BETHESDA, Md.--(BUSINESS WIRE)--Pebblebrook Hotel Trust (NYSE: PEB) today announced it has almost doubled its ownership of common shares of LaSalle Hotel Properties (NYSE: LHO) to 10.0 million common shares, or approximately 9.0% of LaSalle’s outstanding common shares. Pebblebrook is now one of the largest shareholders of LaSalle.
“The Board of Pebblebrook continues to believe that a strategic combination with LaSalle represents the greatest value-maximizing opportunity for the shareholders of both LaSalle and Pebblebrook,” said Jon E. Bortz, Chairman, President and Chief Executive Officer of Pebblebrook Hotel Trust. “Our large, increased ownership position further demonstrates our commitment and determination to complete this combination. We are not surprised by the broad support we have received from shareholders, who have told us and LaSalle that our current proposal is clearly superior to LaSalle’s agreement with Blackstone. We are surprised that LaSalle’s Board does not recognize our proposal to be superior. Our cash and shares offer provides LaSalle’s shareholders with approximately $375 million of incremental value1 compared to the Blackstone agreement. Given that the LaSalle Board continues to recommend the Blackstone agreement, this would be an egregious transfer of value to Blackstone that would be a gross disservice to all LaSalle shareholders, especially given the upside potential of owning shares in a combined entity that will benefit from the growth and the meaningful operational and investment synergies that would result from bringing these two highly similar companies together. Pebblebrook remains prepared to make sure the incremental value of our June 11, 2018 offer does not go to Blackstone, and our offer remains outstanding. We request that the LaSalle Board listen to its shareholders and exercise its fiduciary duty to act in the best interests of all of its shareholders by finalizing a merger agreement with Pebblebrook.”
Pebblebrook submitted its increased offer to the Board of Trustees of LaSalle on June 11, 2018. To date, Pebblebrook has not been contacted by LaSalle or its advisors regarding the June 11, 2018 increased offer. Pebblebrook’s offer provides LaSalle’s common shareholders with the option for each share to elect to receive $37.80 in cash instead of 0.92 Pebblebrook share, subject to a cap of 20% of LaSalle shares in aggregate receiving cash and customary pro ration if the number of LaSalle holders electing to receive cash instead of stock is oversubscribed. LaSalle’s shareholders may elect to receive a mix of cash and Pebblebrook shares, and can receive up to 100% in cash if no more than 20% of shares in the aggregate elect the cash option. The per share cash amount is fixed at $37.80, which provides downside protection for LaSalle shareholders by anchoring approximately $834 million of the offer in cash, and was calculated by multiplying the fixed exchange ratio of 0.92 and Pebblebrook’s 5-day VWAP of $41.09 as of June 8, 2018. In the face of steadily improving industry fundamentals, the value of Pebblebrook’s stock would have to decline to $35.24 in order to equal LaSalle’s agreement with Blackstone. Our offer is net of the $112 million termination fee LaSalle agreed to pay Blackstone, which will be payable by Pebblebrook and not borne by LaSalle’s shareholders. In compliance with federal law, Pebblebrook will file a Schedule 13D regarding its ownership of LaSalle common shares.
1 Incremental value based on Pebblebrook’s 5-day VWAP of $39.83 as of June 15, 2018.
About Pebblebrook Hotel Trust
Pebblebrook Hotel Trust is a publicly traded real estate investment trust (“REIT”) organized to opportunistically acquire and invest primarily in upper upscale, full-service hotels located in urban markets in major gateway cities. The Company owns 28 hotels, with a total of 6,973 guest rooms. The Company owns hotels located in 9 states and the District of Columbia, including: Los Angeles, California (Beverly Hills, Santa Monica and West Hollywood); San Diego, California; San Francisco, California; Washington, DC; Coral Gables, Florida; Naples, Florida; Buckhead, Georgia; Boston, Massachusetts; Minneapolis, Minnesota; Portland, Oregon; Philadelphia, Pennsylvania; Nashville, Tennessee; Columbia River Gorge, Washington; and Seattle, Washington. For more information, please visit us at www.pebblebrookhotels.com and follow us on Twitter at @PebblebrookPEB.
