In a continuing strategy of growing its management and franchise businesses, InterContinental Hotels Group (NYSE:IHG) has sold its InterContinental Buckhead Atlanta hotel to Maryland-based Pebblebrook Hotel Trust (NYSE:PEB) for $105 million. It was the largest single-asset hotel deal ever recorded in Atlanta.
“The sale of the InterContinental Buckhead Atlanta is a great example of our asset strategy in action,” says Richard Solomons, chief financial officer and head of commercial development with London-based IHG. Since 2003, the company has disposed of 185 hotels worldwide with a combined net value of $5.3 billion.
IHG built the Atlanta hotel in 2004 using its own capital to create a showcase for the brand in order to drive growth across the Americas. Since then, the hotelier has signed 21 InterContinental hotels in the region.
“We are now able to recycle the capital we have invested in the building whilst maintaining a long-term management contract with a great partner, reinforcing the strength of the brand,” adds Solomons.
For its part in the deal, Pebblebrook landed a 725,571 sq. ft., 422-room, AAA five-diamond luxury, full-service hotel in the heart of Atlanta’s Buckhead submarket.
Offering 31,000 sq. ft. of flexible meeting and event space, the most expansive in the submarket, the hotel also includes a 12,000 sq. ft. ballroom and a 24,000 sq. ft. outdoor garden and meeting area. Not to mention a 5,000 sq. ft. state-of-the-art wellness spa and a 24-hour fitness club.
“We are extremely pleased to acquire one of Buckhead’s leading hotels,” says Jon Bortz, chairman, president and chief executive officer of Pebblebrook. The REIT views the InterContinental Buckhead Atlanta as a strategic opportunity to invest in a high-quality hotel with a premier brand and operating company in one of the most affluent locations in the country.
Pebblebrook plans to invest approximately $7 million in capital improvements during the next three years. They will primarily consist of a soft-goods refurbishment of all guestrooms, meeting space and public areas.
The REIT estimates the hotel will generate earnings of approximately $7.5 million to $8 million before interest, taxes, depreciation and amortization during the next 12 months.
The sale was the third highest single-asset hotel transaction in the United States this year, following the Hilton Minneapolis at $155 million and the Hyatt Regency Boston at $112 million.