hospitalitystyle.com

(March 2011) posted on Wed Mar 30, 2011 EDT

REITs’ deals involve Hilton, Royal Palm and W hotels

Two major real estate investment trusts – Sunstone Hotel Investors and Pebblebrook Hotel Trust— have unveiled deals involving a trio of high-profile hotels. Sunstone said it has reached a definitive agreement to acquire the 75 percent majority interest in a joint venture that owns the 1,190-room Hilton San Diego Bayfront hotel for $475 million. In addition, the REIT announced it is selling the 409-room Royal Palm Miami Beach for $130 million.

“While we believe the Royal Palm project has strong future potential, monetizing this investment at a profit while retaining rights to participate in the project's upside will enable us to redirect our focus on our core portfolio strategy of acquiring and asset managing branded, institutional-quality upper upscale hotels,” said Sunstone president Ken Cruse. “As a result of our concurrent acquisition of the Hilton San Diego Bayfront hotel and divestiture of the Royal Palm project, we will improve portfolio consistency, reduce corporate risk and meaningfully increase our EBITDA.”

Pebblebrook, meantime, said it has reached an agreement to buy the W Hotel in Boston from Sawyer Enterprises for $89.5 million. Sawyer filed for Chapter 11 bankruptcy last year, and expects to emerge from that process this summer.

“We were not looking to sell, but Pebblebrook presented us with a compelling offer,” said Carol Sawyer Parks, the ceo of Sawyer Enterprises, a Boston-based owner and operator of real estate. “The price is clear evidence of the strong attributes of the W brand, and by extension has a positive impact on the value of the W Residences.

The deal for the W Boston calls for an affiliate of Starwood Hotels and Resorts Worldwide Inc. to continue operating the 235 room luxury hotel and its affiliated W Residences. The acquisition is the latest in a string of high-profile buys by Pebblebrook, a publicly traded hospitality REIT. Other recent buys include the Sir Francis Drake Hotel in San Francisco and the Hotel Monaco in Washington, D.C.