Pebblebrook Hotel Trust, a Bethesda, Md.-based hotel REIT, has completed the sale of Union Station Hotel Nashville, Autograph Collection, in Nashville, Tenn., to Southwest Value Partners for $56 million. Combined with the sale of two hotels earlier this year in Atlanta and Washington, D.C., for $331 million, the company has divested a total of $387 million in hotel properties so far this year.
The REIT announced on May 27 that it had executed a contract with a third party to sell the 125-key historic hotel. Pebblebrook did not identify the buyer but Southwest Value Partners, the California-based firm that is building the 17-acre, mixed-use Nashville Yards development in downtown Nashville, announced in June that it was acquiring the hotel at 1001 Broadway. Southwest financed the acquisition through a five-year, $30.3 million loan from International Bank of Commerce, according to Davidson County records.
Cary Mack and Mark Schlossberg, co-managing partners of Southwest Value Partners, said in a prepared statement Dimension Development will be managing the hotel. Dimension will also manage the Grand Hyatt Nashville, the 591-key hotel that is set to open soon across the street from Union Station Hotel at Nashville Yards. Mack and Schlossberg cited the history of the Union Station building, a former railroad terminal that had opened in 1900 and became a hotel in 1986. Part of Marriott’s Autograph Collection, the upscale hotel became a member of the Historic Hotels of America in 2015. Pebblebrook bought the hotel in December 2014 for $52.3 million from Turnberry Associates and Corner Partnership and made $15.5 million in renovations by 2016. Mack and Schlossberg stated the hotel would be a “natural and exciting hospitality addition to the broader Nashville Yards vision and master plan.”
The mixed-use campus is slated to have more than 3.5 million square feet of office space, about 1,000 multifamily units and 400,000 square feet of retail and entertainment space. The development will include a 20-story, 566,000-square-foot Class A tower at 1001 Church St. that will be Amazon’s operations center, scheduled for completion in 2021.
Pebblebrook has been continuing to sell hotel properties as part of its disposition program after acquiring LaSalle Hotel Properties in November 2018. In January, the REIT executed a contract to sell the 422-key InterContinental Buckhead Atlanta and the 237-key Sofitel Washington DC for $331 million. Also in the nation’s capital, Pebblebrook sold the 137-key Rouge Hotel located less than 1 mile from the White House and the National Mall in September for $42 million. The company previously sold the 343-key Liaison Washington Capitol Hills for $111 million and the 335-key Hotel Palomar for $141.5 million. Both of those sales also occurred in 2019.
In June, Jon Bortz, Pebblebrook chairman, president & CEO, spoke at NAREIT’s REITWeek Virtual Investor Conference, and described the hotel industry as being “devastated” by the COVID-19 crisis. At that time, he noted the hospitality industry has seen about 20 percent of hotels closed and approximately 75 percent of the workforce furloughed. On Thursday, Pebblebrook released its second-quarter 2020 earnings report and stated it could not provide 2020 guidance at this time due to the uncertainties caused by the pandemic. The REIT noted it plans to release new guidance “when it has more clarity on government restrictions, advances in health solutions, the economy, travel demand and more predictable overall operating fundamentals and trends.”
Pebblebrook did note that 24 of its 53 hotels and resorts are now open and expects to reopen five more hotels by mid-August. Bortz stated in the earnings report that the company has seen an uptick in the leisure segment that has benefited its drive-to resorts. He noted they have been experiencing improvements in operating performance each week. Bortz said Pebblebrook is also seeing gradual recovery and demand in its urban hotels. He also noted Pebblebrook has recently completed the redevelopment of Hotel Zena Washington DC and Viceroy Hotel Washington DC in Washington, D.C., and of several properties in California, including Le Parc West Hollywood, San Diego Mission Bay Resort, Chaminade Resort in Santa Cruz and Viceroy Santa Monica Hotel.