The bidding war over LaSalle Hotel Properties has taken its latest turn, with the Bethesda-based hospitality REIT rejecting the new offer Pebblebrook Hotel Trust made last week.

LaSalle's board decided the Pebblebrook offer was not superior to the deal it reached with Blackstone Real Estate Partners last month, the REIT announced Monday.

The board favored the Blackstone offer, valued at $33.50/share, over Pebblebrook's latest $37.80/share offer because the former would be an all-cash transaction, while the latter would be bought primarily with Pebblebrook stock.

"Pebblebrook’s proposal, which includes 80% stock consideration, continues to fail to address the significant price risks and uncertainties for LaSalle shareholders that had been previously communicated to Pebblebrook," LaSalle officials wrote in the announcement. "Pebblebrook has repeatedly refused to agree to a pricing collar or similar type of pricing protection mechanism that would protect LaSalle shareholders against downside risks in the event of a decline in Pebblebrook’s share price between the signing and closing of a transaction."

The Blackstone deal is expected to close as early as August, the announcement said. The deal needs the approval of 66.6% of shareholders. Following LaSalle's rejection, Pebblebrook announced it had increased its ownership of LaSalle common stock to 9%, making it one of the REIT's largest shareholders. It also reaffirmed its position that a Pebblebrook-LaSalle merger would be in the best interests of both companies' shareholders.

"Our large, increased ownership position further demonstrates our committment and determination to complete this combination," Pebblebrook CEO Jon Bortz said in a release.

Pebblebrook had made three separate offers prior to last week's proposal. The discussions began with a March 5 dinner between Bortz and LaSalle CEO Michael Barnello in Hollywood, Florida, followed by a letter the next day from Pebblebrook outlining its initial proposal, LaSalle revealed in a new Securities and Exchange Commission filing.

LaSalle's board then decided to retain outside legal and financial advice, and it sent a letter rejecting Pebblebrook's proposal March 22. That same day, Barnello received a call from a Blackstone executive, and those discussions ultimately led to the deal announced May 21.

Blackstone's offer values LaSalle at $4.8B. The REIT's portfolio includes 41 properties totaling 10,400 rooms in 11 markets, including nine in D.C.