Pebblebrook Hotel Trust (NYSE: PEB):
Q2 FINANCIAL
HIGHLIGHTS
- Net income of $32.2 million
- Same-Property Total RevPAR(1) increased by 2.5% vs. Q2 2023,
with urban properties improving 3.4% and resort properties growing
0.6%
- Same-Property EBITDA(1) of $117.2 million, up $9.6 million, or
8.9%, vs. Q2 2023
- Adjusted EBITDAre(1) of $123.5 million, ahead by $7.2 million,
or 6.2%, vs. Q2 2023
- Adjusted FFO(1) per diluted share of $0.69, increasing 11.3%
from Q2 2023
HOTEL OPERATING TRENDS
- Both urban and resort occupancies grew in Q2. Urban
Same-Property Occupancy increased 2.5 percentage points, with gains
driven by San Diego, Chicago, Boston and Washington, D.C. Resort
Same-Property Occupancy rose by 3.5 percentage points, bolstered by
continued improvement in weekday demand from business transient and
groups and weekend occupancy from leisure travelers.
- Focused efforts to achieve operating cost efficiencies, coupled
with reduced expense pressures and better-than-expected progress in
realizing real estate tax reductions, resulted in a 0.1%
year-over-year decline in Same-Property Total Expenses. This helped
to improve Same-Property EBITDA margins by 182 basis points.
PORTFOLIO UPDATES &
CAPITAL REPOSITIONINGS
- Pebblebrook’s multiyear comprehensive redevelopment and
repositioning projects, totaling over $520 million, have been
completed, positioning the Company to achieve significant revenue
gains and cash flow improvements over the next several years.
- LaPlaya Beach Resort & Club (“LaPlaya”) continues to ramp
up its operating performance following its redevelopment and
restoration after Hurricane Ian. In Q2, EBITDA reached $7.0
million. Additionally, $7.3 million of business interruption income
was recorded, exceeding the Company’s Q2 Outlook by $3.3
million.
- Le Méridien Delfina Santa Monica will be converted and
rebranded to Hyatt Centric in mid-September 2024, becoming the
first Hyatt-affiliated franchise in this highly desirable
beachfront destination.
2024
OUTLOOK
- Net loss: ($13.0) to ($4.0) million
- Same-Property RevPAR(1) Growth Rate: +1.25% to +2.25% (midpoint
down 125 bps)
- Adjusted EBITDAre(1): $351.0 to $360.0 million (midpoint
increased $9.0 million)
- Adjusted FFO(1) per diluted share: $1.59 to $1.67 (midpoint
increased $0.08)
(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.
“Second quarter demand was in line with our expectations, with
healthy business group, transient and leisure boosting the urban
markets, and strong weekday and weekend demand positively affecting
our resort portfolio. Our recently redeveloped and repositioned
properties – Estancia La Jolla Hotel & Spa, Skamania Lodge,
Hilton Gaslamp San Diego Quarter, Margaritaville San Diego Gaslamp
Quarter and Newport Harbor Island Resort – are performing well,
ramping up successfully and gaining market share. Our bottom-line
operating results exceeded our outlook, primarily due to
better-than-expected execution of operating efficiency initiatives,
reduced expense pressures and slightly greater-than-expected
savings from real estate tax reductions. Both our urban hotels and
resorts grew Same-Property EBITDA during the second quarter, which
is very encouraging.
“For the remainder of the year, increasing geopolitical and
economic uncertainties are likely to impact industry performance
and operating results, prompting us to adopt a modestly more
cautious outlook. While we are slightly lowering our revenue growth
outlook for the year, we are raising our 2024 outlook for Hotel
EBITDA, Adjusted EBITDAre, Adjusted FFO and AFFO/share. Although
our overall group and transient pace remains ahead for the balance
of the year compared with 2023, the margin of advantage has been
narrowing. Business group and transient segments remain healthy.
However, leisure consumers have become increasingly
price-conscious, particularly within the lower-priced segments, and
this trend is beginning to impact some higher-end segments. We were
previously expecting overall ADR declines to ease in the second
half of this year, but we now expect continued pressure throughout
the remainder of the year. Despite this, luxury and upscale
travelers have remained resilient, and we are on track for a
successful summer season across our portfolio.”
