BETHESDA, Md.–(BUSINESS WIRE)–$PEB #hotel–Pebblebrook Hotel Trust (NYSE: PEB):
2022
FINANCIAL RESULTS
Net loss of ($85.0) million
Same-Property Total RevPAR(1) increased 65.1% vs. 2021 and 93.0% recovered to 2019
Same-Property EBITDA(1) $391.0 million, 123.0% above 2021 and 84.5% recovered to 2019
Adjusted EBITDAre(1) $356.7 million, vs. $99.8 million in 2021
Adjusted FFO(1) per diluted share $1.69 vs. ($0.23) in 2021
Q4 FINANCIAL
HIGHLIGHTS
Net loss: ($39.9) million
Same-Property Total RevPAR(1) up 27.9% vs. 2021 and 93.9% recovered to 2019
Same-Property ADR(1), exceeded 2021 by 10.8% and 2019 by 18.4%
Same-Property EBITDA(1) $65.2 million, 23.3% above 2021 and 73.1% recovered to 2019
Adjusted EBITDAre(1) $57.4 million, 30% above 2021
Adjusted FFO(1) per diluted share $0.20 vs. $0.08 in 2021
HOTEL
OPERATING TRENDS
Leisure demand remains robust, with ADR premiums exceeding the prior year and pre-pandemic levels
Business transient and group demand continue to recover, and more strongly in urban markets; group pace year-over-year is up significantly for Q1 and all of 2023
Severe winter storms across the country in late December and early January increased cancellations, negatively impacting short-term operating results
Have not yet seen any slowdown in demand as a result of macro-economic concerns
PORTFOLIO
UPDATES &
REPOSITIONINGS
In 2022, acquired the Inn on Fifth Naples and Newport Harbor Island Resort for $330.0 million and sold 4 urban hotels generating $260.9 million in proceeds
Completed $108.4 million of capital investments throughout 2022, including the redevelopment, repositioning and transformations of Hotel Vitale into the 1 Hotel San Francisco and Grafton on Sunset into Hotel Ziggy on the Sunset Strip
Executed a contract to sell The Heathman Hotel Portland for $45.0 million, which is targeted to close shortly in Q1 2023
Q1 2023
OUTLOOK
Net loss: ($48.6) to ($43.6) million
Same-Property RevPAR(1) +15.0 % to +18.0% vs. 2022
Adjusted EBITDAre(1) $46.5 to $51.5 million vs. $46.5 million in 2022
Adjusted FFO(1) per diluted share $0.06 to $0.10, vs. $0.11 in 2022
(1) See tables later in this press release for a description of Same-Property information and reconciliations from net income (loss) to non-GAAP financial measures used in the table above and elsewhere in this press release.
“Our portfolio continued to make significant strides in 2022 in its recovery from the pandemic. Our unique lifestyle resorts performed extremely well, with Same-Property EBITDA far exceeding 2019 despite occupancy still a long way from being fully recovered. The rate premiums at our resorts achieved throughout 2022 are continuing into 2023, which is very encouraging. Our urban market hotels saw an accelerating recovery throughout the year, led by our hotels in Boston, San Diego, and Los Angeles. We are seeing further signs of recovery in Washington, DC, San Francisco, Portland, and Chicago, with our urban hotels generating healthy year-over-year increases in revenues and profitability. Despite the concerns with the macro environment, we remain cautiously optimistic in an improving operating environment as we kick off 2023. We also made important progress in our extensive property redevelopment program, completing the transformations of 1 Hotel San Francisco and Hotel Ziggy on the Sunset Strip and commencing the conversion and redevelopment of Hotel Solamar into Margaritaville San Diego Gaslamp Quarter, as well as several other major redevelopment projects that we expect will deliver outsized gains in revenue, EBITDA and valuation in future years.”
