Pebblebrook Hotel Trust has expanded the list of San Francisco hotels it wants to sell.
The Maryland-based real estate investment trust, which has offloaded four local hotels since 2021, appears ready to list the 221-room Hotel Zoe Fisherman’s Wharf at 425 North Point Street and the 196-room Hotel Zeppelin San Francisco at 545 Post Street, the San Francisco Business Times reported, citing public records.
Requests were made at both hotels for zoning verification letters, or records of permitted uses and compliance information typically used in due diligence for a prospective sale.
Pebblebrook, owner of eight hotels in San Francisco, may sell the hotels despite expressing confidence in the city’s economic recovery, according to the Business Times. In 2021, it sank $25 million into renovating the Hotel Vitale, now the 1 Hotel San Francisco at 8 Mission Street.
The hospitality firm began 2020 with 12 hotel properties in San Francisco, its largest hotel market. Then as the pandemic ramped up, it sold four of its hotels across the city.
The sales included the Sir Francis Drake in early 2021 to Northview Hotel Group and Angelo Gordon; the Villa Florence later that year to AWH Partners and The Roxborough Group; The Marker last July to an affiliate of Stockdale Capital Partners for $77 million, or $370,000 per room; and Hotel Spero last August to an affiliate of Fairwood Capital for $71 million, or $380,000 per room.
The Planning & Zoning Resource Company, based in Oklahoma City, is the party behind the recent zoning verification requests at Hotel Zoe and Hotel Zeppelin.
The firm made similar inquiries for all four of Pebblebrook’s recently sold properties shortly before Pebblebrook’s announced deals in 2010 and then all on the same day in 2018 six months before the close of Pebblebrook’s merger with LaSalle Hotel Properties, the Business Times reported.
The Oklahoma firm also made zoning verification requests a few months ahead of the Villa Florence’s sale, along with another records company that may have represented the buyer’s due diligence team, public records show.
Other companies made similar requests in the months leading up to the sale of Sir Francis Drake and The Marker.
Pebblebrook bought the 33-year-old Hotel Zoe in 2015 for $122 million, or $552,000 per room. It purchased the 110-year-old Hotel Zeppelin in 2014 for $49 million, or $306,000 per room.
Prices for urban hotel properties have remained robust, despite trouble maintaining occupancy during the pandemic. Experts say demand for hotel properties, especially luxury hotels, has remained steady despite rising interest rates.
While 2021 was a record year for California hotel sales, with carryovers put on hold in 2020, last year was a great year for flipping properties in the Bay Area and across the state, according to the Business Journal. But not so much in San Francisco, where hotels were going at a slight discount.
— Dana Bartholomew
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