Pebblebrook secures $1.75B loan for LaSalle merger

The Park Central San Francisco, a member of LaSalle Hotel Properties' portfolio. Photo credit: LaSalle Hotel Properties

Pebblebrook Hotel Trust is moving forward with a $5.2-billion merger with lodging REIT LaSalle Hotel Properties after originating a $1.75-billion loan, which is expected to close by the end of November.

The loan will provide funding for the proposed merger, as well as financing to pay off outstanding debt owed by LaSalle as well as other transaction closing costs. The financing is set to be funded once the merger with LaSalle is complete, with a targeted date of Nov. 30. These figures are still subject to approvals by shareholders at both Pebblebrook and LaSalle.

Read More: Pebblebrook plans next steps following LaSalle merger

The loan’s terms, pricing and covenants are substantially the same as those for the company’s current outstanding term loans, Pebblebrook indicated, and it is allocated into five tranches, maturing between 2020 and 2024, each of which is pre-payable without penalty.

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“We are incredibly appreciative of the strong support from our bank group on this significant financing effort as our company enters this transformative period,” Raymond D. Martz, chief financial officer for Pebblebrook Hotel Trust, said in a statement. “We are excited to welcome several new financing partners who have joined our bank group as part of this financing effort. We are thrilled to announce that we are one step closer to finalizing our merger with LaSalle, which remains on track to close on Nov. 30.”

The merger between Pebblebrook ad LaSalle was announced in September, canceling an earlier agreement forming between LaSalle and Blackstone Group

The merger between Pebblebrook ad LaSalle was announced in September, canceling an earlier agreement forming between LaSalle and Blackstone Group.

Read More: Foregoing Blackstone bid, LaSalle accepts Pebblebrook's offer

Pebblebrook's Q3 performance, reported Nov. 1, beat Wall Street estimates, with the Bethesda, Md., company recording net income of $25.8 million and revenue of $205.5 million. Pebblebrook anticipates its per-share funds from operations in Q4 to range from $0.36 to $0.43, and anticipates full-year funds from operations in the range of $2.57 to $2.64 per share.