Pebblebrook Hotel Trust has completed the sale of The Westin Michigan Avenue Chicago, a 752-room property in Illinois, US, for $72m to an undisclosed third party.
The company reported the hotel achieved $4.6m in earnings before interest, taxes, depreciation, and amortisation (EBITDA) for the 12 months ending 30 September. Net operating income (NOI) was $2.5m, calculated with a 4% capital reserve applied to total hotel revenues.
The transaction value represents a multiple of 15.6 times EBITDA and a 3.5% NOI capitalisation rate prior to consideration of any brand-mandated improvement works or other substantial capital investments.
Pebblebrook intends to use the proceeds mainly to reduce outstanding debt and preferred equity, repurchase common shares when appropriate, and support other capital allocation priorities.
The sale, along with the earlier announced disposal of Montrose at Beverly Hills for $44.25m, brings Pebblebrook’s total debt reduction to $100m and preferred securities reduction to about $5m.
After accounting for these transactions, Pebblebrook expects consolidated debt and convertible notes outstanding to stand at around $2.1bn, while preferred equity will total approximately $761m.
Net debt relative to trailing 12-month corporate EBITDA is projected to reduce to roughly 5.9 times.
Following these property sales, Pebblebrook revised its fourth-quarter and full-year 2025 forecasts that were issued on 5 November.
The company has removed operational figures for both sold hotels from its fourth quarter same-property hospitality metrics but will include earnings generated up until the respective sale dates in adjusted earnings before interest, taxes, depreciation, and amortisation for real estate (EBITDAre) calculations.
Pebblebrook does not anticipate these transactions will have a significant effect on adjusted funds from operations due to expected interest expense reductions from lower overall debt levels.
The company stated that the overall outlook for key earnings indicators during the fourth quarter and full year remains substantially unchanged.
