BETHESDA, Md.–(BUSINESS WIRE)–$PEB #PEB–Pebblebrook Hotel Trust (NYSE: PEB):
Q1 FINANCIAL
HIGHLIGHTS
Net loss: ($100.2) million
Same-Property RevPAR(1): (23.4%) vs. 2019; ADR(1) exceeded 2019 by 19.4%
Same-Property Total Revenues(1): $258.0 million, 76.8% recovered vs. 2019
For March, Same-Property Occupancy(1) at 62%, Same-Property Total Revenues(1) down just 9.3% vs 2019, Same-Property EBITDA(1) 91.0% recovered vs. 2019
Adjusted EBITDAre(1): $46.5 million, 50.3% recovered vs. 2019
Adjusted FFO(1) per diluted share: $0.11 vs. $0.48 in 2019 and ($0.41) in 2021
HOTEL
OPERATING
TRENDS
Operating trends dramatically improved throughout Q1 due to robust leisure travel and spring break demand combined with an accelerating business travel recovery across the portfolio
Operating profitability improved each month during Q1 due to strong demand, increased room and non-room pricing, and enhanced operating efficiencies
March 2022 Same-Property EBITDA Margin(1) beat March 2019 by 12 bps
PORTFOLIO
UPDATES &
REPOSITIONINGS
The Company invested $19.9 million of capital into the portfolio in the first quarter, including completing the $6.0 million redevelopment and transformation of Grafton on Sunset into Hotel Ziggy West Hollywood
The Company is on target to complete the $28.0 million redevelopment and transformation of Hotel Vitale into 1 Hotel San Francisco by the end of Q2 2022
Q2 2022
OUTLOOK
Net income: $18.5 to $28.5 million
Same-Property RevPAR(1) var: (8%) to (10%) vs. 2019; +96.8% to +101.2% vs. 2021
Adjusted EBITDAre(1): $107.5 to $117.5 million
Adjusted FFO(1) per diluted share: $0.56 to $0.63
(1) See tables later in this press release for a description of Same-Property information and reconciliations from net income (loss) to non-GAAP financial measures used in the table above and elsewhere in this press release.
“First-quarter operating results significantly exceeded our expectations due to a snapback in leisure demand starting in mid-February combined with a rapid acceleration in the recovery of group and transient business travel. We are very encouraged that these positive trends have continued and strengthened into April. While our best-performing urban markets continue to be Miami, Boston, Los Angeles and San Diego, we are experiencing a strong recovery in demand in Washington DC, San Francisco, Chicago, Portland and Seattle, another positive sign of pent-up business demand. In addition to quickly improving demand trends, room rates during the first quarter surpassed 2019 levels by 19.4%, with our resorts up 59.4% and Los Angeles, Miami, Portland, Washington DC and Chicago ADRs all above 2019. Based on group lead volume, site tours and overall booking trends, rate premiums should continue in the second quarter and the balance of 2022. Combined with our recently completed property renovations and transformations, our outlook for the year is increasingly more optimistic.”
-Jon E. Bortz, Chairman, President, and Chief Executive Officer of Pebblebrook Hotel Trust
First Quarter Highlights
First Quarter
Same-Property and Corporate Highlights
2022
2021
(’22 vs. ’21 growth)
2019
(’22 vs. ’19 growth)
($ in millions except per share and RevPAR data)
Net income (loss)
($100.2)
($121.4)
$5.7
Same-Property Room Revenues(1)
$168.6
$65.0
$219.7
Same-Property Room Revenues variance
159.6%
(23.3%)
Same-Property Total Revenues(1)
$258.0
$104.5
$336.1
Same-Property Total Revenues variance
146.9%
(23.2%)
Same-Property Total Expenses(1)
$201.9
$111.4
$244.2
Same-Property Total Expenses variance
81.1%
(17.3%)
Same-Property EBITDA(1)
$56.2
($6.9)
$91.9
Same-Property EBITDA variance
NM
(38.9%)
Adjusted EBITDAre(1)
$46.5
($22.8)
$92.3
Adjusted EBITDAre variance
NM
(49.7%)
Adjusted FFO(1)
$14.0
($53.5)
$62.6
Adjusted FFO per diluted share(1)
$0.11
($0.41)
$0.48
Adjusted FFO per diluted share variance
NM
(77.1%)
2022 Monthly Results
Same-Property Portfolio Highlights(2)
January
February
March
($ in millions except ADR and RevPAR data)
Occupancy
34%
50%
62%
ADR
$269
$308
$305
RevPAR
$91
$153
$188
Total Revenues
$57.0
$84.9
$116.2
Total Revenues growth rate (2022 vs. 2019)
(44%)
(21%)
(9%)
Hotel EBITDA
($3.1)
$20.5
$38.8
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.
