Pebblebrook Hotel Trust has sold Hotel Spero in Union Square for $71 million, according to a statement from the company. The Maryland-based REIT would only say that it had sold the 236-room hotel to a third party, but the buyer had been previously identified as an affiliate of Fairwood Capital.
The sale is Pebblebrook’s fourth in Union Square since the pandemic brought international and business travel to a trickle. By the end of 2021, San Francisco had the biggest sector decline in the country, though it has seen an uptick this year.
Before the downturn, Pebblebrook owned 12 hotels, making it the largest hotel owner in the city. The $71 million sale amounts to more than $300,000 per key for the Spanish-style Union Square property, where Pebblebrook said it had a net operating loss of $1.6 million for the 12 months ending June 30, 2022.
The REIT got about $380,000 per key on The Marker Hotel in July, and a similar amount for the hotel formerly known as the Sir Francis Drake in April 2021. Its $87.5 million sale of the 189-room Villa Florence was by far the biggest per room at more than $460,000.
Pebblebrook became the owner of Hotel Spero in 2018 when it purchased LaSalle Properties for $5.2 billion. LaSalle bought the property from Massachusetts Mutual Life for $69 million under the LP Serenity Now, according to public records. Proceeds from the sale of Hotel Spero will be used in part to reduce the company’s “outstanding debt borrowings associated with recent hotel acquisitions,” a company statement said. Pebblebrook has focused lately on buying luxury resorts in Georgia and Florida.
Using liquor license paperwork, the San Francisco Business Times previously determined that the buyer was connected with Fairwood Capital. The LLC applying for various hotel licenses shares the same address as Fairwood’s Memphis headquarters.
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