Pebblebrook talks $350 million six-year convertible notes to yield 1.75%-2.25%, up 32.5%-37.5%

By Abigail W. Adams

Portland, Me., Dec. 10 – Pebblebrook Hotel Trust plans to price $350 million of six-year convertible notes after the market close on Thursday with price talk for a coupon of 1.75% to 2.25% and an initial conversion premium of 32.5% to 37.5%, according to a market source.

BofA Securities Inc. and Raymond James & Associates Inc. are joint bookrunners for the registered offering, which carries a greenshoe of $52.5 million.

The convertible notes are contingently convertible until June 15, 2026.

They are non-callable until Dec. 20, 2023 and then subject to a 130% hurdle.

The notes are putable upon a fundamental change.

They will be settled in cash, shares or a combination of both at the company’s option.

In connection with the offering, the company will enter into capped call transactions.

Proceeds will be used to cover the cost of the call spread with the remaining amount to be used to pay down debt under its senior unsecured revolving credit facility and unsecured term loans.

Pebblebrook is a Bethesda, Md.-based real estate investment trust focusing on urban and resort lifestyle hotels.

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