For the details as to which hotels are included in Same-Property Room Revenues, Total Revenues, Expenses and EBITDA appearing in the table above and elsewhere in this press release, refer to the Same-Property Statistical Data table footnotes later in this press release.
Adjusted EBITDAre, Adjusted FFO and Adjusted FFO per share exclude the amortization of share-based compensation expense. Historical (2021 and 2019 comparable periods) results of such non-GAAP financial measures have been adjusted to reflect the exclusion.
(2)
Includes information for all of the hotels the Company owned as of March 31, 2022, except Hotel Vitale given the property’s closure for renovation.
“Same-Property ADRs far exceeded those of 2019 each month in the first quarter, demonstrating our ability to capture additional rate premiums at our recently redeveloped and renovated hotels and resorts, combined with the benefits of improving demand and rates in our urban markets,” noted Mr. Bortz. “The demand pickup in our urban markets is being driven by increasing business transient, in-house groups, and a return of citywide conventions, indicating very positive momentum for the second quarter and beyond. While our resorts have continued to increase their already healthy occupancy and ADR levels thus far in 2022, our urban hotel demand fundamentals are strengthening each week. Recent urban occupancies were higher than those in the fall of 2021, and urban ADRs in March surpassed 2019. These improving trends are continuing in the second quarter.”
Capital Investments and Strategic Property Redevelopments
In the first quarter of 2022, the Company completed $19.9 million of capital investments throughout its portfolio, including the redevelopment and transformation of Grafton on Sunset into Hotel Ziggy, the eighth member of the Unofficial Z Collection, the Company’s proprietary brand of individually curated, unique urban lifestyle hotels. The transformation of Hotel Vitale into the sustainability-focused, mission-driven, and experiential luxury 1 Hotel San Francisco, which will offer nature-inspired designs and environmentally focused services and aesthetics throughout guestrooms and suites, public areas, and meeting and event venues, is now expected to be re-opened and completed later in the second quarter of 2022.
The Company expects to invest a total of $100.0 to $120.0 million during 2022, which includes redevelopment and repositioning projects at Solamar Hotel (to be converted to Margaritaville Hotel San Diego Gaslamp Quarter), Hilton Gaslamp Quarter, Jekyll Island Club Resort, Viceroy Santa Monica and Estancia La Jolla Hotel & Spa, and the development of a new outdoor venue and additional alternative lodging units at Skamania Lodge.
Update on Strategic Acquisitions
On April 21, 2022, the Company announced that it executed a contract to acquire the 119-room Inn on Fifth in Naples, Florida for $156.0 million. The acquisition is expected to be funded with approximately $78.0 million of cash, $77.6 million of 6.0% perpetual preferred operating partnership units, and $0.4 million of common operating partnership units. The purchase is subject to customary closing conditions, and the Company offers no assurances that this acquisition will be completed on these terms or at all.
Balance Sheet and Liquidity
As of March 31, 2022, the Company had $96.0 million of consolidated cash, cash equivalents and restricted cash, in addition to $598.4 million of undrawn availability on its senior unsecured revolving credit facility, for total liquidity of $694.4 million. The Company had $2.5 billion in consolidated debt and convertible notes at an effective weighted-average interest rate of 3.2 percent. $2.0 billion, or 81 percent of the Company’s total outstanding debt and convertible notes, was at a weighted-average fixed interest rate of 3.2 percent, and $0.5 billion, or 19 percent, was at a weighted-average floating interest rate of 2.8 percent. The Company had $1.4 billion of unsecured term loans, and there was no outstanding balance on its $611.0 million senior unsecured revolving credit facility. The Company has no material loans maturing until 2023.
