Pebblebrook Hotel Trust (NYSE: PEB):
Q3 FINANCIAL
HIGHLIGHTS
- Net loss: $56.5 million
- Same-Property Hotel EBITDA(1) of $114.3 million, Adjusted
EBITDAre(1) of $116.1 million, and Adjusted FFO(1) per diluted
share of $0.61, at the top end of the Company’s Q3 Outlook
- Tropical Storm Hilary and Hurricane Idalia negatively impacted
RevPAR growth by approximately 90 bps and Same-Property Hotel
EBITDA by $2.5 million
- Same-Property Total RevPAR(1) increased 0.2% vs. 2022, with
urban markets rising 4.3%, leading the portfolio’s growth
HOTEL OPERATING TRENDS
- Urban demand continues to recover, driven by a sustained
rebound in group and transient business travel and improving
weekend leisure demand, with the greatest RevPAR gains generated in
Washington DC, San Francisco, Los Angeles, and Boston
- Q4 group and transient revenue pace is up 13% compared to Q4
2022; this growth can be attributed to a robust convention calendar
in several of the Company's urban markets and a shift to more
normalized booking patterns, as corporate group and transient
bookings are being made further in advance than closer to
arrival
PORTFOLIO UPDATES &
REPOSITIONINGS
- Launched Margaritaville Hotel San Diego Gaslamp Quarter,
following a comprehensive $27.0 million redevelopment, transforming
it into a premier destination retreat for urban escapism
- Successfully completed $140.0 million, 5-year refinancing of
Margaritaville Hollywood Beach Resort, fixing the interest rate at
7.0% for 4 years
- Executed contract to sell Hotel Zoe Fisherman’s Wharf for $68.5
million, targeted to close in Q4 2023
- Restoration and rebuilding of LaPlaya Beach Resort & Club
currently expected to be substantially complete in the first
quarter of 2024
Q4 2023 OUTLOOK
- Net loss: $48.3 to $42.3 million
- Adjusted EBITDAre(1): $50.8 to $56.8 million
- Adjusted FFO(1) per diluted share: $0.09 to $0.14
- Same-Property RevPAR(1) vs. 2022: 1.0% to 4.0%
(1)
See tables later in this press release for
a description of Same-Property information and reconciliations from
net income (loss) to non-GAAP financial measures used in the table
above and elsewhere in this press release.
“Our third quarter bottom line results
were at the top end of our expectations, even after the negative
impact of severe weather events on both coasts and the labor
strikes in the entertainment industry that primarily affected our
Los Angeles properties. We continued to see healthy occupancy
improvements in our urban market hotels, driven by improving group
and transient business travel, as well as solid gains in weekend
leisure demand. Our third quarter resort portfolio occupancy was
flat year-over-year, though it would have been higher if not for
the severe weather events.
“During the quarter, we successfully
completed the redevelopment and reflagging of the former Solamar
Hotel as the Margaritaville Hotel San Diego Gaslamp Quarter. This
transformation has created an exceptional lifestyle experience in
San Diego’s vibrant Gaslamp district, renowned for its
entertainment offerings and close proximity to San Diego’s
convention center. We’re very excited about the upside opportunity
for this fantastic, unique, like-new urban lifestyle hotel.”
-Jon E. Bortz, Chairman and Chief Executive Officer of
Pebblebrook Hotel Trust
Third Quarter and Year-to-Date Highlights
Third Quarter
Nine Months Ended September
30,
Same-Property and Corporate
Highlights
2023
2022
Variance
2023
2022
Variance
($ in millions except per share
and RevPAR data)
Net income (loss)
($56.5)
$26.3
(314.7%)
($32.3)
($45.1)
NM
Same-Property Room Revenues(1)
$257.4
$260.1
(1.0%)
$684.0
$657.6
4.0%
Same-Property Total Revenues(1)
$389.1
$388.0
0.3%
$1,046.3
$987.0
6.0%
Same Property Total Expenses(1)
$274.8
$265.0
3.7%
$762.0
$689.6
10.5%
Same Property EBITDA(1)
$114.3
$123.0
(7.0%)
$284.3
$297.5
(4.4%)
Adjusted EBITDAre(1)
$116.1
$124.1
(6.5%)
$293.1
$299.3
(2.1%)
Adjusted FFO(1)
$74.1
$86.7
(14.5%)
$172.2
$195.7
(12.0%)
Adjusted FFO per diluted share(1)
$0.61
$0.66
(7.6%)
$1.39
$1.49
(6.7%)
2023 Monthly Results
Same-Property Portfolio
Highlights(2)
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
($ in millions except per share
and RevPAR data)
Occupancy
47%
60%
67%
71%
72%
77%
77%
74%
75%
ADR
$287
$293
$303
$308
$303
$312
$320
$298
$314
RevPAR
$136
$175
$202
$219
$216
$241
$246
$219
$237
Total Revenues
$80.8
$93.0
$115.9
$116.9
$122.2
$128.4
$135.6
$121.7
$131.9
Total Revenues Growth Rate ('23 vs.
'22)
59%
20%
10%
1%
3%
(1%)
0%
(1%)
1%
Hotel EBITDA
$6.0
$18.7
$34.6
$34.6
$37.3
$38.8
$41.5
$34.7
$38.1
NM = Not Meaningful
(1)
See tables later in this press release for
a description of Same-Property information and reconciliations from
net income (loss) to non-GAAP financial measures, including
Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA"), EBITDA for Real Estate ("EBITDAre"), Adjusted EBITDAre,
Funds from Operations ("FFO"), FFO per share, Adjusted FFO and
Adjusted FFO per share.
