,” continued Mr. Bortz. “The acquisition of Union Station Hotel marks our second Sage-managed hotel, and we believe their extensive experience in operating unique boutique properties gives us confidence in the long term value and growth opportunities of this hotel.”
“We are pleased with the opportunity to expand our relationship with Pebblebrook Hotel Trust,” said Sage’s Co-Founder, President and CEO, Walter Isenberg. “We believe the hotel has tremendous long term growth potential, and we look forward to unlocking additional value at this iconic property.”
The Company expects to incur approximately $0.3 million of costs related to the acquisition of the hotel that will be expensed as incurred.
The acquisition of Union Station Hotel brings the total number of properties in the Company’s portfolio to 34 and marks the Company’s first investment in Nashville, Tennessee.
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 34 hotels, including 28 wholly owned hotels with a total of 6,592 guest rooms and a 49% joint venture interest in six hotels with a total of 1,775 guest rooms. The Company owns, or has an ownership interest in, hotels located in eleven states and the District of Columbia, including: Los Angeles, California (Hollywood, Santa Monica, West Hollywood and Westwood); San Diego, California; San Francisco, California; Miami, Florida; Buckhead, Georgia; Bethesda, Maryland; Boston, Massachusetts; Minneapolis, Minnesota; New York, New York; Portland, Oregon; Philadelphia, Pennsylvania; Nashville, Tennessee; Columbia River Gorge, Washington; Seattle, Washington; and Washington, DC.
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