-Jon E. Bortz, Chairman and Chief Executive Officer of
Pebblebrook Hotel Trust
Second Quarter and Year-to-Date Highlights
Second Quarter
Six Months Ended June
30,
Same-Property and Corporate
Highlights
2024
2023
Var
2024
2023
Var
($ in millions except RevPAR and
per share data)
Net income (loss)
$32.2
$46.2
(30.2%)
$4.7
$24.1
(80.4%)
Same-Property RevPAR(1)
$234
$230
1.7%
$208
$205
1.6%
Same-Property Room Revenues(1)
$244.0
$239.7
1.8%
$435.6
$425.8
2.3%
Same-Property Total Revenues(1)
$372.8
$363.4
2.6%
$667.9
$651.4
2.5%
Same-Property Total Expenses(1)
$255.5
$255.7
(0.1%)
$490.9
$482.6
1.7%
Same-Property EBITDA(1)
$117.2
$107.7
8.9%
$177.0
$168.8
4.8%
Adjusted EBITDAre(1)
$123.5
$116.2
6.2%
$184.3
$177.0
4.1%
Adjusted FFO(1)
$83.8
$75.7
10.7%
$108.8
$98.1
10.9%
Adjusted FFO per diluted share(1)
$0.69
$0.62
11.3%
$0.90
$0.79
13.9%
2024 Monthly Results
Same-Property Portfolio
Highlights(2)
Jan
Feb
Mar
Apr
May
Jun
($ in millions except ADR and
RevPAR data)
Occupancy
51%
63%
70%
73%
76%
81%
ADR
$295
$294
$307
$303
$310
$302
RevPAR
$151
$184
$215
$220
$236
$244
Total Revenues
$84.8
$94.9
$115.4
$115.4
$129.8
$127.5
Total Revenues Growth Rate (’24 vs.
’23)
6%
3%
0%
(1%)
7%
2%
Hotel EBITDA
$8.1
$19.1
$32.5
$31.0
$47.3
$38.9
(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.
Adjusted EBITDAre, Adjusted FFO and
Adjusted FFO per share exclude the amortization of share-based
compensation expense. Historical and comparable period results of
such non-GAAP financial measures have been adjusted to reflect the
exclusion.
(2)
Includes information for all the hotels
the Company owned as of June 30, 2024, except for the
following:
- LaPlaya Beach Resort & Club is excluded from Jan – Jun
“Both our urban hotels and resorts demonstrated positive
performance in the second quarter,” noted Mr. Bortz. “Year to date,
our urban properties have improved occupancy by 2.4 percentage
points and increased Same-Property EBITDA by 7.0% over the
prior-year period. Meanwhile, our Resort Same-Property Occupancy
increased by 3.5 percentage points for the quarter and 1.8
percentage points year to date, with Resort Same-Property EBITDA
year to date increasing by 2.0% over last year.
‘We’re also very pleased with the tremendous progress our
property teams and asset managers have made in delivering operating
efficiency improvements across the portfolio. It has been a primary
focus for our teams. Our Same-Property hotel operating expenses
decreased by 0.1% versus Q2 2023, with costs per occupied room
declining by 3.8%. Excluding property taxes and insurance, our
hotel operating expenses rose by only 1.4%, while decreasing by
2.4% on a per occupied room basis. Generally, we have also
experienced reduced operating cost pressures across the portfolio,
which we expect will continue through the remainder of the
year.”
Ramp Up of LaPlaya Beach Resort & Club
Following the post-hurricane reconstruction completion and full
reopening of LaPlaya in Naples, Florida earlier this year, the
luxury resort's operating performance continues to improve rapidly.
Year to date, LaPlaya has achieved $15.3 million in Hotel EBITDA,
as compared to a loss of $3.7 million in the same period last year,
and a positive $23.1 million in the same period of 2022, which was
the resort’s best performing year prior to Hurricane Ian in
September 2022. The property’s underlying performance is expected
to continue to ramp up, and LaPlaya is fully poised to capitalize
on the upcoming high-demand travel season in Naples, starting in
the fourth quarter of 2024. As part of the Company’s increased 2024
outlook, LaPlaya is expected to contribute $24 million of EBITDA
for the entire year, which represents a $2 million improvement from
the Company’s prior expectations.