(2)
Includes information for all the hotels
the Company owned as of September 30, 2023, except for the
following:
- LaPlaya Beach Resort & Club is
excluded from all months due to its closure following Hurricane
Ian.
- 1 Hotel San Francisco is excluded from
Jan-Jun due to its closure in the first half of 2022 for
redevelopment.
- Hotel Monaco Seattle is included in
Jan-Mar only due to its sale earlier this year.
- Hotel Vintage Seattle is included in
Jan-Mar only due to its sale earlier this year.
- Westin Michigan Avenue Retail Parcel is
included in Jan-Mar only due to its sale earlier this year.
“Despite the challenges posed by two significant storm events
that resulted in booking interruptions and cancellations, we are
pleased to have generated a 3.4% improvement in occupancy during
the third quarter, driven primarily by our urban hotels,” noted Mr.
Bortz. “As we move into the fourth quarter, group pace compared to
the same time last year remains strong, with revenues up over 18%,
led by a favorable convention calendar across a number of our urban
markets, including San Francisco, Washington, DC, San Diego and
Boston. Occupancy growth in our portfolio should continue in the
fourth quarter. While we continue to actively monitor macroeconomic
trends, thus far, we’ve observed continued stable demand from both
the business and leisure segments.”
Update on Impact from Hurricane Ian
The Company continues to make significant progress restoring and
reopening the 189-room LaPlaya Beach Resort & Club (“LaPlaya”)
in Naples, Florida. The resort’s Bay Tower (40 rooms) and Gulf
Tower (70 rooms) are substantially restored and fully operational,
with additional resort services and amenities progressively coming
online. The Beach House (79 rooms), with its full-service spa and
fitness center, is expected to be substantially completed and
returned to service in the first quarter of next year.
The Company anticipates that all operational disruption will be
covered under its business interruption and property insurance
programs, net of deductibles. A preliminary business interruption
settlement of $10.9 million was recorded in Q3 related to lost
income from Q2 2023. Year to date, the Company has recorded $33.0
million of business interruption proceeds. The Company expects to
record additional business interruption settlements as these are
determined and finalized with its insurance providers.
Capital Investments and Strategic Property
Redevelopments
During the third quarter, the Company completed $33.1 million of
capital investments throughout its portfolio, excluding capital
expenditures related to the repair and rebuilding of LaPlaya. This
includes the redevelopment and reflagging of Solamar Hotel to
Margaritaville Hotel San Diego Gaslamp Quarter, which officially
occurred on August 15, 2023.
The renovation of the four guesthouses (50 rooms/suites) at
Southernmost Beach Resort in Key West, FL is well along, with two
of the guesthouses already substantially complete and back in
inventory, with the remaining two scheduled to be completed by the
end of November. The comprehensive redevelopment and repositioning
of Newport Harbor Island Resort is slated to begin in mid-November,
with completion expected in Q2 2024.
For 2023, the Company continues to expect to invest a total of
$145 to $155 million in capital improvements, which excludes
capital expenditures related to the repair and rebuilding of
LaPlaya. Since 2018, the Company has reinvested approximately $693
million into redeveloping its assets, including over $257 million
of ROI-generating investments which have been primarily major
transformations and repositionings of a majority of our properties
to higher levels. These ROI investments are expected to generate a
healthy return on investment in line with the Company’s previous
redevelopment and repositioning projects. By early 2024,
substantially all of the Company’s properties will have been
recently renovated or redeveloped, and future capital investments
and repositionings are expected to be substantially reduced.
Update on Strategic Dispositions
The Company recently executed a contract to sell the 221-room
Hotel Zoe Fisherman’s Wharf (“Hotel Zoe”) in San Francisco,
California, for $68.5 million to a third party. This sale is
targeted to be completed in the fourth quarter of 2023, subject to
normal closing conditions. The Company offers no assurances that
this sale will be completed on these terms or at all. Assuming the
Hotel Zoe sale closes this year, the Company will have completed
$300.8 million of property dispositions in 2023 comprised of six
property sales. The $300.8 million aggregate sales proceeds reflect
a combined 21.8x EBITDA multiple and a 3.8% net operating income
capitalization rate (assuming a capital reserve of 4.0% of total
hotel revenues) based on the trailing twelve-month performance
prior to the completion of each respective sale, or the trailing
twelve-month performance ended September 30, 2023 in the case of
Hotel Zoe.
Net proceeds from the Company’s dispositions are being used for
general corporate purposes, including reducing the Company’s debt,
increasing the Company’s cash position, and repurchasing common or
preferred shares to further strengthen the Company’s balance sheet
and enhance shareholder value.
Common Share Repurchases
The Company did not complete any common share repurchases in Q3
2023 since no property sales were completed in the third quarter.
On a cumulative basis since October 2022, the Company has
repurchased over 11 million common shares, or approximately 8.4% of
the Company’s outstanding common shares, at an average price of
$14.51 per share, representing an approximate 50% discount to the
midpoint of the Company’s most recently published Net Asset Value
(“NAV”) per share.
Balance Sheet and Liquidity
As of September 30, 2023, the Company had $829.0 million in
liquidity, consisting of $191.6 million in cash, cash equivalents,
and restricted cash, plus $637.4 million of undrawn availability on
its senior unsecured revolving credit facility.
The Company's $2.4 billion of consolidated debt and convertible
notes is well-structured, with an effective weighted-average
interest rate of 4.4%. The majority of the debt and convertible
notes, or 78%, is at an effective weighted-average fixed interest
rate of 3.5%, which mitigates exposure to rising interest rates.
The remaining 22% of the Company’s debt is at a weighted-average
floating interest rate of 7.6%. In addition, approximately 92% of
the Company’s outstanding debt is unsecured, and the
weighted-average maturity is 2.8 years. The Company has no
meaningful debt maturities until Q4 2024.
