Real estate investment trust Pebblebrook Hotel Trust has closed on its $68.5 million sale of the 221-room Hotel Zoe Fisherman's Wharf in San Francisco.
The REIT first announced its intent to sell the hotel in October to an unnamed third party as it refines its portfolio strategy.
Pebblebrook purchased the hotel in 2015 for $122 million from Walnut Hill Capital when the hotel was name Tuscan Fisherman's Wharf, a Best Western Plus Hotel.
In 2017, Pebblebrook invested $16 million into the hotel to reopen it as Hotel Zoe as part of the REIT's Unofficial Z Collection, a mini-portfolio of properties with names starting with Z.
In Pebblebrook's recent third-quarter earnings call, Chairman and CEO Jon Bortz said the REIT is continuing to sell its urban properties in slower-to-recover markets.
“We've generally sold our lowest-quality properties in the slowest-recovering urban markets, improving the quality and growth prospects of our remaining portfolio,” he said during the call, referring to the 14 properties, including Hotel Zoe, that Pebblebrook has sold since the onset of the pandemic.
“We just don’t believe any opportunities in the future will be more attractive or available at a bigger discount than buying our current properties at a 25% to 30% discount to the estimated current gross values and a 50-plus-percent discount to the overall value of the company,” he said.
Hotel Zoe's net loss for the trailing 12 months ending Sept. 30 was $1.2 million, according to the news releasing announcing the completion of the sale.
Its net operating income was $2.2 million and its earnings before interest, taxes, depreciation and amortization was $2.7 million.
Proceeds from the sale will be used for general corporate purposes, including reducing Pebblebrook's outstanding debt and repurchasing the REIT's common and preferred shares.