Grand Hotel Minneapolis Sold for $33M
A real estate investment trust has completed its planned acquisition of The Grand Hotel Minneapolis.
Bethesda, Maryland-based Pebblebrook Hotel Trust said Wednesday that it paid $33 million in cash for the 140-room hotel, which it bought from a limited liability company operating under New York-based iStar Financial. The sale price is $3 million lower than the $36 million price that Pebblebrook originally agreed to pay when it signed a purchase agreement in May.
In late July, Pebblebrook said in a regulatory filing that it needed to review “significant and unanticipated matters that we became aware of during our due diligence process,” adding that “there is significant uncertainty as to whether this acquisition will be consummated.” Pebblebrook said at the time that if it did elect to move forward with the deal, the terms of the sale could change.
According to Pebblebrook, the hotel operated at about 61 percent occupancy in 2009; its daily room rate last year averaged about $176. Pebblebrook has chosen San Francisco-based Kimpton Hotels and Restaurants to manage the hotel.
The real estate investment trust said that it predicts that the hotel will generate earnings of $2.3 million to $2.8 million and net operating income of about $2 million to $2.5 million within the next year.
“We are excited about the acquisition of one of Minneapolis' most iconic and historic hotels,” Jon Bortz, chairman, president, and CEO of Pebblebrook Hotel Trust, said in a statement. “We view the acquisition of The Grand Hotel Minneapolis as a unique opportunity to invest in a distinguished and high-quality hotel with a rich and celebrated heritage that is able to offer one-of-a-kind amenities in a superior location.”
The Grand Hotel Minneapolis is Pebblebrook's fifth acquisition since it completed its initial public offering in December 2009. Pebblebrook Chief Financial Officer Raymond Martz told Twin Cities Business in early August that his organization likes the Minneapolis metro area, which is one of its “target markets.” Two of Pebblebrook's largest shareholders are based in Minneapolis-Ameriprise Financial, Inc., and U.S. Bancorp.
The Grand Hotel Minneapolis is located at 615 Second Avenue South in downtown Minneapolis.