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Pebblebrook Hotel Trust, LaSalle Hotel Properties Announce Merger


Pebblebrook Hotel Trust (“Pebblebrook”) and LaSalle Hotel Properties (“LaSalle”) jointly announced that they have entered into a definitive merger agreement under which Pebblebrook will acquire 100% of LaSalle’s outstanding common shares (the “Pebblebrook-LaSalle Agreement”). LaSalle has terminated its previously announced merger agreement with affiliates of The Blackstone Group L.P. (“Blackstone”) (the “Blackstone-LaSalle Agreement”) following receipt of a waiver of Blackstone’s four business day period during which it could have proposed amendments to the terms of the Blackstone-LaSalle Agreement. LaSalle has canceled its special meeting of LaSalle shareholders previously scheduled for September 6, 2018 relating to the Blackstone-LaSalle Agreement.

Under the terms of the Pebblebrook-LaSalle Agreement, for each LaSalle common share owned, each LaSalle shareholder will receive either a fixed amount of $37.80 in cash or a fixed exchange ratio of 0.92 Pebblebrook common share. A maximum of 30% of the outstanding LaSalle common shares may be exchanged for cash (and elections of cash will be subject to pro rata cutbacks if holders of more than 30% of the outstanding LaSalle common shares elect cash). In connection with the Pebblebrook-LaSalle Agreement, the LaSalle common shares Pebblebrook already owns will be canceled and excluded from the cash election.

The transaction is valued at approximately $5.2 billion. It has been approved through a unanimous vote by the Board of Trustees of Pebblebrook and through a unanimous vote by the members of the LaSalle Board of Trustees present (with only Stuart L. Scott not in attendance due to recent hospitalization).

“We are very pleased to have reached an agreement to bring Pebblebrook and LaSalle together in a strategic combination that represents a terrific value-maximizing opportunity for both LaSalle and Pebblebrook shareholders,” said Jon E. Bortz, Chairman, President and Chief Executive Officer of Pebblebrook. “We are confident that shareholders will benefit from this premium portfolio of high-quality independent and branded hotels through its capacity to generate strong cash flow, provide for a stable dividend and capitalize on market opportunities, including improving hotel industry fundamentals. We look forward to moving swiftly to complete this transaction and to welcoming LaSalle employees to our team.”

“This agreement with Pebblebrook delivers immediate cash value to LaSalle shareholders. The transaction represents a 48%1 premium to LaSalle’s unaffected share price,” said Michael D. Barnello, President and Chief Executive Officer of LaSalle Hotel Properties. “This outcome represents the culmination of a thorough strategic alternatives process, which from the beginning, has been focused on maximizing value for shareholders. On behalf of LaSalle’s Board and management team, I would like to express our deep appreciation to our employees, whose hard work and dedication have been instrumental in making LaSalle the outstanding company it is today. We are committed to working closely with Pebblebrook to quickly bring this transaction to closure.”

Strategic Benefits of the Combination

  • Compelling Strategic Fit: Premier, best-in-class lodging REIT portfolio with 662 primary upper-upscale and luxury independent and collection branded hotels and resorts located in or near key urban markets in the U.S., with a greater presence in higher-growth U.S. markets.
  • Clear Industry Leader with Enhanced Scale: Largest owner of unique independent, small brand and collection hotels, the third-largest company in the lodging REIT sector as measured by enterprise value, and the second-largest by equity market capitalization.
  • Complementary Assets: Clustered assets and properties operated by common management companies in select markets enable revenue enhancement opportunities, reduce expenses from synergies, and increase influence and negotiating strength.
  • Stronger Financial Profile: Strong balance sheet with increased flexibility provides greater access to capital markets, generates strong cash flow and provides for a stable dividend.
  • Compelling Value for Shareholders: Anticipated annual corporate-level G&A cost synergies of approximately $18 million to $20 million driven primarily by the elimination of overlapping corporate functions. The proposed merger positions shareholders of both companies to benefit from significant upside potential amid highly favorable economic and hotel industry fundamentals, as well as potential improvement in EBITDA per key through the implementation of respective best practices as well as redevelopment opportunities creating unique experiences for hotel guests.

Transaction Details

Under the terms of the Pebblebrook-LaSalle Agreement, each LaSalle shareholder will have the option to elect to receive for each LaSalle common share owned either a) a fixed amount of $37.80 in cash or b) a fixed exchange ratio of 0.92 Pebblebrook common share. A maximum of 30% of outstanding LaSalle common shares may be exchanged for cash, subject to pro rata cut backs.

The transaction, which is subject to customary closing conditions, including regulatory approvals and approval by LaSalle shareholders and Pebblebrook shareholders, is expected to close in the fourth quarter of 2018.

Management and Operations

Jon E. Bortz will continue to serve as Chairman, President and Chief Executive Officer of Pebblebrook upon closing; Raymond D. Martz will continue to serve as Executive Vice President, Chief Financial Officer, Treasurer and Secretary of Pebblebrook; and Thomas C. Fisher will continue to serve as Executive Vice President and Chief Investment Officer of Pebblebrook. The Pebblebrook Board will remain unchanged. Following the close of the transaction, Pebblebrook will have a portfolio of 662 assets in or near 16 key urban markets, and will remain headquartered in Bethesda, MD.

Conference Call

Pebblebrook will conduct a conference call for the investment community to discuss additional details of the transaction on Thursday, September 13, 2018 at 9:00 a.m. ET. To participate in the conference call, please dial (877) 705-6003, or for participants outside the U.S., (201) 493-6725, approximately ten minutes before the call begins. Additionally, a live webcast of the call will be available at Pebblebrook’s investor relations website at and at LaSalle’s investor relations website A replay of the conference call webcast will be archived and available online through the Investor Relations section of


Raymond James and BofA Merrill Lynch are acting as financial advisors to Pebblebrook, and Hunton Andrews Kurth LLP is acting as legal counsel.

Citigroup Global Markets Inc. and Goldman Sachs & Co. LLC are acting as financial advisors to LaSalle, and Goodwin Procter LLP and DLA Piper LLP (US) are acting as legal counsel.

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