Common and Preferred Dividends
On March 15, 2022, the Company declared a quarterly cash dividend of $0.01 per share on its common shares as well as 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
$0.35625 per 5.7% Series H Cumulative Redeemable Preferred Share.
Update on Curator Hotel & Resort Collection
Curator Hotel & Resort Collection (“Curator”) is a distinct collection of experientially focused small brands and independent lifestyle hotels and resorts worldwide founded by Pebblebrook and several industry-leading independent lifestyle hotel operators. As of March 31, 2022, Curator had grown to 88 member hotels. In the first quarter of 2022, Curator announced strategic partnerships with numerous leading travel and technology companies, including Optii, Infor, Oracle and StayNTouch. As of March 31, 2022, Curator had 82 programs with preferred vendor partners, providing Curator member hotels with preferred pricing, enhanced operating terms and early access to curated new technologies.
Q2 2022 Outlook
Based on current trends, assuming no acquisitions or dispositions, and assuming no new disruptions to travel caused by the COVID-19 pandemic, the Company’s outlook for Q2 2022 is as follows:
Q2 2022 Outlook
Low
High
($ and shares/units in millions, except per share and RevPAR data)
Net income
$18.5
$28.5
Adjusted EBITDAre
$107.5
$117.5
Adjusted FFO
$73.5
$83.5
Adjusted FFO per diluted share
$0.56
$0.63
This Q2 2022 Outlook is based, in part, on the following estimates and assumptions:
Same-Property RevPAR
$209
$214
Same-Property RevPAR variance vs. 2019
(10.0%)
(8.0%)
Same-Property RevPAR variance vs. 2021
96.8%
101.2%
Same-Property EBITDA
$120.0
$130.0
Same-Property EBITDA variance vs. 2019
(18.5%)
(11.7%)
Based on its expectations for Q2 2022, the Company believes it will exit its debt covenant waiver period following the completion of the quarter ending June 30, 2022.
The Company continues to be unable to provide a full-year outlook for 2022 due to the uncertainties caused by the COVID-19 pandemic. The Company intends to issue new full-year guidance when it has more clarity on the economy, travel demand, and more predictable overall operating fundamentals and trends.
First Quarter 2022 Earnings Call
The Company will conduct its quarterly analyst and investor conference call on Wednesday, April 27, 2022, at 9:00 AM ET. Please dial (877) 407-3982 approximately ten minutes before the call begins to participate. Additionally, a live webcast of the conference call will 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 in the United States. The Company owns 53 hotels, totaling approximately 13,200 guest rooms across 15 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; 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, 2021. 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 April 26, 2022. 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)
March 31, 2022
December 31, 2021
(Unaudited)
ASSETS
Assets:
Investment in hotel properties, net
$
5,975,857
$
6,079,333
Cash and cash equivalents
69,446
58,518
Restricted cash
26,507
33,729
Hotel receivables (net of allowance for doubtful accounts of $236 and $1,142, respectively)
40,645
37,045
Prepaid expenses and other assets
66,918
52,565
Total assets
$
6,179,373
$
6,261,190
LIABILITIES AND EQUITY
Liabilities:
Unsecured revolving credit facilities
$
–
$
–
Unsecured term loans, net of unamortized deferred financing costs
1,428,185
1,427,256
Convertible senior notes, net of unamortized debt premium and discount and deferred financing costs
745,634
745,401
Senior unsecured notes, net of unamortized deferred financing costs
49,858
49,838
Mortgage loans, net of unamortized debt discount and deferred financing costs
219,413
219,393
Accounts payable, accrued expenses and other liabilities
233,298
250,584
Lease liabilities – operating leases
319,375
319,426
Deferred revenues
78,756
69,064
Accrued interest
8,355
4,567
Distribution payable
11,565
11,756
Total liabilities
3,094,439
3,097,285
Commitments and contingencies
Shareholders’ Equity:
