Pebblebrook Hotel Trust Outlook

Pebblebrook Hotel Trust Updates 2018 Outlook

Pebblebrook Hotel Trust (NYSE: PEB) today announced that it has revised its 2018 and fourth quarter 2018 outlook to reflect the acquisition of LaSalle Hotel Properties on November 30, 2018 and the sale of The Grand Hotel Minneapolis on December 4, 2018.

Pebblebrook Hotel Trust (NYSE: PEB) today announced that it has revised its 2018 and fourth quarter 2018 outlook to reflect the acquisition of LaSalle Hotel Properties on November 30, 2018 and the sale of The Grand Hotel Minneapolis on December 4, 2018. The Company’s revised outlook for 2018 is as follows:

       

2018 Outlook

as of December 19, 2018

Variance to Prior Outlook

as of November 1, 2018

       

Low

High

 

Low

High

     

 

($ and shares/units in millions, except per share and RevPAR data)

     

 

Net income (loss)

$49.1

$54.1

 

($65.8)

($65.8)

       

 

 

 

 

 

     

Adjusted EBITDAre

$250.3

$255.3

 

$6.4

$6.4

     

Adjusted EBITDAre growth rate

7.4%

9.5%

 

2.7%

2.7%

     

 

 

 

 

 

 

     

Adjusted FFO

$178.0

$183.0

 

($0.5)

($0.5)

     

Adjusted FFO per diluted share

$2.37

$2.44

 

($0.20)

($0.20)

     

Adjusted FFO per diluted share growth rate

(7.8%)

(5.1%)

 

(7.8%)

(7.8%)

     

 

 

 

 

 

 

This 2018 outlook is based, in part, on the following estimates and assumptions:

     

Same-Property RevPAR

$200

$202

 

($8)

($8)

     

Same-Property RevPAR growth rate

0.0%

1.0%

 

-

-

       

 

 

 

 

 

     

Same-Property EBITDA

$258.9

$263.9

 

$6.3

$6.3

     

Same-Property EBITDA growth rate

(0.8%)

1.2%

 

-

-

     

Same-Property EBITDA Margin

31.9%

32.4%

 

(1.2%)

(1.2%)

     

Same-Property EBITDA Margin growth rate

(75 bps)

(25 bps)

 

-

-

       

 

 

 

 

 

     

Corporate cash general and administrative expenses

$17.8

$17.8

 

$0.5

$0.5

     

Corporate non-cash general and administrative expenses

$6.2

$6.2

 

-

-

     

 

 

 

 

 

 

     

Total capital investments related to renovations, capital maintenance and return on investment projects

$60.0

$70.0

 

-

-

     

 

 

 

 

 

 

     

Weighted-average fully diluted shares and units

75.0

75.0

 

5.5

5.5

The Company’s revised outlook for the fourth quarter of 2018 is as follows:

         

New Q4 2018 Outlook

As of December 19, 2018

Variance to Old Outlook

As of November 1, 2018

         

Low

 

High

 

 

 

Low

 

High

     

 

 

($ and shares/units in millions, except per share and RevPAR data)

     

 

 

 

 

 

 

 

 

 

 

 

     

Net income (loss)

 

($63.6)

 

($58.6)

 

 

 

($65.8)

 

($65.8)

     

 

Same-Property RevPAR

 

$168

 

$169

 

 

 

($14)

 

($17)

     

Same-Property RevPAR growth rate

 

(1.0%)

 

-

 

 

 

2.5%

 

1.5%

         

 

 

 

 

 

 

 

 

 

     

Same-Property EBITDA

 

$52.6

 

$57.6

 

 

 

$6.3

 

$6.3

     

Same-Property EBITDA growth rate

 

(12.6%)

 

(4.3%)

 

 

 

1.4%

 

0.4%

     

Same-Property EBITDA Margin

 

24.4%

 

24.9%

 

 

 

(2.8%)

 

(2.8%)

     

Same-Property EBITDA Margin growth rate

 

(250 bps)

 

(200 bps)

 

 

 

100 bps

 

100 bps

         

 

 

 

 

 

 

 

 

 

     

Adjusted EBITDAre

 

$48.7

 

$53.7

 

 

 

$6.4

 

$6.4

     

Adjusted EBITDAre growth rate

 

4.1%

 

14.8%

 

