Pebblebrook to acquire rival hotel REIT company LaSalle for $5.2bn

Pebblebrook acquisition of LaSalle : Pebblebrook Hotel Trust has agreed to acquire 100% of rival Maryland-based hotel real estate investment trust (REIT) company LaSalle Hotel Properties in a deal worth $5.2 billion.

Pebblebrook acquisition of LaSalle will create an enlarged hotel REIT that is expected to become the largest owner of independent hotels and the third-largest company in the lodging REIT sector by enterprise value in the US.

LaSalle Hotel Properties boasts of owning 41 properties made up of upscale, full-service hotels with nearly 10,400 guest rooms across 11 markets in seven states and the District of Columbia.

On the other hand, Pebblebrook owns 28 hotels across nine states and the District of Columbia having a total of 6,973 guest rooms.

The Pebblebrook LaSalle merger will create a lodging REIT portfolio comprising 662 primary upper-upscale and luxury independent and collection branded hotels and resorts in or around major urban markets with a greater footprint in higher-growth US markets.

Business-News-Today.com reports on the $5.2bn Pebblebrook acquisition of LaSalle. Photo courtesy of Pebblebrook Hotel Trust/Business Wire, Inc.

In conjunction with the agreement, LaSalle Hotel Properties has scrapped the all-cash deal worth $4.8 billion made in May 2018 for its acquisition by affiliates of The Blackstone Group as it regards the Pebblebrook offer to be superior.

Michael D. Barnello – President and CEO of LaSalle Hotel Properties, commenting on Pebblebrook acquisition of LaSalle, said: “This agreement with Pebblebrook delivers immediate cash value to LaSalle shareholders. The transaction represents a 48% premium to LaSalle’s unaffected share price.

“This outcome represents the culmination of a thorough strategic alternatives process, which from the beginning, has been focused on maximizing value for shareholders.”

As per the terms of the Pebblebrook acquisition of LaSalle, Pebblebrook Hotel Trust will either pay $37.80  or issue 0.92 of its shares in exchange of each of the shares of LaSalle Hotel Properties.

Pebblebrook Hotel Trust will cancel and exclude the shares it already owns in LaSalle Hotel Properties.

Commenting on Pebblebrook acquisition of LaSalle, Jon E. Bortz – Chairman, President and CEO of Pebblebrook, said: “We are very pleased to have reached an agreement to bring Pebblebrook and LaSalle together in a strategic combination that represents a terrific value-maximizing opportunity for both LaSalle and Pebblebrook shareholders.

“We are confident that shareholders will benefit from this premium portfolio of high-quality independent and branded hotels through its capacity to generate strong cash flow, provide for a stable dividend and capitalize on market opportunities, including improving hotel industry fundamentals.

“We look forward to moving swiftly to complete this transaction and to welcoming LaSalle employees to our team.”

Pebblebrook acquisition of LaSalle will have to meet customary closing conditions such as receipt of regulatory approvals and approval by shareholders of both the REIT companies, following which it is likely to be completed in Q4 2018.