-Jon E. Bortz, Chairman, President, and Chief Executive Officer of Pebblebrook Hotel Trust
Fourth Quarter and Year-to-Date Highlights
Fourth Quarter
Year Ended December 31,
Same-Property and Corporate Highlights
2022
2021
(‘22 vs. ’21
growth)
2019
(‘22 vs.’19
growth)
2022
2021
(‘22 vs.’21
growth)
2019
(‘22 vs.’19
growth)
($ in millions except per share and RevPAR data)
Net income (loss)
($39.9)
($42.8)
$19.6
($85.0)
($186.4)
$115.7
Same-Property Room Revenues(1)
$197.5
$157.3
$213.7
$895.9
$536.4
$972.1
Same-Property Room Revenues variance
25.6%
(7.6%)
67.0%
(7.8%)
Same-Property Total Revenues(1)
$310.6
$242.8
$330.2
$1,368.3
$828.9
$1,468.7
Same-Property Total Revenues variance
27.9%
(5.9%)
65.1%
(6.8%)
Same-Property Total Expenses(1)
$245.4
$190.0
$241.0
$977.3
$653.6
$1,005.8
Same-Property Total Expenses variance
29.2%
1.8%
49.5%
(2.8%)
Same-Property EBITDA(1)
$65.2
$52.9
$89.2
$391.0
$175.3
$462.9
Same-Property EBITDA variance
23.3%
(26.9%)
123.0%
(15.5%)
Adjusted EBITDAre(1)
$57.4
$44.0
$102.3
$356.7
$99.8
$486.9
Adjusted EBITDAre variance
30.3%
(43.9%)
257.6%
(26.7%)
Adjusted FFO(1)
$25.9
$11.0
$73.4
$221.6
($30.5)
$352.4
Adjusted FFO per diluted share(1)
$0.20
$0.08
$0.56
$1.69
($0.23)
$2.69
Adjusted FFO per diluted share variance
150.0%
(64.3%)
NM
(37.2%)
2022 Monthly Results
Same-Property Portfolio(2)
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
($ in millions except ADR and RevPAR data)
Occupancy
34%
50%
62%
68%
67%
73%
74%
71%
73%
73%
59%
48%
ADR
$269
$308
$305
$319
$314
$323
$334
$309
$318
$310
$280
$267
RevPAR
$91
$153
$188
$218
$210
$236
$246
$219
$234
$226
$166
$129
Total Revenues
$57.0
$84.9
$116.2
$128.3
$129.4
$138.1
$142.3
$128.2
$133.4
$131.6
$95.5
$83.5
Total Revenues growth rate
(‘22 vs. ‘19)
(44%)
(21%)
(9%)
(3%)
(6%)
(1%)
4%
(2%)
5%
(1%)
(10%)
(8%)
EBITDA
($3.1)
$20.5
$38.8
$46.6
$42.9
$49.3
$50.4
$37.4
$43.0
$41.2
$17.4
$6.7
Hotel EBITDA growth rate
(’22 vs. ’19)
(115%)
(29%)
(9%)
1%
(11%)
(6%)
2%
(13%)
1%
(12%)
(38%)
(53%)
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 December 31, 2022, except 1 Hotel San Francisco (which is excluded from January-December given the property’s closure for renovation), Inn on Fifth (which is excluded from January-March given the property’s acquisition on May 11), Gurney’s Newport Resort & Marina (which is excluded from January-June given the property’s acquisition on June 23) and LaPlaya Beach Resort & Club (which is excluded from October-December, given the property’s closure following Hurricane Ian). Excludes information for the hotels the Company has sold during 2022: The Marker San Francisco from April-December (sold on June 28), Sofitel Philadelphia at Rittenhouse Square from July-December (sold on August 2), Hotel Spero from July-December (sold on August 25), and Hotel Vintage Portland from July-December (sold September 14).
“December performed slightly better than November, despite the severe winter storms during the holidays, indicating that overall travel demand continues to recover, despite macro-economic concerns,” continued Mr. Bortz. “For the fourth quarter, compared to 2019, Same-Property Total Revenues were off by 5.9%, with ADR up 18.4%. Same-Property EBITDA compared to 2019 was off 26.9%, partly due to more than $1 million of negative impact from the winter storms at the end of December. In addition, the closure of LaPlaya Beach Resort & Club (“LaPlaya”) in Naples, Florida in late September 2022, due to repairs and remediation from Hurricane Ian, negatively impacted Same-Property RevPAR by approximately 150 basis points and Same-Property EBITDA by more than $12.0 million. On the labor side, our hotel teams have made tremendous gains in hiring managers and hourly employees to fill open positions across our portfolio. While this has increased our fixed cost base, it will allow our properties to operate at higher occupancy levels as hotel demand continues to recover and strengthen in 2023.”