Common and Preferred Dividends
On September 15, 2023, the Company declared a quarterly cash
dividend of $0.01 per share on its common shares and a regular
quarterly cash dividend for the following preferred shares of
beneficial interest:
- $0.39844 per 6.375% Series E Cumulative Redeemable Preferred
Share;
- $0.39375 per 6.3% Series F Cumulative Redeemable Preferred
Share;
- $0.39844 per 6.375% Series G Cumulative Redeemable Preferred
Share; and
- $0.35625 per 5.7% Series H Cumulative Redeemable Preferred
Share.
Update on Curator Hotel & Resort Collection
Curator Hotel & Resort Collection (“Curator”) is a curated
collection of experientially focused small brands and independent
lifestyle hotels and resorts worldwide founded by Pebblebrook and
several industry-leading independent lifestyle hotel operators.
Curator has 99 member hotels and 109 master service agreements with
preferred vendor partners. These agreements provide Curator member
hotels with preferred pricing, enhanced operating terms, and early
access to curated new technologies. Curator's mission is to help
independent lifestyle hotels and resorts achieve their full
potential by providing them with the resources and support they
need to compete with larger brands and operators while remaining
independent.
Q4 2023 Outlook
Based on current trends and assuming no material disruptions to
travel caused by pandemics, federal government shutdowns, or
worsening macro-economic conditions, the Company’s outlook for Q4
2023 is as follows:
Q4 2023
Outlook
Low
High
($ and shares/units in millions,
except per share and RevPAR data)
Net income (loss)
($48.3)
($42.3)
Adjusted EBITDAre
$50.8
$56.8
Adjusted FFO
$10.8
$16.8
Adjusted FFO per diluted share
$0.09
$0.14
This Q4 2023 Outlook is based, in part, on the following
estimates and assumptions:
Same-Property RevPAR
$183
$188
Same-Property RevPAR variance vs. 2022
1.0%
4.0%
Same-Property Hotel EBITDA
$57.0
$63.0
Same-Property Hotel EBITDA variance vs.
2022
(9.8%)
(0.3%)
The fourth quarter outlook does not assume any business
interruption income related to LaPlaya. Based on the above Q4 2023
outlook, the implied full-year 2023 outlook is as follows:
Full Year 2023 Outlook
Low
High
($ and shares/units in millions,
except per share and RevPAR data)
Net income (loss)
($80.6)
($74.6)
Adjusted EBITDAre
$344.0
$350.0
Adjusted FFO
$183.0
$189.0
Adjusted FFO per diluted share
$1.49
$1.54
This Full Year 2023 Outlook is based, in part, on the following
estimates and assumptions:
Same-Property RevPAR
$203
$205
Same-Property RevPAR variance vs. 2022
3.3%
4.0%
Same-Property Hotel EBITDA
$341.3
$347.3
Same-Property Hotel EBITDA variance vs.
2022
(5.4%)
(3.7%)
Third Quarter 2023 Earnings Call
The Company will conduct its quarterly analyst and investor
conference call on Friday, October 27, 2023, at 9:00 AM ET. Please
dial (877) 407-3982 approximately ten minutes before the call
begins to participate. A live webcast of the conference call will
also be available through the Investor Relations section of
www.pebblebrookhotels.com. To access the webcast, click on
https://investor.pebblebrookhotels.com/news-and-events/webcasts/default.aspx
ten minutes before the conference call. A replay of the conference
call webcast will be archived and available online.
About Pebblebrook Hotel Trust
Pebblebrook Hotel Trust (NYSE: PEB) is a publicly traded real
estate investment trust (“REIT”) and the largest owner of urban and
resort lifestyle hotels and resorts in the United States. The
Company owns 47 hotels and resorts, totaling approximately 12,200
guest rooms across 13 urban and resort markets. For more
information, visit www.pebblebrookhotels.com and follow us at
@PebblebrookPEB.
This press release contains certain “forward-looking statements”
made pursuant to the safe harbor provisions of the Private
Securities Reform Act of 1995. Forward-looking statements are
generally identifiable by the use of forward-looking terminology
such as “may,” “will,” “should,” “potential,” “intend,” “expect,”
“seek,” “anticipate,” “estimate,” “approximately,” “believe,”
“could,” “project,” “predict,” “forecast,” “continue,” “assume,”
“plan,” references to “outlook” or other similar words or
expressions. Forward-looking statements are based on certain
assumptions and can include future expectations, future plans and
strategies, financial and operating projections and forecasts and
other forward-looking information and estimates. Examples of
forward-looking statements include the following: descriptions of
the Company’s plans or objectives for future capital investment
projects, operations or services; forecasts of the Company’s future
economic performance; forecasts of hotel industry performance;
statements regarding expectations of hotel dispositions and use of
proceeds; and descriptions of assumptions underlying or relating to
any of the foregoing expectations including assumptions regarding
the timing of their occurrence. These forward-looking statements
are subject to various risks and uncertainties, many of which are
beyond the Company’s control, which could cause actual results to
differ materially from such statements. These risks and
uncertainties include, but are not limited to, the state of the
U.S. economy and the supply of hotel properties, and other factors
as are described in greater detail in the Company’s filings with
the SEC, including, without limitation, the Company’s Annual Report
on Form 10-K for the year ended December 31, 2022. Unless legally
required, the Company disclaims any obligation to update any
forward-looking statements, whether as a result of new information,
future events or otherwise.
For further information about the Company’s business and
financial results, please refer to the "Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and
“Risk Factors” sections of the Company’s filings with the U.S.
