Pebblebrook Hotel Trust (PEB), a lodging real estate investment trust (REIT), has recently acquired the Viceroy Miami hotel in downtown Miami, Florida, for $36.5 million, as part of its continuous acquisition spree to capitalize on improving market fundamentals. The recent transaction marks the thirteenth acquisition by the company with over $1 billion of capital investments since its initial public offering in December 2009.

The 148-room Viceroy Miami hotel is an upper upscale full-service hotel strategically located within the ICON Brickell complex along Brickell Avenue – a high-end business district in Miami that has historically performed relatively well during the recession. The region is also home to one of the premier business, dining, entertainment and shopping destinations of Miami. Furthermore, the Miami metropolitan market has benefited from a healthy growth in the tourism industry, attracting more than 38 million visitors annually from all over the world.

In addition to its superior location advantage, the hotel offers panoramic views of the Miami River and Biscayne Bay. Viceroy Miami hotel features over 4,000-square feet of meeting space spread across 3 rooms and 3 food and beverage outlets. In addition, the hotel offers other amenities such as a gym, Spa, a swimming pool, oversized guest rooms, convenience kitchen, and flat screen HDTVs.

Post-acquisition, the hotel will continue to be managed by the Viceroy Hotel Group, which has managed it since its opening in 2009. The hotel is anticipated to generate earnings before interest, taxes, depreciation and amortization (EBITDA) of $2.4 to $2.7 million and net operating income (NOI) after capital reserves of $1.7 to $2.0 million in the next 12 months of its operation.

Pebblebrook operates premium hotel properties in major cities across the U.S., with an emphasis on the coastal markets typified by high barriers to entry. In addition, the company invests in resort properties located near its primary urban target markets, as well as in select destination markets such as Hawaii, south Florida and southern California. The company currently owns 13 hotels, with a total of 3,428 guest rooms.

We presently have a ‘Neutral’ recommendation on Pebblebrook, which currently has a Zacks #3 Rank that translates into a short-term ‘Hold’ rating and indicates that the stock is expected to perform in line with the overall U.S. equity market for the next 1–3 months. However, we have an ‘Outperform’ recommendation and a Zacks #2 Rank (short-term ‘Buy’) for Ashford Hospitality Trust Inc. (AHT), one of the peers of Pebblebrook.

 
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