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Monday, 16 April 2018

Pebblebrook Ups Offer for LaSalle

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Pebblebrook Hotel Trust, which last month offered to buy LaSalle Hotel Properties in a stock swap valued at roughly $3.4 billion, has sweetened its offer for the company.

Pebblebrook, which was founded in 2009 and is led by Jon Bortz, who previously had founded and served as chairman and chief executive of LaSalle, had offered to swap 0.8655 of its shares for every LaSalle share outstanding. That had placed an implied value of $30/share for LaSalle's shares.

Pebblebrook is now offering to swap 0.8944 of its shares for every LaSalle share. Because its shares have increased, the implied value is $31.75/share, or 5.8 percent more than the earlier offer. In a letter to LaSalle's board, Bortz noted that the offer places a value on LaSalle's shares that is 30.2 percent more than their value on March 27, before its initial offer was made public, and 13.9 percent greater than the net asset value estimates placed on LaSalle's portfolio by equity analysts.

Bortz also said that if LaSalle's board cooperated, a definitive merger agreement could be signed within 10 days.

A total of 15 percent of the revised offer could be paid in cash, as opposed to Pebblebrook shares, subject to certain restrictions.

Bortz said the revised offer "demonstrates our strong commitment to bringing these two similar companies together. Investor reaction has been overwhelmingly in favor of a combination, and we are ready to move forward swiftly to reach an agreement."

He noted that the latest offer allows LaSalle to solicit alternative proposals for 30 days. If a merger is successful - Bortz noted that LaSalle hasn't yet responded to the latest proposal - LaSalle's existing shareholders would own more than 50 percent of the combined company. They'd also enjoy a substantially greater dividend rate - Pebblebrook pays $1.36/share annually, while LaSalle pays 0.92 cents/share.

Pebblebrook's financial advisers are Raymond James and BofA Merrill Lynch, while Hunton Andrews Kurth is legal counsel.

The company as of the end of last year owned 28 hotels with 6,972 rooms. Many of its properties are independently branded and include the 202-room Hotel Zelos San Francisco, the 183-room Hotel Monaco in Washington, D.C., and The Nines, with 331 rooms in Portland, Ore.

LaSalle, meanwhile, owns 41 hotels with 10,451 rooms in markets such as San Francisco, Washington, Boston, New York and San Diego. Its portfolio profile is similar to Pebblebrook's and includes properties such as the 761-room Park Central Hotel in New York, 139-room Hotel George in Washington and 681-room Park Central in San Francisco.

Revenue per available room, a widely followed hotel-sector metric, declined for both companies last year. Pebblebrook's fell by 2.21 percent, while LaSalle's fell by 1.8 percent. Both underperformed the wider hotel market in part because of softness in the San Francisco market, to which the two companies have a substantial exposure.

Comments? E-mail Orest Mandzy, or call him at (267) 327-4281.



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Additional Info

  • Syndicate to Realpoint: No
  • Sector: Hotel & Resort
  • Subject: REITS -general (REITS), Stock/Equity Offerings (IPO)
  • Private: No
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Data Digest

 

CMBS DELINQUENCY VOLUME

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CMBS SPECIAL SERVICING VOLUME

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Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44

 

RCA CPPI

 

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CMBS 2.0 Spreads

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Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41

 

 

 

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