Pebblebrook Hotel Trust plans to sell the 137-room Kimpton Rouge Hotel in Washington, D.C., to an undisclosed buyer for $42 million. The real estate investment trust expects to complete the sale in Q3.
The contracted sale price reflects a 17.4x earnings before interest, tax, depreciation and amortization multiple and a 5 percent net operating income capitalization rate based on the hotel’s operating performance for 2018. Based on the trailing 12-month period ending this past March, the contracted sales price reflects a 17.7x EBITDA multiple and a 4.9 percent NOI capitalization rate. The NOI capitalization rates are after an assumed annual capital reserve of 4 percent of total hotel revenues.
The sale is subject to normal closing conditions and Pebblebrook offered no assurances the sale will be completed on these terms, or at all. If the sale goes through as planned, the company’s estimated total net debt to trailing 12-month corporate EBITDA ratio will be approximately 4.6 times.
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The publicly traded REIT owns 60 hotels across 16 urban and resort markets with a focus on West Coast gateway cities. Earlier this month, the REIT introduced plans to rebrand two other D.C. hotels: the Kimpton Mason & Rook Hotel and the Kimpton Donovan Hotel. The two properties will join Viceroy Hotels & Resorts’ The Viceroy Lifestyle Series and Pebblebrook’s Unofficial Z Collection, respectively, in 2020.
The Kimpton Rouge Hotel includes a bar and restaurant, a fitness center and a business center. It is located between Dupont Circle and Logan Circle, about a 15-minute walk north of the White House and a 30-minute walk north of the Washington Monument.