Regarding insurance claims, the Company expects all operational
and physical disruptions to be covered under its business
interruption (“BI”) and property insurance policies, net of
deductibles. In Q2 2024, a preliminary settlement of $7.3 million
for BI proceeds related to income losses from October 2023 through
February 2024 was recorded, exceeding the Company’s Q2 outlook by
$3.3 million. Year to date, the Company has recorded $11.3 million
in BI income and forecasts an additional $2.7 million for the
remainder of 2024, bringing the total expected BI income for 2024
to $14.0 million. This is $3.0 million more than previously
expected. These projections are now incorporated into the Company’s
2024 Outlook. It is important to note that while business
interruption proceeds will increase Adjusted EBITDAre and Adjusted
FFO, they are not included in Same-Property Hotel EBITDA. As a
reminder, LaPlaya’s operating performance is excluded from all
same-property reporting results for 2024 and 2023.
Le Méridien Delfina Santa Monica to Convert to Hyatt
Centric
The Company recently reached an agreement with Hyatt Hotels
& Resorts (“Hyatt”) to reflag its existing 315-room Le Méridien
Delfina Santa Monica as the Hyatt Centric Delfina Santa Monica in
mid-September 2024. This exciting conversion will include an
approximate $16.0 million property refresh, commencing in the
fourth quarter of this year, with expected completion in the second
quarter of 2025. Hyatt is providing key money, offsetting a
meaningful portion of the property refresh.
“We are thrilled that our lifestyle-oriented Delfina Santa
Monica hotel will become part of Hyatt Centric,” noted Mr. Bortz.
“After evaluating many alternative options, we determined that
converting to Hyatt Centric was the optimal choice for this unique
lifestyle-oriented property. We were already planning a refresh,
and the additional scope to meet Hyatt Centric standards was
relatively minor. This will be the only Hyatt-branded hotel in the
desirable and high barrier-to-entry beachside Santa Monica hotel
market, which should be a tremendous benefit for the property.”
Capital Investments and Strategic Property
Redevelopments
During the second quarter, the Company completed $28.7 million
of capital investments throughout its portfolio, excluding capital
expenditures related to the repair and rebuilding of LaPlaya. These
investments relate to a number of the Company’s last major property
redevelopments, including:
- the $50 million comprehensive redevelopment and transformation
of Newport Harbor Island Resort into a luxury island resort,
which fully launched on Memorial Day weekend;
- the finalization of Estancia La Jolla Hotel & Spa’s
$26 million redevelopment and repositioning, which was completed in
mid-April and included fully renovating public areas and extensive
public area landscaping, adding a lobby bar and patio, outdoor
meeting venues, an outdoor pool bar and grill and new cabanas, and
upgrading the main ballroom and the Mustangs and Burros restaurant;
and
- the May completion of Skamania Lodge's $20 million phase
1 of its much larger master plan to expand and introduce
alternative lodging accommodations, including the recent addition
of two new 2-bedroom cabins, one new 3-bedroom villa, and five
first-of-their-kind luxury glamping units. Other recent resort
additions included a multi-million-dollar outdoor meeting and event
venue adjacent to the resort’s new 18-hole putting course, three
additional treehouses bringing the total number of treehouses to
nine, and road and utility infrastructure for existing and future
alternative accommodations.
With the completion of these investments, virtually all of the
Company's properties have undergone recent major redevelopments or
renovations. This marks a transition to a period of significantly
reduced capital investments planned for the next few years. The
Company continues to expect it will invest a total of $85 to $90
million in the portfolio in 2024, net of key money.
