Pebblebrook Hotel Trust (NYSE: PEB) today announced that it has closed on the sale of the 826-space parking garage, which included 10,500 square feet of vacant ground floor space, at Revere Hotel Boston Common for $95.0 million.
The sale price of $95.0 million reflects a 23.5x EBITDA multiple and a 4.0% net operating income capitalization rate (after an assumed annual capital reserve of 4.0% of revenues) based on the trailing twelve-month operating performance for the period ended May 31, 2017.
“We are extremely pleased with the sale of the parking garage at Revere Hotel Boston Common,” noted Jon E. Bortz, Chairman, President and Chief Executive Officer of Pebblebrook Hotel Trust. “This sale generates significant value for our shareholders at a very favorable price and overall capitalization rate. To date, we have sold 5 hotels and 2 non-hotel assets under our strategic disposition plan that we initiated early last year, which has generated $676.8 million in gross proceeds. These property sales continue to allow us to take advantage of the value differential between the higher private market prices and values and the lower public market valuation of our company.”
Proceeds from the sale of the parking garage at Revere Hotel Boston Common will be utilized for general business purposes, which may include further reducing the Company’s outstanding debt or repurchasing the Company’s common shares. The sale of the parking garage at Revere Hotel Boston Common closed on June 23, 2017.
Due to the sale, the garage will not be reported in the Company’s Same-Property statistics for the second, third or fourth quarters; however, the results during the Company’s ownership period during the second quarter will continue to be included in Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), Adjusted Funds From Operations (“FFO”), Adjusted FFO per diluted share and Net Income. As a result of the sale, the Company expects that the Company’s financials will be impacted by the following amounts:
Second Quarter Impact
- Net Income increased by approximately $12.8 million as a result of the estimated gain on sale of hotel properties of approximately $13.0 million
- Same-Property EBITDA reduced by approximately $1.1 million
- Adjusted EBITDA reduced by approximately $0.2 million
- Adjusted FFO reduced by approximately $0.2 million
- Adjusted FFO per diluted share reduced by approximately $0.00 per share
Second, Third and Fourth Quarters Combined Impact
- Net Income increased by approximately $11.7 million as a result of the estimated gain on sale of hotel properties of approximately $13.0 million
- Same-Property EBITDA reduced by approximately $3.6 million
- Adjusted EBITDA reduced by approximately $2.7 million
- Adjusted FFO reduced by approximately $1.3 million
- Adjusted FFO per diluted share reduced by approximately $0.02 per share
The Company is not re-projecting or reaffirming its outlook for the second quarter or the full year issued on April 27, 2017 in any way other than to take into account the sale of the parking garage at Revere Hotel Boston Common.
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 detailed above.
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 28 hotels, with a total of 6,970 guest rooms. The Company owns hotels located in 9 states and the District of Columbia, including: Los Angeles, California (Beverly Hills, Santa Monica and West Hollywood); San Diego, California; San Francisco, California; Washington, DC; Coral Gables, Florida; Naples, Florida; Buckhead, Georgia; Boston, Massachusetts; Minneapolis, Minnesota; Portland, Oregon; Philadelphia, Pennsylvania; Nashville, Tennessee; Columbia River Gorge, Washington; and Seattle, Washington.
|Pebblebrook Hotel Trust|
|Parking Garage at Revere Hotel Boston Common|
|Reconciliation of Hotel Net Income to Hotel EBITDA and Hotel Net Operating Income|
|Trailing Twelve Months|
|(Unaudited, in millions)|
Twelve Months ended
|Hotel net income||$2.5|
Depreciation and amortization
|Hotel Net Operating Income||$3.8|
Note: Historically, the parking garage at Revere Hotel Boston Common's financial results were included in the financial results of Revere Hotel Boston Common. The amounts above, however, reflect the parking garage alone, and do not include the financial results of the hotel.
The Company has presented trailing twelve-month hotel EBITDA and trailing twelve-month hotel net operating income after capital reserves because it believes these measures provide investors and analysts with an understanding of the hotel-level operating performance. These non-GAAP measures do not represent amounts available for management’s discretionary use, because of needed capital replacement or expansion, debt service obligations or other commitments and uncertainties, nor are they indicative of funds available to fund the Company’s cash needs, including its ability to make distributions.
The Company’s presentation of the hotel’s trailing twelve-month EBITDA and trailing twelve-month net operating income after capital reserves should not be considered as an alternative to net income (computed in accordance with GAAP) as an indicator of the hotel’s financial performance. The table above is a reconciliation of the hotel’s trailing twelve-month EBITDA and net operating income after capital reserves calculations to net income in accordance with GAAP. Any differences are a result of rounding.
|Pebblebrook Hotel Trust|
|Historical Operating Data|
|($ in millions, except ADR and RevPAR)|
|Historical Operating Data:|
|Hotel EBITDA Margin||32.2%||37.2%||38.6%||32.0%||35.1%|
|Hotel EBITDA Margin||30.7%|
These historical hotel operating results include information for all of the hotels the Company owned as of June 23, 2017. 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. Any differences are a result of rounding.
The information above has not been audited and has been presented only for comparison purposes.
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