Pebblebrook Hotel Trust will sell its 221-room Hotel Zoe Fisherman's Wharf in San Francisco for $68.5 million.
The buyer is not named, but according to Pebblebrook, the deal is expected to close during the fourth quarter.
Bethesda, Maryland-based hotel real estate investment trust Pebblebrook bought Hotel Zoe in 2015 for $122 million from Walnut Hill Capital, according to CoStar data. At the time, the property was named the Tuscan Fisherman's Wharf, a Best Western Plus Hotel.
As it does with many of its acquisitions, Pebblebrook renovated and repositioned the hotel, investing $16 million to reopen it as Hotel Zoe in June 2017. It joined the REIT's Unofficial Z Collection, a mini-portfolio of properties with Z in their names.
In the news release announcing the deal, Pebblebrook reported for the trailing 12 months ending Sept. 30, the hotel's net loss was estimated at $12 million, net operating income of $2.2 million and earnings before interest, taxes, depreciation and amortization of $2.7 million.
The $68.5 million reflects a 25-times EBITDA multiple and a 3.2% net operating income capitalization rate — assuming a capital reserve of 4% of total hotel revenue.
Pebblebrook intends to use proceeds from the sale for general corporate purposes, such as reducing outstanding debt and repurchasing common and preferred shares.
Though the company has sold several of its San Francisco properties over the years, Pebblebrook CEO and Chairman Jon Bortz recently told HNN that he is optimistic about the market despite its recent troubles and sees the city as a strong, long-term investment opportunity.
“If it was me and my personal money and I was investing in hotels and I had a five- to 10-year horizon, I’d be buying in San Francisco,” he said.