Securities and Exchange Commission, including, but not limited to,
its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q,
copies of which may be obtained at the Investor Relations section
of the Company’s website at www.pebblebrookhotels.com.
All information in this press release is as of October 26, 2023.
The Company undertakes no duty to update the statements in this
press release to conform the statements to actual results or
changes in the Company’s expectations.
For additional information or to receive press
releases via email, please visit our website at
www.pebblebrookhotels.com
Pebblebrook Hotel Trust Consolidated Balance
Sheets ($ in thousands, except share and per-share data)
September 30, 2023 December 31, 2022 (Unaudited)
ASSETS Assets: Investment in hotel properties, net
$
5,553,122
$
5,874,876
Hotels held for sale
65,453
44,861
Cash and cash equivalents
182,665
41,040
Restricted cash
8,946
11,229
Hotel receivables (net of allowance for doubtful accounts of $519
and $431, respectively)
56,842
45,258
Prepaid expenses and other assets
131,800
116,276
Total assets
$
5,998,828
$
6,133,540
LIABILITIES AND EQUITY
Liabilities: Unsecured revolving credit facilities
$
-
$
-
Unsecured term loans, net of unamortized deferred financing costs
1,374,267
1,372,057
Convertible senior notes, net of unamortized debt premium and
discount and deferred financing costs
747,028
746,326
Senior unsecured notes, net of unamortized deferred financing costs
49,981
49,920
Mortgage loans, net of unamortized debt discount and deferred
financing costs
195,669
218,990
Accounts payable, accrued expenses and other liabilities
272,745
250,518
Lease liabilities - operating leases
320,571
320,402
Deferred revenues
74,576
73,603
Accrued interest
10,720
4,535
Liabilities related to hotels held for sale
1,647
428
Distribution payable
12,156
12,218
Total liabilities
3,059,360
3,048,997
Commitments and contingencies
Shareholders' Equity:
Preferred shares of beneficial interest, $0.01 par value
(liquidation preference $715,000 at September 30, 2023 and December
31, 2022), 100,000,000 shares authorized; 28,600,000 shares issued
and outstanding at September 30, 2023 and December 31, 2022
286
286
Common shares of beneficial interest, $0.01 par value, 500,000,000
shares authorized; 120,057,744 shares issued and outstanding at
September 30, 2023 and 126,345,293 shares issued and outstanding at
December 31, 2022
1,201
1,263
Additional paid-in capital
4,097,130
4,182,359
Accumulated other comprehensive income (loss)
45,834
35,724
Distributions in excess of retained earnings
(1,295,089
)
(1,223,117
)
Total shareholders' equity
2,849,362
2,996,515
Non-controlling interests
90,106
88,028
Total equity
2,939,468
3,084,543
Total liabilities and equity
$
5,998,828
$
6,133,540
Pebblebrook Hotel Trust Consolidated
Statements of Operations ($ in thousands, except share and
per-share data) (Unaudited)
Three months ended September
30,
Nine months ended September
30,
2023
2022
2023
2022
Revenues: Room
$
259,397
$
277,971
$
706,705
$
707,997
Food and beverage
91,661
98,080
261,172
261,228
Other operating
44,741
40,642
117,984
103,060
Total revenues
$
395,799
$
416,693
$
1,085,861
$
1,072,285
Expenses: Hotel operating expenses: Room
$
68,065
$
66,637
$
189,179
$
167,102
Food and beverage
69,091
69,296
196,748
179,859
Other direct and indirect
112,596
115,589
324,164
307,317
Total hotel operating expenses
249,752
251,522
710,091
654,278
Depreciation and amortization
63,272
60,372
179,598
179,746
Real estate taxes, personal property taxes, property insurance, and
ground rent
32,905
34,641
91,380
98,118
General and administrative
11,549
10,281
32,739
29,675
Impairment
71,416
12,865
71,416
86,119
(Gain) loss on sale of hotel properties
-
(6,194
)
(30,219
)
(6,194
)
Business interruption insurance income
(10,881
)
-
(32,985
)
-
Other operating expenses
3,829
989
9,876
4,045
Total operating expenses
421,842
364,476
1,031,896
1,045,787
Operating income (loss)
(26,043
)
52,217
53,965
26,498
Interest expense
(31,022
)
(25,020
)
(87,996
)
(70,753
)
Other
1,403
123
2,538
156
Income (loss) before income taxes
(55,662
)
27,320
(31,493
)
(44,099
)
Income tax (expense) benefit
(822
)
(1,015
)
(853
)
(1,015
)
Net income (loss)
(56,484
)
26,305
(32,346
)
(45,114
)
Net income (loss) attributable to non-controlling interests
658
1,237
2,999
1,359
Net income (loss) attributable to the Company
(57,142
)
25,068
(35,345
)
(46,473
)
Distributions to preferred shareholders
(10,988
)
(11,344
)
(32,963
)
(34,031
)
Net income (loss) attributable to common shareholders
$
(68,130
)
$
13,724
$
(68,308
)
$
(80,504
)
Net income (loss) per share available to common
shareholders, basic
$
(0.57
)
$
0.10
$
(0.56
)
$
(0.62
)
Net income (loss) per share available to common shareholders,
diluted
$
(0.57
)
$
0.10
$
(0.56
)
$
(0.62
)
Weighted-average number of common shares, basic
120,057,744
130,905,132
122,394,293
130,904,772
Weighted-average number of common shares, diluted
120,057,744
131,149,783
122,394,293
130,904,772
Considerations Regarding
Non-GAAP Financial Measures
This press release includes certain non-GAAP financial measures.