Balance Sheet and Liquidity
As of June 30, 2024, the Company had $111.2 million in cash,
cash equivalents and restricted cash, plus $636.3 million of
undrawn availability on its $650 million senior unsecured revolving
credit facility. The Company’s current $2.2 billion of consolidated
debt and convertible notes is well-structured, with an estimated
effective weighted-average interest rate of 4.4% as of the
beginning of the third quarter. 75% of the combined debt and
convertible notes is fixed at an estimated effective
weighted-average interest rate of 3.4%, while the remaining 25% is
floating at an estimated weighted-average interest rate of 7.3%. In
addition, approximately 91% of the Company’s outstanding debt is
unsecured, and the weighted-average maturity of the Company’s debt
is approximately 2.7 years. The Company has no meaningful debt
maturities until Q4 2025.
Common and Preferred Dividends
On June 14, 2024, 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. As
of June 30, 2024, Curator had 97 member hotels and resorts and 117
master service agreements with preferred vendor partners. The
master service agreements provide Curator member hotels with
preferred pricing, enhanced operating terms, and early access to
curated new technologies. Curator's mission is to support lifestyle
hotels and resorts through its best-in-class operating agreements,
services and technology, while helping properties amplify their
independent brands and what makes them unique.
2024 Outlook
The Company's 2024 Outlook, which does not assume any
acquisitions or dispositions, incorporates planned capital
investments and key assumptions, including an estimated $14.0
million in business interruption proceeds and $24.0 million of
Hotel EBITDA related to LaPlaya, which is incorporated into
Adjusted EBITDAre and Adjusted FFO, but does not impact
Same-Property Hotel EBITDA.
This forecast assumes stable travel conditions, unaffected by
pandemics, major weather events, federal shutdowns or deteriorating
macro-economic factors.
2024
Outlook
As of 7/24/24
Variance
to Prior Outlook
Var to 4/23/24
($ in millions, except per share
data)
Low
High
Low
High
Net (loss)
($13.0)
($4.0)
$49.0
$43.0
Adjusted EBITDAre
$351.0
$360.0
$12.0
$6.0
Adjusted FFO
$193.5
$202.5
$13.0
$7.0
Adjusted FFO per diluted share
$1.59
$1.67
$0.10
$0.06
This 2024 Outlook is based, in part, on the following
estimates and assumptions:
2024
Outlook
As of 7/24/24
Variance
to Prior Outlook
Var to 4/23/24
($ in millions)
Low
High
Low
High
US Hotel Industry RevPAR Growth Rate
0.75%
1.75%
0.75%
(0.25%)
Same-Property RevPAR variance vs. 2023
1.25%
2.25%
(0.75%)
(1.75%)
Same-Property Total Revenue variance vs.
2023
2.4%
3.4%
(0.9%)
(1.4%)
Same-Property Total Expense variance vs.
2023
2.9%
3.4%
(1.8%)
(1.9%)
Same-Property Hotel EBITDA
$350.1
$359.1
$6.0
–
Same-Property Hotel EBITDA variance vs.
2023
0.8%
3.4%
1.7%
–
The Company’s Q3 2024 Outlook is as follows:
Q3 2024 Outlook
Low
High
($ in millions, except per share
and RevPAR data)
Net income
$7.5
$12.5
Adjusted EBITDAre
$101.0
$106.0
Adjusted FFO
$59.5
$64.5
Adjusted FFO per diluted share
$0.49
$0.53
This Q3 2024 Outlook is based, in part, on the following
estimates and assumptions:
Same-Property RevPAR
$238
$243
Same-Property RevPAR variance vs. Q3
2023
1.25%
3.25%
Same-Property Total Revenue variance vs.
Q3 2023
1.7%
3.8%
Same-Property Total Expense variance vs.
Q3 2023
3.9%
4.9%
Same-Property Hotel EBITDA
$108.0
$113.0
Same-Property Hotel EBITDA variance vs. Q3
2023
(3.5%)
1.0%
Second Quarter 2024 Earnings Call
The Company will conduct its quarterly analyst and investor
conference call on Thursday, July 25, 2024, at 9:30 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 46 hotels and resorts, totaling approximately 12,000
guest rooms across 13 urban and resort markets. For more
information, visit www.pebblebrookhotels.com and follow
@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;
expectations of BI income; 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, 2023. 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 July 24, 2024.
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.
