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Pebblebrook (PEB) Sells Hotel Zoe Fisherman's Wharf for $68.5M
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Pebblebrook Hotel Trust (PEB - Free Report) closed the disposition of Hotel Zoe Fisherman’s Wharf in San Francisco, CA, on Nov 14 to a third party for $68.5 million. The move is in sync with the company’s investment strategy.
The lodging real estate investment trust (REIT) recorded a net loss of $1.2 million, net operating income of $2.2 million and EBITDA of $2.7 million for the 221-room hotel in the trailing 12 months ended Sep 30, 2023.
The sales price of the property denotes an EBITDA multiple of 25X and a net operating income (NOI) capitalization rate of 3.2%. The NOI capitalization rate is calculated after an assumed capital reserve of 4% of total hotel revenues.
The company intends to use the sale proceeds for general corporate purposes, including reducing its outstanding debt and repurchasing its common and preferred shares.
PEB’s strategic capital-deployment efforts reflect its prudent capital management practices and bode well for its growth. The company is focused on acquisitions and capitalizing on development activities and aims to optimize the use of its dispositions’ proceeds.
Notably, from the beginning of 2023 through Nov 15, PEB disposed of six properties for $300.8 million. The sales proceeds reflect a combined EBITDA multiple of 21.8X and a NOI capitalization rate of 3.8% based on the trailing 12-month performance prior to each sale completion.
Last month, the company reported healthy third-quarter 2023 results aided by continued recovery in urban demand driven by a sustained rebound in group and transient business travel and improving weekend leisure demand.
Adjusted funds from operations (AFFO) per share of 61 cents beat the Zacks Consensus Estimate of 57 cents. The figure was also at the higher end of the company’s outlook for the quarter.
The same-property total revenue per available room (RevPAR) was up marginally year over year.
The company made $33.1 million in capital investments throughout the portfolio. This excluded capital expenditures related to the repair and rebuilding of LaPlaya. For 2023, PEB expects to invest a total of $145-$155 million in capital improvements, excluding capital expenditures related to the repair and rebuilding of LaPlaya.
The lodging REIT projects AFFO per share in the range of 9-14 cents for the fourth quarter. The Zacks Consensus Estimate is pegged at 12 cents, within expectations. The same-property RevPAR is anticipated to witness year-over-year growth between 1% and 4%.
However, macroeconomic uncertainty and a high interest rate environment pose concerns for the company in the near term.
PEB currently carries a Zacks Rank #4 (Sell).
The company’s shares have lost 5.7% in the quarter-to-date period against the industry’s growth of 5.3%.
The Zacks Consensus Estimate for Welltower’s current-year FFO per share has moved marginally northward over the past week to $3.58.
The consensus estimate for EastGroup Properties’ 2023 FFO per share has moved marginally upward in the past week to $7.69.
The Zacks Consensus Estimate for Park Hotels & Resorts’ current-year FFO per share has moved 3.1% northward over the past month to $1.98.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Pebblebrook (PEB) Sells Hotel Zoe Fisherman's Wharf for $68.5M
Pebblebrook Hotel Trust (PEB - Free Report) closed the disposition of Hotel Zoe Fisherman’s Wharf in San Francisco, CA, on Nov 14 to a third party for $68.5 million. The move is in sync with the company’s investment strategy.
The lodging real estate investment trust (REIT) recorded a net loss of $1.2 million, net operating income of $2.2 million and EBITDA of $2.7 million for the 221-room hotel in the trailing 12 months ended Sep 30, 2023.
The sales price of the property denotes an EBITDA multiple of 25X and a net operating income (NOI) capitalization rate of 3.2%. The NOI capitalization rate is calculated after an assumed capital reserve of 4% of total hotel revenues.
The company intends to use the sale proceeds for general corporate purposes, including reducing its outstanding debt and repurchasing its common and preferred shares.
PEB’s strategic capital-deployment efforts reflect its prudent capital management practices and bode well for its growth. The company is focused on acquisitions and capitalizing on development activities and aims to optimize the use of its dispositions’ proceeds.
Notably, from the beginning of 2023 through Nov 15, PEB disposed of six properties for $300.8 million. The sales proceeds reflect a combined EBITDA multiple of 21.8X and a NOI capitalization rate of 3.8% based on the trailing 12-month performance prior to each sale completion.
Last month, the company reported healthy third-quarter 2023 results aided by continued recovery in urban demand driven by a sustained rebound in group and transient business travel and improving weekend leisure demand.
Adjusted funds from operations (AFFO) per share of 61 cents beat the Zacks Consensus Estimate of 57 cents. The figure was also at the higher end of the company’s outlook for the quarter.
The same-property total revenue per available room (RevPAR) was up marginally year over year.
The company made $33.1 million in capital investments throughout the portfolio. This excluded capital expenditures related to the repair and rebuilding of LaPlaya. For 2023, PEB expects to invest a total of $145-$155 million in capital improvements, excluding capital expenditures related to the repair and rebuilding of LaPlaya.
The lodging REIT projects AFFO per share in the range of 9-14 cents for the fourth quarter. The Zacks Consensus Estimate is pegged at 12 cents, within expectations. The same-property RevPAR is anticipated to witness year-over-year growth between 1% and 4%.
However, macroeconomic uncertainty and a high interest rate environment pose concerns for the company in the near term.
PEB currently carries a Zacks Rank #4 (Sell).
The company’s shares have lost 5.7% in the quarter-to-date period against the industry’s growth of 5.3%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the REIT sector are Welltower (WELL - Free Report) , EastGroup Properties (EGP - Free Report) and Park Hotels & Resorts (PK - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Welltower’s current-year FFO per share has moved marginally northward over the past week to $3.58.
The consensus estimate for EastGroup Properties’ 2023 FFO per share has moved marginally upward in the past week to $7.69.
The Zacks Consensus Estimate for Park Hotels & Resorts’ current-year FFO per share has moved 3.1% northward over the past month to $1.98.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.