Pebblebrook Hotel Trust (NYSE: PEB) today announced that on June 23, 2022, it acquired the AAA Four Diamond 257-room Gurney’s Newport Resort & Marina in Newport, Rhode Island for $174.0 million.
Gurney’s Newport is an irreplaceable ten-acre waterside resort located on highly visible Goat Island in world-famous Newport, Rhode Island. The independent resort boasts 360-degree unobstructed water views of Narragansett Bay as well as Newport Harbor, and the iconic Newport Bridge, creating the quintessential coastal New England experience. Gurney’s Newport features 257 guestrooms, including 18 spacious suites, and 80,000 square feet of flexible indoor and outdoor event space, surrounded by expansive lawns, sweeping water views, a marina, and a historic lighthouse. The resort contains a wide variety of waterside eateries, including Showfish Newport and The Pineapple Club, which feature ingredient-driven menus with healthy bites, locally sourced dishes, and seasonal classics. The resort also contains a 22-slip full-service marina with direct access to Gurney’s Newport. Additional resort amenities include a 3,000-square foot spa with nine treatment rooms, outdoor fireplaces throughout, a lobby bar, a grab-and-go coffee shop, a 3,200-square foot waterside pavilion with fantastic views, a resort-style saltwater outdoor pool with poolside cabanas, an indoor pool, a fitness center, and a seasonal ice-skating rink.
“We are very excited to acquire this extremely unique premier resort within the vibrant, high barrier to entry Newport market,” said Jon E. Bortz, Chairman, President, and Chief Executive Officer of Pebblebrook Hotel Trust (“Pebblebrook”). “Gurney’s Newport is the only resort-style property in Newport, and it is one of the very few true waterside resorts on the Northeastern Seaboard, drawing strong demand from New York, Boston and Providence. This unique New England retreat features an expansive footprint overlooking Newport Harbor and Narragansett Bay, where guests can enjoy upscale dining, spa treatments, sailing tours, outdoor event spaces, a private marina, cabana experiences, and numerous other resort-style amenities. With group and individual travelers increasingly seeking a unique resort experience with open-air amenities, Gurney’s Newport is well-positioned to continue to grow in the highly attractive Newport market.”
The Company is evaluating numerous operating and physical enhancements to the guest experience to drive increased cash flow. Pebblebrook believes the overall opportunity is to reposition the property to a higher level, given its unique location and amenities. Potential improvements include fully renovating the guestrooms and guest bathrooms, upgrading the lobby, arrival experience, and landscaping, refurbishing the restaurants and bars, adding a market, relocating/upgrading the spa, reimagining the Grand Ballroom, South Lawn, and outdoor pavilion spaces, and adding new guest activities and amenities. In addition, the Company has the right to purchase the marina (which includes 22 slips accommodating boats up to 240 feet) in 2027. The resort will also become part of Curator Hotel & Resort Collection, which is expected to generate a wide array of expense reductions combined with enhanced technology and operating initiatives.
Based on the estimated May 2022 trailing-twelve-month performance, the hotel generated total revenue per available room (“TRevPAR”) of $401, hotel earnings before interest, taxes, depreciation, and amortization (“hotel EBITDA”) of $13.6 million, and hotel net operating income (“hotel NOI”), after a 4% capital reserve, of $12.1 million.
The acquisition of Gurney’s Newport brings the total number of properties in the Company’s portfolio to 55, including 13 unique drive-to, independent lifestyle resorts. Pebblebrook funded the acquisition with cash on hand and proceeds from its senior unsecured revolving credit facility.
| Pebblebrook Hotel Trust | ||
| Gurney’s Newport Resort & Marina | ||
| Reconciliation of Hotel Net Income to Hotel EBITDA and Hotel Net Operating Income | ||
| Estimated May 2022 Trailing Twelve Months | ||
| (Unaudited, in millions) | ||
| Estimated Trailing Twelve Months | ||
| Ended May 31, 2022 | ||
| Hotel net income | $8.7 | |
| Adjustment: | ||
| Depreciation and amortization(1) | 4.9 | |
| Hotel EBITDA | $13.6 | |
| Adjustment: | ||
| Capital reserve | (1.5 | ) |
| Hotel Net Operating Income | $12.1 | |
| (1) Depreciation and amortization have been estimated based on a preliminary purchase price allocation. A change, if any, in the allocation will affect the amount of depreciation and amortization and the resulting change may be material. | ||
| Pebblebrook Hotel Trust | |||||||||||||
| Historical Operating Data - Entire Portfolio | |||||||||||||
| ($ in millions, except ADR and RevPAR) | |||||||||||||
| (Unaudited) | |||||||||||||
| Historical Operating Data: | |||||||||||||
| First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Full Year | |||||||||
| 2019 | 2019 | 2019 | 2019 | 2019 | |||||||||
| Occupancy | 75% | 86% | 86% | 78% | 81% | ||||||||
| ADR | $253 | $270 | $266 | $247 | $259 | ||||||||
| RevPAR | $189 | $232 | $230 | $191 | $211 | ||||||||
| Hotel Revenues | $352.6 | $432.1 | $424.6 | $371.5 | $1,580.8 | ||||||||
| Hotel EBITDA | $94.8 | $152.7 | $143.8 | $101.3 | $492.5 | ||||||||
| Hotel EBITDA Margin | 26.9% | 35.3% | 33.9% | 27.3% | 31.2% | ||||||||
| First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Full Year | |||||||||
| 2021 | 2021 | 2021 | 2021 | 2021 | |||||||||
| Occupancy | 22% | 42% | 53% | 51% | 42% | ||||||||
| ADR | $260 | $262 | $287 | $262 | $270 | ||||||||
| RevPAR | $58 | $109 | $152 | $135 | $114 | ||||||||
| Hotel Revenues | $112.2 | $210.0 | $287.4 | $265.0 | $874.6 | ||||||||
| Hotel EBITDA | ($5.5) | $45.3 | $84.1 | $58.5 | $182.4 | ||||||||
| Hotel EBITDA Margin | (4.9%) | 21.6% | 29.3% | 22.1% | 20.9% | ||||||||
| First Quarter | |||||||||||||
| 2022 | |||||||||||||
| Occupancy | 47% | ||||||||||||
| ADR | $306 | ||||||||||||
| RevPAR | $145 | ||||||||||||
| Hotel Revenues | $269.9 | ||||||||||||
| Hotel EBITDA | $59.9 | ||||||||||||
| Hotel EBITDA Margin | 22.2% | ||||||||||||
These historical hotel operating results include information for all of the hotels the Company owned as of June 23, 2022, following the acquisition of Gurney’s Newport Resort & Marina. These historical operating results include periods prior to the Company's ownership of the hotels. The information above does not reflect the Company's corporate general and administrative expense, interest expense, property acquisition costs, depreciation and amortization, taxes and other expenses. Any differences are a result of rounding.