Pebblebrook Hotel Trust Consolidated Balance Sheets
($ in thousands, except share and per-share data) June
30, 2024 December 31, 2023 (Unaudited)
ASSETS Assets: Investment in hotel properties, net
$
5,442,903
$
5,490,776
Cash and cash equivalents
101,689
183,747
Restricted cash
9,489
9,894
Hotel receivables (net of allowance for doubtful accounts of $343
and $689, respectively)
63,555
43,912
Prepaid expenses and other assets
86,716
96,644
Total assets
$
5,704,352
$
5,824,973
LIABILITIES AND EQUITY
Liabilities: Unsecured revolving credit facilities
$
-
$
-
Unsecured term loans, net of unamortized deferred financing costs
1,262,552
1,375,004
Convertible senior notes, net of unamortized debt premium and
discount and deferred financing costs
747,720
747,262
Senior unsecured notes, net of unamortized deferred financing costs
2,396
2,395
Mortgage loans, net of unamortized debt discount and deferred
financing costs
194,533
195,140
Accounts payable, accrued expenses and other liabilities
238,429
238,644
Lease liabilities - operating leases
320,681
320,617
Deferred revenues
85,112
76,874
Accrued interest
6,637
6,830
Distribution payable
11,857
11,862
Total liabilities
2,869,917
2,974,628
Commitments and contingencies
Shareholders' Equity:
Preferred shares of beneficial interest, $0.01 par value
(liquidation preference $690,000 at June 30, 2024 and December 31,
2023), 100,000,000 shares authorized; 27,600,000 shares issued and
outstanding at June 30, 2024 and December 31, 2023
276
276
Common shares of beneficial interest, $0.01 par value, 500,000,000
shares authorized; 120,094,380 shares issued and outstanding at
June 30, 2024 and 120,191,349 shares issued and outstanding at
December 31, 2023
1,201
1,202
Additional paid-in capital
4,077,360
4,078,912
Accumulated other comprehensive income (loss)
29,281
24,374
Distributions in excess of retained earnings
(1,362,359
)
(1,341,264
)
Total shareholders' equity
2,745,759
2,763,500
Non-controlling interests
88,676
86,845
Total equity
2,834,435
2,850,345
Total liabilities and equity
$
5,704,352
$
5,824,973
Pebblebrook Hotel Trust Consolidated
Statements of Operations ($ in thousands, except share and
per-share data) (Unaudited) Three months
endedJune 30, Six months endedJune 30,
2024
2023
2024
2023
Revenues: Room
$
253,778
$
250,934
$
451,878
$
447,308
Food and beverage
101,520
93,748
182,615
169,511
Other operating
41,812
39,661
76,686
73,243
Total revenues
$
397,110
$
384,343
$
711,179
$
690,062
Expenses: Hotel operating expenses: Room
$
65,003
$
64,690
$
120,026
$
121,114
Food and beverage
70,921
68,985
131,935
127,657
Other direct and indirect
111,733
112,354
211,752
211,568
Total hotel operating expenses
247,657
246,029
463,713
460,339
Depreciation and amortization
57,296
57,957
114,505
116,326
Real estate taxes, personal property taxes, property insurance, and
ground rent
25,002
29,571
57,407
58,475
General and administrative
11,946
11,202
24,123
21,190
Gain on sale of hotel properties
-
(23,584
)
-
(30,219
)
Business interruption insurance income
(7,301
)
(14,015
)
(11,281
)
(22,104
)
Other operating expenses
1,539
2,377
3,120
6,047
Total operating expenses
336,139
309,537
651,587
610,054
