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LaSalle Properties Calls Pebblebrook Hotel Trust Bid 'Superior' to Blackstone Offer

Bidding for Luxury Hotel Portfolio May Go Into Next Week
September 6, 2018
LaSalle Hotel Properties owns the Park Central Hotel at 870 Seventh Ave. in New York.

Real estate investment trust LaSalle Hotel Properties said a purchase offer from Pebblebrook Hotel Trust is a "superior proposal" to a rival bid from Blackstone Group and gave Blackstone four days to come back with another bid.

LaSalle shifted course late Wednesday on its position taken last month to recommend the Blackstone deal only hours before shareholders were to begin voting on it.

After a protracted bidding war with Pebblebrook that began in March, all members of LaSalle Hotel Properties’ board in attendance Wednesday agreed to the superior designation.

Under terms of the Blackstone agreement, LaSalle delivered a notice to Blackstone’s board that it wanted to reverse its recommendation to shareholders and terminate the merger. That put in motion a window of four business days for Blackstone to sweeten its bid with amendments to its May 21 to purchase LaSalle’s portfolio of 41 hotels in 11 markets. A spokesman for LaSalle was uncertain whether that meant Blackstone would have to respond by Monday or Tuesday. Blackstone representatives did not respond to requests for information.

Updated coverage with the latest developments regarding this transaction is available here: PEBBLEBROOK WINS BIDDING WAR FOR LASALLE

Bethesda, Maryland-based LaSalle noted in a filing with the Securities and Exchange Commission that its change of attitude on Pebblebrook’s offer included no assurances that a deal would be done or that Blackstone wouldn’t come back with something else. And even if a deal with Pebblebrook is put in motion, LaSalle said there were no promises it would reflect the most recent bid.

Pebblebrook, also located in Bethesda, had submitted a handful of bids to LaSalle for the properties, settling on one in late August that called for a cash and share-swap buyout of LaSalle’s stock at a fixed per-share amount of $37.80. The stock swap was set at 0.92 of a Pebblebrook share for every share of LaSalle stock. However, only 30 percent of the proportion of LaSalle common shares could be exchanged.

Blackstone had offered an all-stock acquisition at $33.50 a share, or an all-cash transaction valued at $4.8 billion.

Pebblebrook called a "strategic combination" with LaSalle a "value-maximizing opportunity" for shareholders on both sides in a statement after the LaSalle announcement.

"We look forward to further engaging with LaSalle to quickly execute a merger agreement that will allow shareholders to maximize immediate and long-term value as we create a new hotel industry leader," Jon Bortz, Pebblebrook's chief executive, said in the statement.

Bortz had said last month that he would sell certain LaSalle properties after he closed the deal, but did not name them. LaSalle owns a number of properties in cities, like Chicago, in which Pebblebrook does not have a presence. In Chicago, LaSalle owns Hotel Chicago in the Marina City complex that includes the House of Blues music venue and the Westin in the heart of the Michigan Avenue shopping and entertainment district.

Jennifer Waters, Chicago Reporter  CoStar Group   
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