Pebblebrook Hotel Trust has acquired the 210-room Estancia La Jolla Hotel & Spa in La Jolla, Calif., for $108 million. The company retained Noble House Hotels & Resorts to manage the resort.
Estancia covers 10 acres and is close to Black’s Beach, the Salk Institute for Biological Studies and the University of California, San Diego. The property has more than 50,000 square feet of indoor and outdoor meeting and event space (originally built as a conference center) surrounded by courtyards and gardens. The resort also has numerous indoor and outdoor dining venues. The Spa Estancia is a 7,000-square-foot space with 11 indoor and outdoor treatment rooms, a eucalyptus steam room, a fitness center and an outdoor saltwater pool with poolside cabanas.
The coastal La Jolla market features nearly 19 million square feet of corporate office and lab space and is a top drive-to leisure destination. Estancia is a 20-minute drive from San Diego International Airport, and it is near numerous local demand drivers such as La Jolla Cove, Torrey Pines, University of California, San Diego, the Birch Aquarium and the Scripps Institute, in addition to high-end retail stores and restaurants at the Village of La Jolla.
“We are thrilled to partner with Noble House on another unique resort offering tremendous upside potential,” said Jon E. Bortz, chairman, president and CEO of Pebblebrook Hotel Trust. “We have extensive experience partnering with Noble House to transform and operate high-quality independent resorts, including our own LaPlaya Beach Resort & Club in Florida, our recently acquired Jekyll Island Club Resort in Georgia, our nearby San Diego Mission Bay Resort and our recently renovated L’Auberge Del Mar just up the road from Estancia. The resort’s location near both L’Auberge Del Mar and San Diego Mission Bay Resort will create many operating, complexing and marketing synergies among these three high-end San Diego resorts. We are delighted to add Estancia to our growing resort collection with Noble House.”
Pebblebrook is evaluating several operating and physical enhancements for additional upside and increased cash flow, including renovations to the property’s guestrooms, lobby, spa and pool areas, event lawns and ballroom. The resort will also become part of Curator Hotel & Resort Collection.
For full-year 2021, following a slow start to the year due to the COVID-19 pandemic, Pebblebrook expects Estancia to produce between $308 and $313 of total revenue per available room. The resort is expected to generate hotel earnings before interest, taxes, depreciation and amortization of $4.6 million to $4.7 million and hotel net operating income, after a 4 percent capital reserve, of $3.7 million to $3.8 million. For 2019, the resort generated hotel EBITDA of $8.1 million and hotel NOI of $6.7 million.
The acquisition of Estancia brings the total number of properties in the company’s portfolio to 53, including 11 drive-to, independent lifestyle resorts.
The company funded the acquisition with approximately $46 million of cash on hand, and it assumed approximately $62 million of existing nonrecourse, secured debt. The debt matures in September 2028. The interest rate on the debt is fixed at an annual rate of approximately 5.1 percent.