Pebblebrook (PEB) Buys Margaritaville Hollywood Beach Resort
Pebblebrook (PEB) expands into the dynamic South Florida market with the acquisition of the Margaritaville Hollywood Beach Resort.
Pebblebrook Hotel Trust PEB has acquired the 369-room Margaritaville Hollywood Beach Resort in Hollywood, FL, for $270 million from an affiliate of KSL Capital Partners, LLC. Built in 2015, this lifestyle beachfront resort’s buyout strengthens the company’s foothold in the growing South Florida market.
The Margaritaville Hollywood Beach Resort has 369 guestrooms, which include 43 well-appointed suites and more than 30,000 square feet of indoor and outdoor event spaces. Located between the Miami Beach and Fort Lauderdale, this premier lifestyle resort is likely to benefit from its proximity to both cities.
It is also at a convenient distance from the Fort Lauderdale-Hollywood International Airport and the Miami International Airport, and offers easy access to a variety of recreational, retail, and entertainment activities for leisure and corporate groups overlooking the Atlantic Ocean.
With the Hollywood Bandshell, the focal point of the Hollywood Broadwalk located at the resort, the property attracts a large number of tourists. It features eight highly casual and upscale dining venues, like Jimmy Buffet’s Margaritaville, Landshark Bar & Grill, JWB Prime Steak and Seafood, 5 o’Clock Somewhere Bar & Grill, and Floridays Airstream Cafe.
Moreover, the resort’s other amenities comprise 11,000-square foot 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 retail outlets.
Markedly, with the relaxation of regulations, acceleration in vaccine distribution and favorable holiday travel trends, the lodging industry is likely to continue recovering. Amid this, with a superior location and premium features, this lifestyle beachfront resort in the growing South Florida market is anticipated to attract both leisure and corporate group customers.
The acquisition seems beneficial as the resort is expected to produce $475-$480 of total revenue per available room, hotel earnings before interest, taxes, depreciation, and amortization of $16.8 to $17.2 million and net operating income of $14.3 to $14.5 million after a 4% capital reserve.
Funded with $108.5 million of cash in hand, the acquisition brings Pebblebrook’s total number of properties in the portfolio to 52, which includes 10 drive-to independent lifestyle resorts.
With this buyout, Pebblebrook will have a liquidity of nearly $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.
Pebblebrook Hotel’s shares have appreciated 24% year to date, outperforming the industry’s rally of 18.1%. The company currently carries a Zacks Rank of 3 (Hold).
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Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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