Pebblebrook Acquires Margaritaville In Hollywood, FL, For $270M
Pebblebrook Hotel Trust has acquired the 369-room oceanfront Margaritaville Hollywood Beach Resort in Hollywood, FL, for $270 million from an affiliate of KSL Capital Partners LLC. The lifestyle resort will continue to be managed by Davidson Hospitality Group.
Margaritaville Hollywood Beach Resort, the brand’s flagship property, is located on 6.2 oceanfront acres, along 450 linear feet of direct beach frontage, and is the focal point of the Hollywood Beach Boardwalk. The resort was built in 2015 and features 369 guestrooms, including 43 suites and more than 30,000 sq. ft. of indoor and outdoor event space for leisure and corporate groups overlooking the Atlantic Ocean. The resort also features eight casual and upscale dining venues. Additional amenities include the 11,000-sq.-ft. St. Somewhere Spa, Fitness and Salon, multiple outdoor swimming pools, 22 full-service cabanas, the Flowrider Surf Simulator, the Parakeets Kid’s Club and several outdoor entertainment venues.
“We’re thrilled to acquire this irreplaceable, lifestyle beachfront resort in the growing South Florida market, which is known as Margaritaville’s flagship property on the East Coast,” said Jon Bortz, chairman/CEO, Pebblebrook Hotel Trust. “This premier lifestyle resort attracts both leisure and corporate group customers who seek a unique laid-back experience with a wide array of restaurant, bar and entertainment venues. In addition, Margaritaville’s strategic oceanfront location on the Hollywood Boardwalk makes it a natural destination for residents and tourists in the South Florida market.”
Following the acquisition, Davidson now operates six of Pebblebrook’s properties.
“We are excited to partner with Davidson on another unique resort,” continued Bortz. “Davidson has extensive experience operating high-quality destination resorts, including our iconic Paradise Point Resort in San Diego, which we are targeting to convert to Margaritaville’s West Coast flagship resort. Davidson also operates our Solamar San Diego, which is slated to become a Margaritaville downtown urban resort. The Davidson team has a deep understanding of the Margaritaville brand and customer, making them a natural partner for Margaritaville Hollywood Beach Resort, which we believe has tremendous upside.”
Pebblebrook is evaluating numerous operating and physical enhancements for additional upside opportunities and increased cash flow. This includes adding guestrooms; expanding the restaurant and bar offerings; reimagining the merchandising and quality of the retail space; and creating additional revenue-generating venues from underutilized indoor and outdoor spaces and areas. The resort will also become part of Curator Hotel & Resort Collection, which is expected to result in a wide array of expense reductions and enhanced technology and operating initiatives for the resort.
For full-year 2021, following a slow start to the year due to the pandemic, Margaritaville Hollywood Beach Resort is forecasted to produce between $475 and $480 of total RevPAR. The resort is expected to generate hotel EBITDA of $16.8 million to $17.2 million and hotel net operating income, after a 4% capital reserve, of $14.3 million to $14.5 million.
The acquisition brings the total number of properties in the company’s portfolio to 52, including 10 drive-to, independent lifestyle resorts.
The company funded the acquisition with approximately $108.5 million of cash on hand, and assumed the $161.5 million of existing non-recourse, secured debt. The debt matures in May 2022 and provides for up to two one-year extensions to May 2024. The interest rate on the debt is floating at a current all-in rate of approximately 2.5%. The company may pre-pay the debt at any time without penalty.
Following the acquisition, Pebblebrook will have liquidity of approximately $800 million, including an estimated $160 million of consolidated cash, cash equivalents and restricted cash in addition to $644.2 million of undrawn availability on its senior unsecured revolving credit facility.