These measures are not in accordance with, or an alternative to,
measures prepared in accordance with GAAP and may be different from
similarly titled non-GAAP financial measures used by other
companies. In addition, these non-GAAP financial measures are not
based on any comprehensive set of accounting rules or principles.
Non-GAAP financial measures have limitations in that they do not
reflect all of the amounts associated with the Company’s results of
operations determined in accordance with GAAP.Funds from Operations
(“FFO”) - FFO represents net income (computed in accordance with
GAAP), excluding gains or losses from sales of properties, plus
real estate-related depreciation and amortization and after
adjustments for unconsolidated partnerships. The Company considers
FFO a useful measure of performance for an equity REIT because it
facilitates an understanding of the Company's operating performance
without giving effect to real estate depreciation and amortization,
which assume that the value of real estate assets diminishes
predictably over time. Since real estate values have historically
risen or fallen with market conditions, the Company believes that
FFO provides a meaningful indication of its performance. The
Company also considers FFO an appropriate performance measure given
its wide use by investors and analysts. The Company computes FFO in
accordance with standards established by the Board of Governors of
Nareit in its March 1995 White Paper (as amended in November 1999
and April 2002), which may differ from the methodology for
calculating FFO utilized by other equity REITs and, accordingly,
may not be comparable to that of other REITs. Further, FFO does not
represent amounts available for management’s discretionary use
because of needed capital replacement or expansion, debt service
obligations or other commitments and uncertainties, nor is it
indicative of funds available to fund the Company’s cash needs,
including its ability to make distributions. The Company presents
FFO per diluted share calculations that are based on the
outstanding dilutive common shares plus the outstanding Operating
Partnership units for the periods presented.Earnings before
Interest, Taxes, and Depreciation and Amortization ("EBITDA") - The
Company believes that EBITDA provides investors a useful financial
measure to evaluate its operating performance, excluding the impact
of our capital structure (primarily interest expense) and our asset
base (primarily depreciation and amortization).Earnings before
Interest, Taxes, and Depreciation and Amortization for Real Estate
("EBITDAre") - The Company believes that EBITDAre provides
investors a useful financial measure to evaluate its operating
performance, and the Company presents EBITDAre in accordance with
Nareit guidelines, as defined in its September 2017 white paper
"Earnings Before Interest, Taxes, Depreciation and Amortization for
Real Estate." EBITDAre adjusts EBITDA for the following items,
which may occur in any period, and refers to these measures as
Adjusted EBITDAre: (1) gains or losses on the disposition of
depreciated property, including gains or losses on change of
control; (2) impairment write-downs of depreciated property and of
investments in unconsolidated affiliates caused by a decrease in
value of depreciated property in the affiliate; and (3) adjustments
to reflect the entity's share of EBITDAre of unconsolidated
affiliates.The Company also evaluates its performance by reviewing
Adjusted FFO and Adjusted EBITDAre because it believes that
adjusting FFO to exclude certain recurring and non-recurring items
described below provides useful supplemental information regarding
the Company's ongoing operating performance and that the
presentation of Adjusted FFO and Adjusted EBITDAre, when combined
with the primary GAAP presentation of net income (loss), more
completely describes the Company's operating performance. The
Company adjusts FFO available to common share and unit holders for
the following items, which may occur in any period, and refers to
this measure as Adjusted FFO and Adjusted EBITDAre:-
Transaction
costs: The Company excludes transaction costs expensed during
the period because it believes that including these costs in FFO
does not reflect the underlying financial performance of the
Company and its hotels.-
Non-cash ground rent: The Company
excludes the non-cash ground rent expense, which is primarily made
up of the straight-line rent impact from a ground lease.-
Management/franchise contract transition costs: The Company
excludes one-time management and/or franchise contract transition
costs expensed during the period because it believes that including
these costs in FFO and Adjusted EBITDAre does not reflect the
underlying financial performance of the Company and its hotels.-
Interest expense adjustment for acquired liabilities: The
Company excludes interest expense adjustment for acquired
liabilities assumed in connection with acquisitions, because it
believes that including these non-cash adjustments in FFO and
Adjusted EBITDAre does not reflect the underlying financial
performance of the Company.-
Finance lease adjustment: The
Company excludes the effect of non-cash interest expense from
finance leases because it believes that including these non-cash
adjustments in FFO and Adjusted EBITDAre does not reflect the
underlying financial performance of the Company.-
Non-cash
amortization of acquired intangibles: The Company excludes the
non-cash amortization of acquired intangibles, which includes but
is not limited to the amortization of favorable and unfavorable
leases or management agreements and above/below market real estate
tax reduction agreements because it believes that including these
non-cash adjustments in FFO and Adjusted EBITDAre does not reflect
the underlying financial performance of the Company.-
Non-cash
interest expense, one-time operation suspension expenses, early
extinguishment of debt, amortization of share-based compensation
expense, issuance costs of redeemed preferred shares, and
hurricane-related repairs costs: The Company excludes these
items because the Company believes that including these adjustments
in FFO does not reflect the underlying financial performance of the
Company and its hotels.-
One-time operation suspension expenses,
amortization of share-based compensation expense, and
hurricane-related costs: The Company excludes these items
because it believes that including these costs in EBITDAre does not
reflect the underlying financial performance of the Company and its
hotels.The Company presents weighted-average number of basic and
fully diluted common shares and units by excluding the dilutive
effect of shares issuable upon conversion of convertible debt.The
Company’s presentation of FFO and Adjusted EBITDAre as adjusted by
the Company, should not be considered as an alternative to net
income (computed in accordance with GAAP) as an indicator of the
Company’s financial performance or to cash flow from operating
activities (computed in accordance with GAAP) as an indicator of
its liquidity. The Company’s presentation of EBITDAre, and as
adjusted by the Company, should not be considered as an alternative
to net income (computed in accordance with GAAP) as an indicator of
the Company’s financial performance or to cash flow from operating
activities (computed in accordance with GAAP) as an indicator of
its liquidity.
