The real estate investment trust said it will invest $8 million to $10 million over the next year to remodel the 108-room hotel. It is also bringing in the Viceroy Hotel Group to manage the hotel. Viceroy manages two of Pebblebrook's other hotels: the Sheraton Delfina Santa Monica and the Viceroy Miami.
Pebblebrook is betting the San Francisco market will be a top market for its portfolio. San Francisco hotels delivered the strongest gains in revenue per available room than any other major market in the U.S. in 2011, according to Pebblebrook. This is a key industry measure of hotel financial performance.
The company, based in Bethesda, Md., now has 21 hotels across the country with the addition of Hotel Milano.
Pebblebrook's shares fell 65 cents, nearly 3 percent, to $22.10 in afternoon trading. Its shares have traded in a 52-week range of $14 to $23.75.
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