Operating income (loss)
60,971
74,806
59,592
80,008
Interest expense
(27,939
)
(29,544
)
(54,360
)
(56,974
)
Other
217
952
543
1,135
Income (loss) before income taxes
33,249
46,214
5,775
24,169
Income tax (expense) benefit
(1,010
)
(31
)
(1,056
)
(31
)
Net income (loss)
32,239
46,183
4,719
24,138
Net income (loss) attributable to non-controlling interests
1,303
1,458
2,133
2,341
Net income (loss) attributable to the Company
30,936
44,725
2,586
21,797
Distributions to preferred shareholders
(10,632
)
(10,987
)
(21,263
)
(21,975
)
Net income (loss) attributable to common shareholders
$
20,304
$
33,738
$
(18,677
)
$
(178
)
Net income (loss) per share available to common
shareholders, basic
$
0.17
$
0.27
$
(0.16
)
$
(0.00
)
Net income (loss) per share available to common shareholders,
diluted
$
0.16
$
0.24
$
(0.16
)
$
(0.00
)
Weighted-average number of common shares, basic
120,094,380
121,696,400
120,089,803
123,581,926
Weighted-average number of common shares, diluted
149,744,864
151,238,955
120,089,803
123,581,926
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 endedJune 30, Six months endedJune 30,
2024
2023
2024
2023
Net income (loss)
$
32,239
$
46,183
$
4,719
$
24,138
Adjustments: Real estate depreciation and amortization
57,215
57,871
114,341
116,155
Gain on sale of hotel properties
-
(23,584
)
-
(30,219
)
Impairment loss
-
-
-
-
FFO
$
89,454
$
80,470
$
119,060
$
110,074
Distribution to preferred shareholders and unit holders
(11,796
)
(12,151
)
(23,591
)
(24,303
)
Issuance costs of redeemed preferred shares
-
-
-
-
FFO available to common share and unit holders
$
77,658
$
68,319
$
95,469
$
85,771
Transaction costs
40
257
44
310
Non-cash ground rent
1,872
1,905
3,745
3,811
Management/franchise contract transition costs
-
99
44
211
Interest expense adjustment for acquired liabilities
368
543
631
1,084
Finance lease adjustment
747
736
1,492
1,470
Non-cash amortization of acquired intangibles
(481
)
(482
)
(963
)
(4,531
)
Early extinguishment of debt
-
-
1,534
-
Amortization of share-based compensation expense
3,523
3,032
6,583
5,911
Issuance costs of redeemed preferred shares
-
-
-
-
Hurricane-related costs
33
1,282
183
4,067
Adjusted FFO available to common share and unit holders
$
83,760
$
75,691
$
108,762
$
98,104
FFO per common share - basic
$
0.64
$
0.56
$
0.79
$
0.69
FFO per common share - diluted
$
0.64
$
0.56
$
0.79
$
0.69
Adjusted FFO per common share - basic
$
0.69
$
0.62
$
0.90
$
0.79
Adjusted FFO per common share - diluted
$
0.69
$
0.62
$
0.90
$
0.79
Weighted-average number of basic common shares and units
121,105,508
122,704,780
121,100,931
124,590,306
Weighted-average number of fully diluted common shares and units
121,314,817
122,806,160
121,494,964
124,590,306
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 endedJune 30, Six months endedJune
30,
2024
2023
2024
2023
Net income (loss)
$
32,239
$
46,183
$
4,719
$
24,138
Adjustments: Interest expense
27,939
29,544
54,360
56,974
Income tax expense (benefit)
1,010
31
1,056
31
Depreciation and amortization
57,296
57,957
114,505
116,326
EBITDA
$
118,484
$
133,715
$
174,640
$
197,469
Gain on sale of hotel properties
-
(23,584
)
-
(30,219
)
Impairment loss
