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Blackstone Gets Outbid for LaSalle REIT

Pebblebrook is rattling the merger agreement Blackstone struck with LaSalle Hotel Properties by proposing a higher price for the REIT.

Pebblebrook Hotel Trust has sweetened its offer for real estate investment trust LaSalle Hotel Properties to $4.17 billion, surpassing the Blackstone Group’s bid.

The proposal for all of LaSalle’s outstanding common stock represents a price of $37.80 per share based on a fixed exchange ratio of 0.92, according to a Pebblebrook statement Monday. That’s a 13 percent premium over the $33.50-per-share deal that LaSalle agreed to do with Blackstone last month.

Pebblebrook’s chairman and chief executive officer Jon Bortz is urging LaSalle’s board of trustees to terminate the Blackstone agreement, and give the REIT’s shareholders a chance to approve its higher offer. LaSalle Hotel Properties has been trading around $35 a share this month.

“Our offer is without a doubt a superior proposal to the sale agreement LaSalle executed with Blackstone,” Bortz said in the statement. “It provides both immediate and long-term value for LaSalle shareholders who will be able to benefit from the improving industry fundamentals in this already strong travel environment.”

LaSalle Hotel Properties owns 41 upscale, full-service hotels in seven states and the District of Columbia, according to its website. The Bethesda, Maryland-based REIT said on the site that it focuses on investing in hotels and resorts in areas “where the barriers to new supply are the greatest and the demand for rooms is strong and predictable.”

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Pebblebrook — a publicly traded REIT that’s also based in Bethesda, Maryland — said its revised proposal takes into account the $112 million fee that LaSalle would have to pay Blackstone to terminate its agreement with the private equity firm. The company owns 28 hotels in 9 states and the District of Columbia, with properties in such cities as Los Angeles, Boston, Philadelphia, Seattle, and Naples, Florida.

“Pebblebrook’s track record of success as a public company and our significant knowledge of LaSalle’s assets and markets make us the perfect and obvious strategic partner for LaSalle,” Bortz said in a June 11 letter to the LaSalle’s board. “Our plan is to retain the vast majority of LaSalle’s non-executive employees and grow the value of the combined entity.”

LaSalle’s shares were trading at $35.02 at 12:27 pm on Monday, down less than 1 percent from their closing price on June 8, according to Nasdaq.


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