Pebblebrook Hotel Trust
Reconciliation of Net Income (Loss) to FFO and Adjusted FFO
($ in thousands, except share and per-share data)
(Unaudited)
Three months ended September
30,
Nine months ended September
30,
2023
2022
2023
2022
Net income (loss)
$
(56,484
)
$
26,305
$
(32,346
)
$
(45,114
)
Adjustments: Real estate depreciation and amortization
63,186
60,285
179,341
179,480
Gain on sale of hotel properties
-
(6,194
)
(30,219
)
(6,194
)
Impairment loss
71,416
12,865
71,416
86,119
FFO
$
78,118
$
93,261
$
188,192
$
214,291
Distribution to preferred shareholders and unit holders
(12,152
)
(12,507
)
(36,455
)
(35,842
)
FFO available to common share and unit holders
$
65,966
$
80,754
$
151,737
$
178,449
Transaction costs
273
179
583
331
Non-cash ground rent
1,901
1,933
5,712
5,808
Management/franchise contract transition costs
(1
)
(43
)
210
346
Interest expense adjustment for acquired liabilities
403
521
1,487
2,007
Finance lease adjustment
740
728
2,210
2,175
Non-cash amortization of acquired intangibles
(482
)
(536
)
(5,013
)
(1,620
)
Non-cash interest expense
-
-
-
49
Early extinguishment of debt
1,004
-
1,004
-
Amortization of share-based compensation expense
3,321
3,180
9,232
8,154
Hurricane-related costs
991
-
5,058
-
Adjusted FFO available to common share and unit holders
$
74,116
$
86,716
$
172,220
$
195,699
FFO per common share - basic
$
0.54
$
0.61
$
1.23
$
1.35
FFO per common share - diluted
$
0.54
$
0.61
$
1.23
$
1.35
Adjusted FFO per common share - basic
$
0.61
$
0.66
$
1.40
$
1.49
Adjusted FFO per common share - diluted
$
0.61
$
0.66
$
1.39
$
1.49
Weighted-average number of basic common shares and units
121,066,124
131,782,236
123,402,673
131,781,876
Weighted-average number of fully diluted common shares and units
121,240,662
132,026,887
123,719,181
131,781,876
See “Considerations Regarding Non-GAAP Financial Measures”
of this press release for important considerations regarding our
use of non-GAAP financial measures. Any differences are a result of
rounding.
Pebblebrook Hotel Trust Reconciliation
of Net Income (Loss) to EBITDA, EBITDAre and Adjusted EBITDAre
($ in thousands) (Unaudited)
Three months ended September
30,
Nine months ended September
30,
2023
2022
2023
2022
Net income (loss)
$
(56,484
)
$
26,305
$
(32,346
)
$
(45,114
)
Adjustments: Interest expense
31,022
25,020
87,996
70,753
Income tax expense (benefit)
822
1,015
853
1,015
Depreciation and amortization
63,272
60,372
179,598
179,746
EBITDA
$
38,632
$
112,712
$
236,101
$
206,400
Gain on sale of hotel properties
-
(6,194
)
(30,219
)
(6,194
)
Impairment loss
71,416
12,865
71,416
86,119
EBITDAre
$
110,048
$
119,383
$
277,298
$
286,325
Transaction costs
273
179
583
331
Non-cash ground rent
1,901
1,933
5,712
5,808
Management/franchise contract transition costs
(1
)
(43
)
210
346
Non-cash amortization of acquired intangibles
(482
)
(536
)
(5,013
)
(1,620
)
Amortization of share-based compensation expense
3,321
3,180
9,232
8,154
Hurricane-related costs
991
-
5,058
-
Adjusted EBITDAre
$
116,051
$
124,096
$
293,080
$
299,344
See “Considerations Regarding Non-GAAP Financial Measures”
of this press release for important considerations regarding our
use of non-GAAP financial measures. Any differences are a result of
rounding.
Pebblebrook Hotel Trust Reconciliation
of Q4 2023 and Full Year 2023 Outlook Net Income (Loss) to FFO and
Adjusted FFO (in millions, except per share data)
(Unaudited) Three months endingDecember 31,
2023 Year endingDecember 31, 2023 Low High
Low High Net income (loss)
$
(48
)
$
(42
)
$
(81
)
$
(75
)
Adjustments: Real estate depreciation and amortization
65
65
244
244
(Gain) loss on sale of hotel properties
-
-
(30
)
(30
)
Impairment loss
-
-
71
71
FFO
$
17
$
23
$
204
$
210
Distribution to preferred shareholders and unit holders
(12
)
(12
)
(49
)
(49
)
FFO available to common share and unit holders
$
5
$
11
$
155
$
161
Non-cash ground rent
2
2
8
8
Amortization of share-based compensation expense
3
3
13
13
Other
1
1
7
7
Adjusted FFO available to common share and unit holders
$
11
$
17
$
183
$
189
FFO per common share - diluted
$
0.04
$
0.09
$
1.26
$
1.31
Adjusted FFO per common share - diluted
$
0.09
$
0.14
$
1.49
$
1.54
Weighted-average number of fully diluted common shares and
units
121.1
121.1
123.0
123.0
See “Considerations Regarding Non-GAAP Financial Measures”
of this press release for important considerations regarding our
use of non-GAAP financial measures. Any differences are a result of
rounding.