Update on Impact from Hurricane Ian
The Company continues to complete significant repairs and rebuilding at the 189-room LaPlaya Beach Resort & Club, and the property was fully re-energized and reconnected to the permanent electricity grid in late January. The resort’s Bay Tower partially reopened in late January 2023, and the Gulf Tower is expected to partially reopen shortly, barring any issues that remain out of our control that could delay this reopening. The property’s Beach House is forecasted to be fully remediated and restored by the fourth quarter of this year, but delays may further impact this timeline.
The Company anticipates all operational disruption will be covered under the Company’s business interruption and property insurance programs, net of deductibles. A preliminary business interruption settlement of a minimum of $7.2 million for the fourth quarter of 2022 with the Company’s insurance providers is anticipated and is included in the Company’s Q1 2023 outlook. Pebblebrook expects to record additional business interruption settlements in 2023 as these are determined and finalized with its insurance providers.
Capital Investments and Strategic Property Redevelopments
In the fourth quarter of 2022, the Company completed $40.2 million of capital investments throughout its portfolio. The Company completed $108.4 million of capital improvements and projects in 2022.
Since 2018, the Company has invested $567 million across its portfolio, including approximately $230 million in redevelopment projects expected to generate healthy increases in market share, revenues, and cash flow as these properties stabilize, similar to prior transformations.
The Company expects to invest $145.0 to $155.0 million in capital improvements during 2023, which includes completing the redevelopment and repositioning projects at Solamar Hotel (to be converted to Margaritaville Hotel San Diego Gaslamp Quarter), Hilton San Diego Gaslamp Quarter, Jekyll Island Club Resort, Viceroy Santa Monica Hotel, Estancia La Jolla Hotel & Spa, the four guesthouses at Southernmost Beach Resort, as well as the completion of the development of a new outdoor venue and 11 additional alternative lodging units at Skamania Lodge.
Update on Strategic Dispositions
The Company completed four hotel dispositions in 2022 totaling $260.9 million of proceeds. The Company has executed a contract to sell The Heathman Hotel in Portland, Oregon for $45.0 million. The sale of The Heathman Hotel is subject to normal closing conditions, and the Company offers no assurances that this sale will be completed on these terms or at all. The sale is targeted to be completed shortly. Since 2020, the Company has sold 11 urban hotels, including the upcoming anticipated sale of The Heathman Hotel, and acquired 6 leisure-focused resort properties, substantially transforming the Company’s portfolio.
Common and Preferred Share Repurchases
Since late October of 2022, the Company has repurchased 5.5 million common shares, or over 4 percent of the Company’s previously outstanding shares, at an average price of $15.12 per share, a 51% discount to the midpoint of the Company’s most recently published estimated Net Asset Value (“NAV”).
During the fourth quarter, in a single unsolicited transaction, the Company also repurchased 1.0 million shares of its Series H preferred shares for $16.00 per share, a 36% discount to the $25.00 liquidation value per share.
On February 17, 2023 the Company’s board of trustees authorized an additional $150 million common share repurchase program. As a result, the Company currently has a combined $224 million available under its common share repurchase programs. The Company’s board of trustees also authorized a $100 million preferred share repurchase program. This new repurchase program applies to all of the Company’s outstanding series of preferred equity shares. The repurchase programs may be suspended or discontinued at any time, and the Company is not obligated to repurchase any shares.
Balance Sheet and Liquidity
As of December 31, 2022, the Company had $52.3 million of consolidated cash, cash equivalents and restricted cash, in addition to $637.4 million of undrawn availability on its senior unsecured revolving credit facility, for total liquidity of $689.7 million. The Company had $2.4 billion in consolidated debt and convertible notes at an effective weighted-average interest rate of 3.5 percent. $1.9 billion, or 79% of the Company’s total outstanding debt and convertible notes, was at an effective weighted-average fixed interest rate of 2.7 percent, and $0.5 billion, or 21% percent, was at a weighted-average floating rate of 6.3 percent. In January, in a very attractive window in the market, the Company entered into an additional $400 million in swaps for 2- and 3-year maturities at 3.2% and 3.0%, respectively, effectively replacing an equivalent amount maturing in 2023.
