The Inn on Fifth is heading towards a sale to a real estate investment trust

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A publicly traded real estate investment trust has announced plans to acquire the iconic Inn on Fifth in downtown Naples.

On Thursday, New York Stock Exchange-listed Pebblebrook Hotel Trust announced plans to acquire the 119-room AAA Four Diamond inn for $156 million.

The deal is expected to be completed by June, if not sooner.

The resort property comprises two buildings that sit across from each other off of posh Fifth Avenue in the south. Together they have 43 spacious suites, most of which are in the newest and even more exclusive Club Level building.

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In addition to its suites, the Club Level offers a private rooftop with a Jacuzzi and a private lounge serving food and drinks, from breakfast and appetizers to sodas and cocktails.

As for the main building, it has 87 rooms and suites, with over 10,000 square feet of newly renovated meeting space, a 3,600 square foot outdoor pool deck, day spa, and fitness center.

The original hotel also includes over 21,000 square feet of high-level commercial and retail space on the ground floor, which is 100% leased and occupied. Tenants include Truluck’s and Ocean Prime restaurants, as well as upscale retailer Vineyard Vines and an international luxury residential sales agency.

The announcement from the Pebblebrook Hotel Trust was made via a press release.

“We are extremely excited to acquire this premier Naples resort in the Naples high-barrier-to-entry market,” said Jon E. Bortz, chairman, president and chief executive officer of the trust, in the statement. a statement. “The Inn on Fifth exemplifies South Florida’s effortless blend of upscale and laid-back luxury and has been flawlessly developed and meticulously maintained by the current owner.”

The current owner, Phil McCabe, a local hotelier and developer, opened the inn decades ago. In 1998 to be exact.

It added the Club Level Suites across the street in 2012.

Over the years the property has seen millions of upgrades, keeping it fresh and competitive.

The rapid growth of the Naples area is clearly one of the determining factors in the Trust’s decision to purchase the property.

“This unique leisure-oriented property is centrally located on the main intersection of Old Naples and is surrounded by more than 30 restaurants, cafes, art galleries and shops. The Inn on Fifth is well positioned to benefit from the continued growth and appeal of Naples as an exclusive destination along South Florida’s Gulf Coast,” said Bortz.

The trust also clearly sees upside potential.

The company said it was “evaluating numerous operational and physical improvements for added benefit and increased cash flow.”

This includes a development opportunity on a 0.6 acre parcel adjacent to the main hotel building which is part of the planned acquisition.

Owner Phil McCabe walks through his offices as they undergo renovations at The Inn on Fifth in Naples on Tuesday August 27, 2019.

In the year ending February, the hotel generated $431 in revenue per available room, earned $11.3 million (before interest, taxes, depreciation and amortization), and generated $10.5 million in net operating profit.

The March results “indicate dramatic further growth”, according to the trust, with revenue up more than 40% – and an average daily rate of $1,000.

With the acquisition of Inn on Fifth, Pebblebrook’s portfolio would grow to 54. Its properties include 12 unique, drive-in independent resorts and six properties in South Florida.

The trust plans to fund its acquisition of the inn with approximately $78 million in cash, as well as $77.6 million in perpetual preferred operating partnership units – or preferred shares – to be issued to the seller.

The pool serves guests on a hot day at The Inn on Fifth in Naples on Tuesday, August 27, 2019.

McCabe could not immediately be reached for comment.

Following the sale, Pebblebrook said it plans to retain Noble House Hotels & Resorts as the management company.

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The announced acquisition of the hotel follows two other major ones in the Naples area.

The Naples Grande Beach Resort in North Naples quietly changed hands in late March, trading for $248 million, including its golf club and tennis center.

The upscale resort sits at the end of Seagate Drive off Pine Ridge Road off US 41, a short walk from Clam Pass Park in North Naples.

It opened in 1988 as the Registry Resort.

The smaller Inn of Naples, off US 41 north of Naples, sold on March 15, with a purchase price of over $15.3 million.

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