Pebblebrook Breaks into Miami Hotel Market
- Jun 01, 2011
June 1, 2011
By Barbra Murray, Contributing Editor
Pebblebrook Hotel Trust has made its entrée into the Miami market with the acquisition of the 148-room Viceroy Miami from TRG-Brickell Point West Ltd. in a $36.5 million all-cash transaction. “It’s been one of our target markets since our IPO,” Jon Bortz, chairman and CEO of Pebblebrook, told CPE.
The hotel REIT, which focuses on the acquisition of upper upscale, full-service hotels, completed its initial public offering in December 2009, and with the purchase of the Viceroy, has since invested approximately $1 billion to amass a portfolio of 13 properties spanning six states from the West Coast to the East Coast, including the District of Columbia.
Developed along the Biscayne Bay as part of the Related Group’s $1.3 billion, high-end, mixed-use condominium community, ICON Brickell, the Viceroy opened its doors in 2009 with the distinction of providing the longest infinity-edge swimming pool in the state of Florida. The hotel shares the 50-story Viceroy Tower, one of three high-rises that comprise ICON Brickell, with condominium residences and features eateries and 4,000 square feet of meeting space. Guests at the Viceroy also have access to an upscale 28,000-square-foot spa located in one of the other ICON towers.
“The Viceroy Hotel really feels like it’s in a luxury billion-dollar complex, and we acquired it at about half of what it cost to build,” Bortz notes. While the property is top-of-the-line, its potential for great success has been impacted by the all-important issue of timing and the developer’s financial troubles. “It opened in 2009, which was a horrible time to open up a new hotel, and it was overseen by a bank, so clearly there were a lot of challenges there.” However, the property’s performance in 2010—its average occupancy level was 68 percent–was in line with that of the Miami hotel market, where the average occupancy level was 69.9 percent, according to a report by international accounting and consulting firm Deloitte. The figures for the hotel and the city were significantly above the national average of 58.7 percent. And 2011 is already looking better.
“We believe the Brickell district has continued to come along as a financial, office, restaurant and entertainment area,” he said. “It’s not South Beach, but it’s really coming along. And Miami is one of the top 10 metro areas in the country. It has employment growth and it continues to grow as an international gateway city. It’s a very intriguing market.”
Viceroy Hotel Group will stay on to manage the hotel as it has since the doors opened two years ago. “We have a relationship with Viceroy and we respect them,” Bortz said. Viceroy Hotel Group also manages Santa Monica, Calif.’s Sheraton Delfina Santa Monica Hotel, which Pebblebrook acquired last November for $102.8 million, and it was the lodging management company that brought Viceroy Miami to the REIT’s attention. The Related Group relied on Jones Lang LaSalle Hotels to orchestrate the sale of the hotel. Gregory Rumpel, executive vice president and Andrew Dickey, vice president, led the JLL team.