Common and Preferred Dividends
On December 15, 2022, 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
$0.35625 per 5.7% Series H Cumulative Redeemable Preferred Share.
Update on Curator Hotel & Resort Collection
Curator Hotel & Resort Collection (“Curator”) is a distinct collection of experientially focused small brands and independent lifestyle hotels and resorts worldwide founded by Pebblebrook and several industry-leading independent lifestyle hotel operators. As of December 31, 2022, Curator had 97 member hotels. In the fourth quarter of 2022, Curator strengthened its roster with eight new member hotels. As of December 31, 2022, Curator had 100 master service agreements with preferred vendor partners, providing Curator member hotels with preferred pricing, enhanced operating terms, and early access to curated new technologies.
Q1 2023 Outlook
Based on current trends and assuming no material disruptions to travel caused by the COVID-19 pandemic or worsening macro-economic conditions, the Company’s outlook for Q1 2023 is as follows:
Q1 2023 Outlook
Low
High
($ and shares/units in millions, except per-share and
RevPAR data)
Net loss
($48.6)
($43.6)
Adjusted EBITDAre
$46.5
$51.5
Adjusted FFO
$7.3
$12.3
Adjusted FFO per diluted share
$0.06
$0.10
This Q1 2023 Outlook is based, in part, on the following estimates and assumptions:
Same-Property RevPAR
$168
$172
Same-Property RevPAR variance vs. 2022
15.0%
18.0%
Same-Property RevPAR variance vs. 2019
(8.5%)
(6.1%)
Same-Property EBITDA
$50.7
$55.7
Same-Property EBITDA variance vs. 2022
3.0%
13.1%
Same-Property EBITDA variance vs. 2019
(35.6%)
(29.2%)
The Company’s outlook incorporates the estimated negative impact of displaced revenues and EBITDA associated with the ongoing redevelopments and transformations of Solamar Hotel (conversion to Margaritaville Hotel San Diego Gaslamp Quarter), Hilton San Diego Gaslamp Quarter, Estancia La Jolla Hotel & Spa, Viceroy Santa Monica, Jekyll Island Club Resort, and a small renovation project at The Nines Portland. Same-Property RevPAR growth is expected to be negatively impacted by these major transformation projects in the first quarter by 225 to 350 basis points, and Same-Property EBITDA is expected to be reduced by $4.5 million to $6.5 million.
The first quarter outlook also incorporates an estimated $7.2 million for the preliminary business interruption settlement relating to lost income from the fourth quarter of 2022. This amount affects the Company’s Adjusted EBITDAre, Adjusted FFO, and net loss.
Year End 2022 Earnings Call
The Company will conduct its quarterly analyst and investor conference call on Wednesday, February 22, 2023, 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 and resorts in the United States. The Company owns 51 hotels and resorts, totaling approximately 12,800 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; statements regarding expectations of hotel dispositions; 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 February 21, 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)
December 31, 2022
December 31, 2021
ASSETS
Assets:
Investment in hotel properties, net
$
5,874,876
$
6,079,333
Hotels held for sale
44,861
–
Cash and cash equivalents
41,040
58,518
Restricted cash
11,229
33,729
Hotel receivables (net of allowance for doubtful accounts of $431 and $1,142, respectively)
45,258
37,045
Prepaid expenses and other assets
116,276
52,565
Total assets
$
6,133,540
$
6,261,190
LIABILITIES AND EQUITY
Liabilities:
Unsecured revolving credit facilities
$
–
$
–
Unsecured term loans, net of unamortized deferred financing costs
1,372,057
1,427,256
Convertible senior notes, net of unamortized debt premium and discount and deferred financing costs
746,326
745,401
Senior unsecured notes, net of unamortized deferred financing costs
