Pebblebrook Hotel Trust, a real estate investment trust, plans to raise up to $402.5 million in an initial public offering to buy high end hotels in major U.S. cities, according to a regulatory filing.
This is the second filing in two weeks by a REIT seeking to take advantage of low property prices and a robust stock market.
Pebblebrook plans to use the proceeds to buy upper-upscale hotels and resorts in the 20 largest U.S. cities, according to a prospectus filed with the U.S. Securities and Exchange Commission on Friday.
The Maryland-based REIT said such properties are at cyclically low prices. Business and leisure travel should rebound as the economy recovers, the REIT added.
The company does not currently own any properties.
Top-tier hotels have been hurt this year by the sharp fall-off in business travel. Hotels have had to cut rates to attract guests, leaving owners with less cash to pay off debt.
In September, 5.8 percent of hotel loans backed by commercial mortgage-backed securities were in default, making the lodging sector the most distressed of all property types, Fitch Ratings said on Monday. [ID:WLA5428]
In an effort to boost liquidity, some hotel REITs, including Host Hotels & Resorts, have sold stock this year.
In August, hotel operator Hyatt Hotels filed plans to raise about $1.15 billion in an IPO.
Pebblebrook's IPO will be led by Bank of America Merrill Lynch and Raymond James. Its management team is being led by Jon Bortz, the founder and former chief executive LaSalle Hotel Properties according to the filing.
Pebblebrook's move follows a filing in September from Chesapeake Lodging Trust to raise up to $460 million in an IPO.
Both REITs plan to list on the New York Stock Exchange.
Chesapeake said that following its IPO it will sell as much as 4.9 percent of its shares outstanding to Hyatt Hotels Corp. For the first three years after the IPO, Hyatt will have the right of first offer to manage any hotel Chesapeake buys.
Chesapeake will use the proceeds to pay back loans to its chief executive officer and its chief financial officer as well as buy hotels.
(Reporting by Phil Wahba and Deepa Seetharaman; editing by Carol Bishopric)