Pebblebrook selling SF’s Sir Francis Drake: REIT Pebblebrook Hotel Trust has executed a contract to sell the 416-room Sir Francis Drake in San Francisco to a third party, which the company expects will generate US$157.6 million of proceeds after closing costs. Based on the hotel’s net operating income for the year ended December 31, 2019, such proceeds after customary closing costs reflect a 7.2% net operating income capitalization rate. The net operating income capitalization rate is after an assumed annual capital reserve of 4% of total hotel revenues. The sale of Sir Francis Drake is subject to normal closing conditions, and Pebblebrook says it offers no assurances that the sale will be completed on these terms, or at all. The company is targeting to complete the sale within 60 days.
Brookfield posts US$2B loss: Global real estate company Brookfield Property Partners posted a US$2 billion loss as the fallout from the COVID-19 pandemic caused it to reassess the value of its real estate. The loss last year compares with US$3.2 billion in net income for 2019, a decline the Hamilton, Bermuda-based company attributed primarily to “unrealized reductions of values of certain assets within the portfolio,” according to a statement. Funds from operations, a measure of cash flow for real estate companies, were down about 18% to US$540 million for the company’s portfolio of office buildings, while funds from operations from retail properties fell 29% last year to US$550 million.
Suit over denied COVID loss claim: Providence, Rhode Island-based Procaccianti Companies and its subsidiary TPG Hotels & Resorts is suing its insurer for refusing to cover losses the company says it has sustained due to hazardous, unsafe and devastating conditions wrought by the COVID-19 pandemic. One of largest privately held U.S. hotel operators has accused Zurich American Insurance Co. of breaching its contract by refusing to honor its obligations under the US$300-million “all risk” insurance policy. The company alleges that the presence of COVID-19 in the air and on the surfaces of its properties has transformed them into dangerous transmitters of the virus. As such, it constitutes a “direct physical loss” that has made their hotels unsafe, unfit and uninhabitable. Zurich has countered that the policy covers only losses that are caused by a “Covered Cause of Loss.” It asserts that losses “due to ‘virus’ and ‘other disease causing or illness causing’ substances are among the expressly excluded causes.
More from The Providence Journal
Davidson Hotels rebrands: Atlanta, Georgia-based hospitality management company Davidson Hotels & Resorts has refined its company architecture and rebranded as Davidson Hospitality Group. The following clearly defined operating verticals will now all reside under the new masterbrand, Davidson Hospitality Group: Davidson Hotels; Davidson Resorts; the company’s lifestyle operating vertical Pivot; and Davidson Restaurant Group.
Full recovery by 2025? The Global Business Travel Association released its annual BTI Outlook, projecting a 21% increase in business travel spending in 2021. Most of this gain is expected to come at the end of 2021 as vaccinations increase globally and consumer confidence returns. In 2022, the BTI Outlook forecasts further acceleration in business travel, including a significant pick-up in group meeting activity and international business travel. While annual business travel spending growth is expected to slow somewhat in 2023, it is projected to remain well above historical average rates of growth of 4.6%. By the end of 2024, annual business travel spending is projected to reach approximately US$1.4 trillion, nearly equaling the 2019 pre-pandemic revenue peak of US$1.43 trillion. The analysis ultimately predicts a full recovery to pre-pandemic levels is expected by 2025.
Scotland’s quarantine: Tougher quarantine restrictions will be extended to all travelers arriving directly into Scotland, according to the country’s first minister, Nicola Sturgeon. The four UK nations have already agreed that people arriving from high risk countries on a “red list” will have to quarantine in hotels. But Sturgeon said the measure doesn’t go far enough. “I can therefore confirm today that we intend to introduce a managed quarantine requirement for anyone who arrives directly into Scotland, regardless of which country they have come from,” she said. Details on the quarantine have yet to be announced.
Construction starts on Saudi Arabia’s Red Sea project: The Red Sea Development Co., the developer behind Riyadh’s ambitious regenerative tourism project, has awarded contracts to Saudi company Al Bawani and Swiss firm Blumer Lehmann to support the development plans and structural work of its luxury hotels and resorts on the Red Sea. The two companies will play pivotal roles in the construction of hotels across The Red Sea Project, with Al Bawani responsible for civil and structural works across 40 hotel villas on the Southern Dunes site, and Blumer Lehmann responsible for timber construction planning and fabrication as well as supply works for a hotel situated on Ummahat Al Shaykh Island. Al Bawani has also been awarded the first contract for the Southern Dunes site, which involves civil and structural works for 40 hotel villas as well as utility works and site-wide roads. The roads are an integral part of development plans for the project as they will interlink the hotel villas, restaurant and central hotel buildings.
US$300M of senior secured notes for Full House: Las Vegas-based Full House Resorts announced that it intends, subject to market and other conditions, to offer US$300 million in aggregate principal amount of senior secured notes due 2028 in a private debt offering. The notes will be senior secured obligations of the company and will be guaranteed, jointly and severally, by all of its current subsidiaries and future restricted subsidiaries. The company intends to use the net proceeds from the offering to redeem all of its outstanding senior secured notes due 2024, which had US$106.8 million outstanding as of December 31, 2020, at a redemption price equal to 100.9% plus all accrued and unpaid interest and will additionally fund the proposed expansion and redevelopment of the Bronco Billy’s Casino and Hotel in Cripple Creek, Colorado.