49,920
49,838
Mortgage loans, net of unamortized debt discount and deferred financing costs
218,990
219,393
Accounts payable, accrued expenses and other liabilities
250,518
250,584
Lease liabilities – operating leases
320,402
319,426
Deferred revenues
73,603
69,064
Accrued interest
4,535
4,567
Liabilities related to hotels held for sale
428
–
Distribution payable
12,218
11,756
Total liabilities
3,048,997
3,097,285
Commitments and contingencies
Shareholders’ Equity:
Preferred shares of beneficial interest, $0.01 par value (liquidation preference $715,000
and $740,000 at December 31, 2022 and December 31, 2021, respectively), 100,000,000 shares
authorized; 28,600,000 shares issued and outstanding at December 31, 2022 and 29,600,000
shares issued and outstanding at December 31, 2021
286
296
Common shares of beneficial interest, $0.01 par value, 500,000,000 shares authorized;
126,345,293 shares issued and outstanding at December 31, 2022 and 130,813,750 shares issued
and outstanding at December 31, 2021
1,263
1,308
Additional paid-in capital
4,182,359
4,268,042
Accumulated other comprehensive income (loss)
35,724
(19,442
)
Distributions in excess of retained earnings
(1,223,117
)
(1,094,023
)
Total shareholders’ equity
2,996,515
3,156,181
Non-controlling interests
88,028
7,724
Total equity
3,084,543
3,163,905
Total liabilities and equity
$
6,133,540
$
6,261,190
Pebblebrook Hotel Trust
Consolidated Statements of Operations
($ in thousands, except share and per-share data)
Three months ended
December 31,
Twelve months ended
December 31,
2022
2021
2022
2021
(Unaudited)
Revenues:
Room
$
202,939
$
158,577
$
910,936
$
483,191
Food and beverage
85,474
62,625
346,702
157,848
Other operating
31,193
26,075
134,253
92,005
Total revenues
$
319,606
$
247,277
$
1,391,891
$
733,044
Expenses:
Hotel operating expenses:
Room
$
58,890
$
41,328
$
225,992
$
127,105
Food and beverage
63,684
43,807
243,543
111,928
Other direct and indirect
106,622
83,478
413,939
257,547
Total hotel operating expenses
229,196
168,613
883,474
496,580
Depreciation and amortization
59,837
58,615
239,583
224,251
Real estate taxes, personal property taxes, property insurance, and ground rent
28,016
27,445
126,134
111,675
General and administrative
9,512
11,363
39,187
38,166
Transaction costs
99
37
430
100
Impairment and other losses
3,763
–
89,882
14,856
(Gain) loss on sale of hotel properties
–
–
(6,194
)
(64,729
)
Other operating expenses
959
485
4,673
1,936
Total operating expenses
331,382
266,558
1,377,169
822,835
Operating income (loss)
(11,776
)
(19,281
)
14,722
(89,791
)
Interest expense
(29,235
)
(23,568
)
(99,988
)
(96,633
)
Other
406
28
562
113
Income (loss) before income taxes
(40,605
)
(42,821
)
(84,704
)
(186,311
)
Income tax (expense) benefit
738
(1
)
(277
)
(61
)
Net income (loss)
(39,867
)
(42,822
)
(84,981
)
(186,372
)
Net income (loss) attributable to non-controlling interests
831
(429
)
2,190
(1,514
)
Net income (loss) attributable to the Company
(40,698
)
(42,393
)
(87,171
)
(184,858
)
Distributions to preferred shareholders
(11,043
)
(11,344
)
(45,074
)
(42,105
)
Issuance costs of redeemed preferred shares
8,186
(12
)
8,186
(8,055
)
Net income (loss) attributable to common shareholders
$
(43,555
)
$
(53,749
)
$
(124,059
)
$
(235,018
)
Net income (loss) per share available to common shareholders, basic
$
(0.34
)
$
(0.41
)
$
(0.95
)
$
(1.80
)
Net income (loss) per share available to common shareholders, diluted
$
(0.34
)
$
(0.41
)
$
(0.95
)
$
(1.80
)
Weighted-average number of common shares, basic
129,116,171
130,813,750
130,453,944
130,804,354
Weighted-average number of common shares, diluted
129,116,171
130,813,750
130,453,944
130,804,354
Contacts
Raymond D. Martz, Chief Financial Officer, Pebblebrook Hotel Trust – (240) 507-1330