Preferred shares of beneficial interest, $0.01 par value (liquidation preference $740,000 at March 31, 2022 and December 31, 2021), 100,000,000 shares authorized; 29,600,000 shares issued and outstanding at March 31, 2022 and December 31, 2021
296
296
Common shares of beneficial interest, $0.01 par value, 500,000,000 shares authorized; 130,904,299 shares issued and outstanding at March 31, 2022 and 130,813,750 shares issued and outstanding at December 31, 2021
1,309
1,308
Additional paid-in capital
4,269,322
4,268,042
Accumulated other comprehensive income (loss)
12,092
(19,442
)
Distributions in excess of retained earnings
(1,206,019
)
(1,094,023
)
Total shareholders’ equity
3,077,000
3,156,181
Non-controlling interests
7,934
7,724
Total equity
3,084,934
3,163,905
Total liabilities and equity
$
6,179,373
$
6,261,190
Pebblebrook Hotel Trust
Consolidated Statements of Operations
($ in thousands, except share and per-share data)
(Unaudited)
Three months ended
March 31,
2022
2021
Revenues:
Room
$
168,632
$
53,463
Food and beverage
62,424
14,809
Other operating
27,012
15,371
Total revenues
$
258,068
$
83,643
Expenses:
Hotel operating expenses:
Room
$
42,463
$
16,710
Food and beverage
46,050
10,743
Other direct and indirect
85,847
45,228
Total hotel operating expenses
174,360
72,681
Depreciation and amortization
59,100
55,443
Real estate taxes, personal property taxes, property insurance, and ground rent
30,457
28,590
General and administrative
9,708
7,646
Impairment loss
60,983
14,856
Other operating expenses
1,123
562
Total operating expenses
335,731
179,778
Operating income (loss)
(77,663
)
(96,135
)
Interest expense
(22,572
)
(25,331
)
Other
19
29
Income (loss) before income taxes
(100,216
)
(121,437
)
Income tax (expense) benefit
–
(3
)
Net income (loss)
(100,216
)
(121,440
)
Net income (loss) attributable to non-controlling interests
(686
)
(858
)
Net income (loss) attributable to the Company
(99,530
)
(120,582
)
Distributions to preferred shareholders
(11,344
)
(8,139
)
Net income (loss) attributable to common shareholders
$
(110,874
)
$
(128,721
)
Net income (loss) per share available to common shareholders, basic
$
(0.85
)
$
(0.98
)
Net income (loss) per share available to common shareholders, diluted
$
(0.85
)
$
(0.98
)
Weighted-average number of common shares, basic
130,904,299
130,775,873
Weighted-average number of common shares, diluted
130,904,299
130,775,873
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
March 31,
2022
2021
2019
Net income (loss)
$
(100,216
)
$
(121,440
)
$
5,655
Adjustments:
Real estate depreciation and amortization
59,010
55,333
54,243
Impairment loss
60,983
14,856
–
FFO
$
19,777
$
(51,251
)
$
59,898
Distribution to preferred shareholders
(11,344
)
(8,139
)
(8,139
)
FFO available to common share and unit holders
$
8,433
$
(59,390
)
$
51,759
Transaction costs
15
111
2,497
Non-cash ground rent
1,938
880
972
Management/franchise contract transition costs
263
(44
)
3,172
Interest expense adjustment for acquired liabilities
722
539
271
Finance lease adjustment
722
812
691
Non-cash amortization of acquired intangibles
(542
)
(253
)
(437
)
Non-cash interest expense
49
735
1,778
One-time operation suspension expenses
–
132
–
Early extinguishment of debt
–
756
–
Amortization of share-based compensation expense
2,355
2,181
1,848
Adjusted FFO available to common share and unit holders
$
13,955
$
(53,541
)
$
62,551
FFO per common share – basic
$
0.06
$
(0.45
)
$
0.40
FFO per common share – diluted
$
0.06
$
(0.45
)
$
0.40
Adjusted FFO per common share – basic
$
0.11
$
(0.41
)
$
0.48
Adjusted FFO per common share – diluted
$
0.11
$
(0.41
)
$
0.48
Weighted-average number of basic common shares and units
131,765,112
131,636,686
130,801,030
Weighted-average number of fully diluted common shares and units
131,765,112
131,636,686
130,980,506
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.
The Company also evaluates its performance by reviewing Adjusted FFO 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, when combined with the primary GAAP presentation of net income (loss), more completely describes the Company’s operating performance. The Company adjusts FFO avai
Contacts
Raymond D. Martz, Chief Financial Officer, Pebblebrook Hotel Trust – (240) 507-1330