Pebblebrook Hotel Trust Reconciliation
of Q4 2023 and Full Year 2023 Outlook Net Income (Loss) to EBITDA,
EBITDAre and Adjusted EBITDAre ($ in millions)
(Unaudited) Three months endingDecember 31,
2023 Year endingDecember 31, 2023 Low High
Low High Net income (loss)
$
(48
)
$
(42
)
$
(81
)
$
(75
)
Adjustments: Interest expense and income tax expense
29
29
118
118
Depreciation and amortization
65
65
244
244
EBITDA
$
46
$
52
$
281
$
287
(Gain) loss on sale of hotel properties
-
-
(30
)
(30
)
Impairment loss
-
-
71
71
EBITDAre
$
46
$
52
$
322
$
328
Non-cash ground rent
2
2
8
8
Amortization of share-based compensation expense
3
3
13
13
Other
-
-
1
1
Adjusted EBITDAre
$
51
$
57
$
344
$
350
See “Considerations Regarding Non-GAAP Financial Measures”
of this press release for important considerations regarding our
use of non-GAAP financial measures. Any differences are a result of
rounding.
Pebblebrook Hotel Trust Same-Property
Statistical Data (Unaudited)
Three months ended September
30,
Nine months ended September
30,
2023
2022
2023
2022
Same-Property Occupancy
75.4
%
72.9
%
68.9
%
63.8
%
2023 vs. 2022 Increase/(Decrease)
3.4
%
7.9
%
Same-Property ADR
$
310.67
$
324.78
$
305.21
$
316.82
2023 vs. 2022 Increase/(Decrease)
(4.3
%)
(3.7
%)
Same-Property RevPAR
$
234.09
$
236.69
$
210.16
$
202.15
2023 vs. 2022 Increase/(Decrease)
(1.1
%)
4.0
%
Same-Property Total RevPAR
$
353.85
$
353.06
$
321.51
$
303.41
2023 vs. 2022 Increase/(Decrease)
0.2
%
6.0
%
Notes: For the three months
ended September 30, 2023 and 2022, the above table of hotel
operating statistics includes information from all hotels owned as
of September 30, 2023, except for the following:• LaPlaya Beach
Resort & Club is excluded due to its closure following
Hurricane Ian.For the nine months ended September 30, 2023 and
2022, the above table of hotel operating statistics includes
information from all hotels owned as of September 30, 2023, except
for the following:• LaPlaya Beach Resort & Club is excluded
from all months due to its closure following Hurricane Ian.• 1
Hotel San Francisco is excluded from Jan-Jun due to its closure for
redevelopment.• Hotel Monaco Seattle is included in Jan-Mar only
due to its sale earlier this year.• Hotel Vintage Seattle is
included in Jan-Mar only due to its sale earlier this year.• Westin
Michigan Avenue Retail Parcel is included in Jan-Mar only due to
its sale earlier this year.These hotel results for the respective
periods may include information reflecting operational performance
prior to the Company's ownership of the hotels. Any differences are
a result of rounding.The information above has not been audited and
is presented only for comparison purposes.
Pebblebrook
Hotel Trust Same-Property Statistical Data - by Market
(Unaudited)
Three months ended September
30,
Nine months ended September
30,
2023
2023
Same-Property RevPAR variance to 2022: Washington DC
21.4
%
39.4
%
San Francisco
13.1
%
24.9
%
Los Angeles
5.0
%
9.2
%
Boston
2.5
%
3.3
%
Chicago
(5.3
%)
11.1
%
San Diego
(7.2
%)
(1.8
%)
Portland
(8.9
%)
4.3
%
Southern Florida/Georgia
(9.1
%)
(10.0
%)
Other
(18.8
%)
(15.0
%)
Urban
3.0
%
10.0
%
Resorts
(10.2
%)
(7.7
%)
Notes: For the three months
ended September 30, 2023, the above table of hotel operating
statistics includes information from all hotels owned as of
September 30, 2023, except for the following:• LaPlaya Beach Resort
& Club is excluded due to its closure following Hurricane
Ian.For the nine months ended September 30, 2023, the above table
of hotel operating statistics includes information from all hotels
owned as of September 30, 2023, except for the following:• LaPlaya
Beach Resort & Club is excluded from all months due to its
closure following Hurricane Ian.• 1 Hotel San Francisco is excluded
from Jan-Jun due to its closure for redevelopment.• Hotel Monaco
Seattle is included in Jan-Mar only due to its sale earlier this
year.• Hotel Vintage Seattle is included in Jan-Mar only due to its
sale earlier this year."Other" includes Newport, RI and Santa Cruz,
CA.These hotel results for the respective periods may include
information reflecting operational performance prior to the
Company's ownership of the hotels. Any differences are a result of
rounding.The information above has not been audited and is
presented only for comparison purposes.
