Pebblebrook-LaSalle Merger Finalized As REIT Sells $800M In Hotels
Pebblebrook announced the closing of the $5.2B merger Friday, along with the sale of five properties totaling $821M.
The REIT sold a portfolio including the Park Central San Francisco, Park Central New York and the WestHouse Hotel New York for $715M. It also sold the Gild Hall in New York for $38.8M and the Embassy Suites Philadelphia Center City for $67M. The sales come as part of Pebblebrook's plan to unload between $750M and $1.25B of legacy LaSalle hotels.
The closing of the merger follows a lengthy back-and-forth process between the two REITs. Pebblebrook in March made its first bid to acquire LaSalle, which the company quickly rejected. It then made several additional offers of increasing size, even as LaSalle moved forward with a takeover bid from Blackstone. Eventually, Pebblebrook raised its offers too high to refuse, and LaSalle backed out of the Blackstone deal in favor of its fellow Bethesda-based REIT.
The terms that LaSalle ultimately agreed to allowed its shareholders to exchange up to 30% of their shares for cash at $37.80/share and transfer the rest to Pebblebrook shares at a 0.92 exchange ratio. The deal values the merged company at $5.2B, and Pebblebrook says the combined entity is now the largest owner of independent lifestyle hotels.
The REIT will continue to operate under the Pebblebrook name, will keep its headquarters in Bethesda and trade under the "PEB" symbol. Pebblebrook's stock opened Monday at $35.15/share, which is down on the year from its Jan. 1 opening at $37.32 and is well below its May peak of $41.22.
The company will continue to be led by Pebblebrook Chairman Jon Bortz, who previously led LaSalle for 11 years before founding Pebblebrook in 2009. The company's portfolio consists of 64 hotels totaling roughly 15,400 rooms in 18 urban markets.