 

 

13.7%

 

13.7%

     

 

 

 

 

 

 

 

 

 

 

 

     

Adjusted FFO

 

$24.5

 

$29.5

 

 

 

($0.5)

 

($0.5)

     

Adjusted FFO per diluted share

 

$0.27

 

$0.32

 

 

 

($0.09)

 

($0.11)

     

Adjusted FFO per diluted share growth rate

 

(44.9%)

 

(34.7%)

 

 

 

(18.4%)

 

(22.5%)

     

 

 

 

 

 

 

 

 

 

 

 

     

Weighted-average fully diluted shares and units

 

91.0

 

91.0

 

 

 

21.5

 

21.5

                           

The Company’s revised outlook incorporates one month’s performance (December) of the LaSalle-legacy portfolio as well as the negative impact of the labor strikes in Boston, San Diego and San Francisco, which extended beyond the Company’s previous estimates, and the wildfires outside of San Francisco and Los Angeles, which occurred after the Company provided its fourth quarter outlook on November 1, 2018. The Company’s revised outlook also incorporates the impact of the higher share count and outstanding debt following the closing of the acquisition of LaSalle Hotel Properties on November 30, 2018.

“We are very pleased with the progress we have made integrating the LaSalle-legacy portfolio and employees into Pebblebrook,” said Jon E. Bortz, Chairman, President and Chief Executive Officer of Pebblebrook. “Although the Same-Property EBITDA increase from the LaSalle-legacy hotels is not meaningful for the month of December, given that it is seasonally one of the slowest months for the portfolio, the performance of the LaSalle-legacy hotels has been in line with our expectations. In addition, we have reduced our fourth quarter outlook to reflect the sale of The Grand Hotel Minneapolis, which is not included in the Same-Property numbers for the fourth quarter, as well as the negative impact of the labor strikes and the wildfires.”

The Company’s integration of the 36 LaSalle-legacy hotels remains on track and within previous expectations. In addition, the expected transaction and closing costs for the LaSalle acquisition look to be below the Company’s previous forecast. The Company also remains confident that the previously announced $18 to $20 million of annualized corporate synergies and expense savings will be realized. The Company continues to make progress executing on its strategic disposition program to sell between $750.0 million and $1.25 billion of LaSalle-legacy hotels over the next six to twelve months.

The Company’s estimates and assumptions, including the Company’s outlook for 2018 and the fourth quarter of 2018 for Same-Property RevPAR, Same-Property RevPAR growth rate, Same-Property EBITDA, Same-Property EBITDA growth rate, Same-Property EBITDA Margin and Same-Property EBITDA Margin growth rate include the hotels owned as of December 19, 2018, as if they had been owned by the Company for all of 2017 and 2018, except for LaPlaya Beach Resort & Club, which is not included in the third or fourth quarters, Grand Hotel Minneapolis, which is not included in the fourth quarter, and all 36 LaSalle-legacy hotels, which are only included in December for both 2017 and 2018. The Company’s 2018 outlook assumes no additional acquisitions or dispositions beyond the hotels the Company owned as of December 19, 2018.

As of December 19, 2018, the total number of outstanding common shares and common units is approximately 130.8 million, which reflects the issuance of 61,399,104 common shares and 133,605 common units associated with the acquisition of LaSalle Hotel Properties.

If any of the foregoing estimates and assumptions prove to be inaccurate, actual results, including the outlook, may vary, and could vary significantly, from the amounts shown above.

About Pebblebrook Hotel Trust

Pebblebrook Hotel Trust is a publicly traded real estate investment trust (“REIT”) organized to opportunistically acquire and invest primarily in upper upscale, full-service hotels located in urban markets in major gateway cities. The Company owns 63 hotels, totaling approximately 15,300 guest rooms, located in 10 states and the District of Columbia, including: Del Mar, California; Los Angeles, California (Beverly Hills, Santa Monica and West Hollywood); San Diego, California; San Francisco, California; Santa Cruz, California; Washington, DC; Coral Gables, Florida; Key West, Florida; Naples, Florida; Buckhead, Georgia; Chicago, Illinois; Boston, Massachusetts; New York, New York; Portland, Oregon; Philadelphia, Pennsylvania; Nashville, Tennessee; Columbia River Gorge, Washington; and Seattle, Washington.



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