-
-
-
-
EBITDAre
$
118,484
$
110,131
$
174,640
$
167,250
Transaction costs
40
257
44
310
Non-cash ground rent
1,872
1,905
3,745
3,811
Management/franchise contract transition costs
-
99
44
211
Non-cash amortization of acquired intangibles
(481
)
(482
)
(963
)
(4,531
)
Amortization of share-based compensation expense
3,523
3,032
6,583
5,911
Hurricane-related costs
33
1,282
183
4,067
Adjusted EBITDAre
$
123,471
$
116,224
$
184,276
$
177,029
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 Q3 2024 and Full Year 2024 Outlook Net Income
(Loss) to FFO and Adjusted FFO (in millions, except per
share data) (Unaudited) Three months
endingSeptember 30, 2024 Year endingDecember 31, 2024
Low High Low High Net income
(loss)
$
8
$
13
$
(13
)
$
(4
)
Adjustments: Real estate depreciation and amortization
57
57
227
227
Gain on sale of hotel properties
-
-
-
-
Impairment loss
-
-
-
-
FFO
$
65
$
70
$
214
$
223
Distribution to preferred shareholders and unit holders
(12
)
(12
)
(47
)
(47
)
FFO available to common share and unit holders
$
53
$
58
$
167
$
176
Non-cash ground rent
2
2
8
8
Amortization of share-based compensation expense
4
4
14
14
Other
1
1
5
5
Adjusted FFO available to common share and unit holders
$
60
$
65
$
194
$
203
FFO per common share - diluted
$
0.44
$
0.48
$
1.37
$
1.45
Adjusted FFO per common share - diluted
$
0.49
$
0.53
$
1.59
$
1.67
Weighted-average number of fully diluted common shares and
units
121.5
121.5
121.5
121.5
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 Q3 2024 and Full Year 2024 Outlook Net Income (Loss) to EBITDA,
EBITDAre and Adjusted EBITDAre ($ in millions)
(Unaudited) Three months endingSeptember 30, 2024
Year endingDecember 31, 2024 Low High
Low High
Net income (loss)
$
8
$
13
$
(13
)
$
(4
)
Adjustments: Interest expense and income tax expense
30
30
115
115
Depreciation and amortization
57
57
227
227
EBITDA
$
95
$
100
$
329
$
338
Gain on sale of hotel properties
-
-
-
-
Impairment loss
-
-
-
-
EBITDAre
$
95
$
100
$
329
$
338
Non-cash ground rent
2
2
8
8
Amortization of share-based compensation expense
4
4
14
14
Other
-
-
-
-
Adjusted EBITDAre
$
101
$
106
$
351
$
360
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
endedJune 30, Six months endedJune 30,
2024
2023
2024
2023
Same-Property Occupancy
76.6
%
73.8
%
68.9
%
66.6
%
2024 vs. 2023 Increase/(Decrease)
3.8
%
3.5
%
Same-Property ADR
$304.94
$311.03
$302.45
$307.88
2024 vs. 2023 Increase/(Decrease)
(2.0
%)
(1.8
%)
Same-Property RevPAR
$233.51
$229.56
$208.46
$205.11
2024 vs. 2023 Increase/(Decrease)
1.7
%
1.6
%
Same-Property Total RevPAR
$356.72
$348.04
$319.64
$313.74
2024 vs. 2023 Increase/(Decrease)
2.5
%
1.9
%
Notes:
For the three months ended June 30, 2024
and 2023, the above table of hotel operating statistics includes
information from all hotels owned as of June 30, 2024, 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 redevelopment. For the six months ended June
30, 2024 and 2023, the above table of hotel operating statistics
includes information from all hotels owned as of June 30, 2024,
except for the following: • LaPlaya Beach Resort & Club is
excluded from Q1 and Q2 due to its closure following Hurricane Ian.
