Pebblebrook Hotel Trust Acquires Florida’s Margaritaville Hollywood Beach Resort for $270m from KSL Capital Partners
Pebblebrook Hotel Trust announced that it acquired the 369-room oceanfront Margaritaville Hollywood Beach Resort in Hollywood, Florida for $270 million from an affiliate of KSL Capital Partners, LLC. The lifestyle resort will continue to be managed by Davidson Hospitality Group ("Davidson").
Margaritaville Hollywood Beach Resort, the flagship property to an internationally recognized brand synonymous with a casual-luxe lifestyle, is located on 6.2 oceanfront acres, along 450 linear feet of direct beach frontage, and is the focal point of the famous Hollywood Beach Broadwalk. The resort was built in 2015 and features 369 guestrooms, including 43 well-appointed suites, and over 30,000 square feet of indoor and outdoor event space for leisure and corporate groups overlooking the Atlantic Ocean.
The resort also features 8 highly successful casual and upscale dining venues, including Jimmy Buffet's Margaritaville, Landshark Bar & Grill, JWB Prime Steak and Seafood, 5 o'Clock Somewhere Bar & Grill, and Floridays Airstream Cafe. Additional resort amenities include the 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, numerous retail outlets, and live entertainment nightly at one of the resort's several vibrant 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 and Chief Executive Officer of 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 Broadwalk makes it a natural destination for residents and tourists in the South Florida market."
Ideally located between Miami Beach and Fort Lauderdale, Margaritaville Hollywood Beach Resort benefits from its proximity to both cities, including numerous recreational, retail, and entertainment activities. The resort is within a day's drive of over 20 million residents while also benefitting from excellent airlift from Fort Lauderdale-Hollywood International Airport and Miami International Airport. Directly adjacent to the resort, the Hollywood Beach Broadwalk stretches 2.5 miles along the Atlantic Ocean. The brick-paved thoroughfare is a haven for tourists attracted to its countless eateries, cafes, and retail outlets. The focal point of the Hollywood Broadwalk is the Hollywood Bandshell, which is located at the resort and is operated by the property team.
Davidson will continue to manage Margaritaville Hollywood Beach Resort. Following the acquisition of Margaritaville Hollywood Beach Resort, Davidson now operates 6 of Pebblebrook's properties.
"We are excited to partner with Davidson on another unique resort," continued Mr. 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 under-utilized 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 revenue per available room ("TRevPAR"). The resort is expected to generate hotel earnings before interest, taxes, depreciation, and amortization ("hotel EBITDA") of $16.8 to $17.2 million and hotel net operating income ("hotel NOI"), after a 4% capital reserve, of $14.3 to $14.5 million.
The acquisition of Margaritaville Hollywood Beach Resort 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 of Margaritaville Hollywood Beach Resort, the Company will have liquidity of approximately $800.0 million, including an estimated $160.0 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.