Pebblebrook Hotel
Trust Hotel Operational Data Schedule of
Same-Property Results ($ in thousands)
(Unaudited)
Three months ended September
30,
Nine months ended September
30,
2023
2022
2023
2022
Same-Property Revenues: Room
$
257,421
$
260,104
$
683,956
$
657,610
Food and beverage
89,690
92,261
251,664
238,557
Other
42,009
35,622
110,719
90,850
Total hotel revenues
389,120
387,987
1,046,339
987,017
Same-Property Expenses: Room
$
67,400
$
62,328
$
182,534
$
156,010
Food and beverage
67,128
64,754
186,106
165,096
Other direct
8,902
8,209
24,563
22,030
General and administrative
30,280
30,016
86,530
78,988
Information and telecommunication systems
5,249
4,777
15,247
13,089
Sales and marketing
27,388
26,672
78,038
66,697
Management fees
11,370
11,342
30,167
30,181
Property operations and maintenance
13,729
12,773
39,564
34,942
Energy and utilities
11,696
10,566
31,785
28,258
Property taxes
15,176
18,559
44,644
54,675
Other fixed expenses
16,453
14,970
42,838
39,584
Total hotel expenses
274,771
264,966
762,016
689,550
Same-Property EBITDA
$
114,349
$
123,021
$
284,323
$
297,467
Same-Property EBITDA Margin
29.4
%
31.7
%
27.2
%
30.1
%
Notes: For the three months ended
September 30, 2023 and 2022, the above table of hotel operating
statistics includes information from all hotels owned as of
September 30, 2023, except for the following:• LaPlaya Beach Resort
& Club is excluded due to its closure following Hurricane
Ian.For the nine months ended September 30, 2023 and 2022, the
above table of hotel operating statistics includes information from
all hotels owned as of September 30, 2023, except for the
following:• LaPlaya Beach Resort & Club is excluded from all
months due to its closure following Hurricane Ian.• 1 Hotel San
Francisco is excluded from Jan-Jun due to its closure for
redevelopment.• Hotel Monaco Seattle is included in Jan-Mar only
due to its sale earlier this year.• Hotel Vintage Seattle is
included in Jan-Mar only due to its sale earlier this year.• Westin
Michigan Avenue Retail Parcel is included in Jan-Mar only due to
its sale earlier this year.These hotel results for the respective
periods may include information reflecting operational performance
prior to the Company's ownership of the hotels. Any differences are
a result of rounding.The information above has not been audited and
is presented only for comparison purposes.
Pebblebrook
Hotel Trust Historical Operating Data ($ in millions
except ADR and RevPAR data) (Unaudited)
Historical Operating Data:
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Full Year
2019
2019
2019
2019
2019
Occupancy
74
%
86
%
86
%
77
%
81
%
ADR
$
251
$
274
$
272
$
250
$
262
RevPAR
$
186
$
236
$
234
$
192
$
212
Hotel Revenues
$
300.9
$
382.7
$
380.5
$
325.4
$
1,389.4
Hotel EBITDA
$
76.7
$
135.7
$
130.1
$
87.3
$
429.8
Hotel EBITDA Margin
25.5
%
35.5
%
34.2
%
26.8
%
30.9
%
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Full Year
2022
2022
2022
2022
2022
Occupancy
48
%
69
%
73
%
60
%
63
%
ADR
$
300
$
323
$
325
$
295
$
312
RevPAR
$
144
$
222
$
237
$
178
$
196
Hotel Revenues
$
231.6
$
366.3
$
388.0
$
308.1
$
1,294.0
Hotel EBITDA
$
46.1
$
125.5
$
123.0
$
63.2
$
357.9
Hotel EBITDA Margin
19.9
%
34.3
%
31.7
%
20.5
%
27.7
%
First Quarter
Second Quarter
Third Quarter
2023
2023
2023
Occupancy
58
%
73
%
75
%
ADR
$
301
$
311
$
311
RevPAR
$
176
$
227
$
234
Hotel Revenues
$
294.1
$
377.4
$
389.1
Hotel EBITDA
$
60.4
$
112.1
$
114.3
Hotel EBITDA Margin
20.5
%
29.7
%
29.4
%
Notes: These historical hotel
operating results include information for all of the hotels the
Company owned as of September 30, 2023, as if they were owned as of
January 1, 2019, except for LaPlaya Beach Resort & Club which
is excluded from all time periods due to its closure following
Hurricane Ian. These historical operating results include periods
prior to the Company's ownership of the hotels. The information
above does not reflect the Company's corporate general and
administrative expense, interest expense, property acquisition
costs, depreciation and amortization, taxes and other
expenses.These hotel results for the respective periods may include
information reflecting operational performance prior to the
Company's ownership of the hotels. Any differences are a result of
rounding.The information above has not been audited and is
presented only for comparison purposes.
Pebblebrook Hotel
Trust 2023 Same-Property Inclusion Reference Table
Hotels Q1 Q2 Q3 Q4
Hotel Monaco Seattle X Hotel Vintage Seattle X LaPlaya Beach Resort
& Club 1 Hotel San Francisco X X The Westin Michigan Avenue
Chicago - Retail Parcel X Newport Harbor Island Resort X X X Hotel
Zoe Fisherman's Wharf X X X
Notes: A property marked with an "X" in a specific
quarter denotes that the same-property operating results of that
property are included in the Same-Property Statistical Data and in
the Schedule of Same-Property Results.The Company's third quarter
Same-Property RevPAR, RevPAR Growth, Total RevPAR, Total RevPAR
Growth, ADR, Occupancy, Revenues, Expenses, EBITDA and EBITDA
Margin include all of the hotels the Company owned as of September
30, 2023, except for the following:• LaPlaya Beach Resort &
Club is excluded due to its closure following Hurricane Ian.The
Company's estimates and assumptions for Same-Property RevPAR,
RevPAR Growth, Total RevPAR, Total RevPAR Growth, ADR, Occupancy,
Revenues, Expenses, EBITDA and EBITDA Margin for the fourth quarter
of 2023 include all of the hotels the Company owned as of September
30, 2023, except for the following:• LaPlaya Beach Resort &
Club is excluded due to its closure following Hurricane Ian.•
Newport Harbor Island Resort is excluded due to its upcoming
redevelopment.• Hotel Zoe Fisherman's Wharf is excluded due to its
anticipated sale.Operating statistics and financial results may
include periods prior to the Company's ownership of the hotels.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231026078591/en/
Raymond D. Martz, Chief Financial Officer, Pebblebrook Hotel
Trust - (240) 507-1330
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