• Newport Harbor Island Resort is excluded from Q1 and Q2 due to
its redevelopment. 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 endedJune 30, Six months endedJune
30,
2024
2024
Same-Property RevPAR variance to 2023: Other Resort Markets
14.4
%
2.9
%
San Diego
10.5
%
10.2
%
Boston
5.2
%
5.2
%
Washington DC
4.0
%
5.0
%
Chicago
0.4
%
(1.0
%)
Los Angeles
(3.3
%)
(1.3
%)
San Francisco
(4.1
%)
(0.6
%)
Southern Florida/Georgia
(5.0
%)
(4.6
%)
Portland
(21.8
%)
(24.0
%)
Urban
2.6
%
3.4
%
Resorts
(0.7
%)
(2.6
%)
Notes:
For the three months ended June 30, 2024,
the above table of hotel operating statistics includes information
from all hotels owned as of June 30, 2024, 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 redevelopment. For the six months ended June
30, 2024, the above table of hotel operating statistics includes
information from all hotels owned as of June 30, 2024, except for
the following: • LaPlaya Beach Resort & Club is excluded from
Q1 and Q2 due to its closure following Hurricane Ian. • Newport
Harbor Island Resort is excluded from Q1 and Q2 due to its
redevelopment. Other Resort Markets includes: Columbia River Gorge,
WA 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 endedJune 30, Six
months endedJune 30,
2024
2023
2024
2023
Same-Property Revenues: Room
$
244,016
$
239,675
$
435,571
$
425,849
Food and beverage
92,234
88,471
165,383
160,949
Other
36,521
35,230
66,938
64,599
Total hotel revenues
372,771
363,376
667,892
651,397
Same-Property Expenses: Room
$
62,932
$
61,518
$
117,075
$
114,289
Food and beverage
65,102
63,613
121,534
118,417
Other direct
8,058
8,342
15,170
15,846
General and administrative
29,646
29,128
55,960
55,209
Information and telecommunication systems
5,100
5,029
10,119
9,927
Sales and marketing
27,387
26,682
52,121
50,174
Management fees
10,972
10,716
18,831
18,742
Property operations and maintenance
13,113
13,175
25,562
25,436
Energy and utilities
10,451
9,256
20,392
18,997
Property taxes
8,547
13,692
25,856
28,933
Other fixed expenses
14,219
14,561
28,247
26,585
Total hotel expenses
255,527
255,712
490,867
482,555
Same-Property EBITDA
$
117,244
$
107,664
$
177,025
$
168,842
Same-Property EBITDA Margin
31.5
%
29.6
%
26.5
%
25.9
%
Notes: For the three
months ended June 30, 2024 and 2023, the above table of hotel
operating statistics includes information from all hotels owned as
of June 30, 2024, 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
redevelopment.For the six months ended June 30, 2024 and 2023, the
above table of hotel operating statistics includes information from
all hotels owned as of June 30, 2024, except for the following:•
LaPlaya Beach Resort & Club is excluded from Q1 and Q2 due to
its closure following Hurricane Ian.• Newport Harbor Island Resort
is excluded from Q1 and Q2 due to its redevelopment.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
$275
$272
$250
$263
RevPAR
$186
$236
$234
$192
$212
Hotel Revenues
$294.3
$375.5
$372.5
$318.8
$1,361.0
Hotel EBITDA
$74.2
$132.7
$126.5
$84.9
$418.3
Hotel EBITDA Margin
25.2%
35.3%
34.0%
26.6%
30.7%
First Quarter Second Quarter Third
Quarter Fourth Quarter Full Year
2023
2023
2023
2023
2023
Occupancy
59%
73%
75%
64%
68%
ADR
$303
$312
$312
$296
$306
RevPAR
$177
$229
$235
$188
$208
Hotel Revenues
$290.2
$372.1
$383.0
$320.3
$1,365.7
Hotel EBITDA
$59.1
$110.5
$111.9
$67.7
$349.1
Hotel EBITDA Margin
20.4%
29.7%
29.2%
21.1%
25.6%
First Quarter Second Quarter
2024
2024
Occupancy
60%
76%
ADR
$299
$306
RevPAR
$179
$232
Hotel Revenues
$295.1
$380.5
Hotel EBITDA
$58.4
$118.9
Hotel EBITDA Margin
19.8%
31.2%
Notes: These historical hotel
operating results include information for all of the hotels the
Company owned as of June 30, 2024, 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 2024 Same-Property Inclusion Reference Table
Hotels Q1 Q2 Q3 Q4
LaPlaya Beach Resort & Club Newport Harbor Island Resort 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 estimates and assumptions for 2024
Same-Property RevPAR, RevPAR Growth, Total Revenue Growth, Total
Expense Growth, Hotel EBITDA and Hotel EBITDA growth include all of
the hotels the Company owned as of June 30, 2024, except for the
following:• LaPlaya Beach Resort & Club is excluded from all
quarters due to its closure following Hurricane Ian.• Newport
Harbor Island Resort is excluded from Q1, Q2 and Q4 due to its
redevelopment.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/20240724034441/en/
Raymond D. Martz, Co-President and Chief Financial Officer,
Pebblebrook Hotel Trust - (240) 507-1330 For additional information
or to receive press releases via email, please visit
www.pebblebrookhotels.com
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