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Pebblebrook's (PEB) Operating Trends Match Expectations in Q2
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Pebblebrook Hotel Trust (PEB - Free Report) recently provided an update on its operating trend, whereby it noted that, for second-quarter 2023, overall demand and profitability trends continue to align with its expectations.
The company mentioned that although leisure demand is not as strong as the prior year, when demand for suites and other premium room upgrades was higher than historical norms, it remains healthy.
Also, the business transient and group categories are experiencing solid demand. However, the booking window for the same remains short-term. The group room night and average daily rate (ADR) pace is higher than the 2022 level.
For the company’s urban portfolio, the same-property total revenues for April surpassed the 2022 level by 9%. This growth in the urban markets was led by Chicago, San Francisco and Washington DC. However, the major redevelopments at Hilton San Diego Gaslamp Quarter, Hotel Solamar (conversion to Margaritaville) and Viceroy Santa Monica hampered the operating performance of this portfolio to a certain extent.
PEB’s resort portfolio’s same-property total revenues fell 10.5% year over year in April. The decline was primarily due to the major renovations at the Jekyll Island Club Resort and the Estancia La Jolla Hotel & Spa.
As a result of these major redevelopments, the same-property total revenues for the entire portfolio improved only 1% year over year in April. While occupancy improved 190 basis points from the year-ago period, ADR for the portfolio decreased 2.3%.
Per the operating update, Pebblebrook also made meaningful progress in completing major repairs at the 189-room LaPlaya Beach Resort & Club (“LaPlaya”) in Naples, FL, due to Hurricane Ian. The resort has been partially re-opened, and further improvements in resort amenities and services are expected to be completed later in the second quarter. It anticipates the full restoration of the resort by late 2023.
Further, this May, PEB disposed of Hotel Monaco Seattle in Seattle, WA, to a third party for $63.3 million. The sale price of the 189-room property denoted an EBITDA multiple of 11.4X and a net operating income capitalization rate of 7.6% based on the hotel’s operating performance for 2019.
It expects to complete the sale of Vintage Park Seattle later in the second quarter. It intends to use the sale proceeds for general corporate purposes, which may include reducing its outstanding debt and repurchasing its common and preferred shares.
In April, this lodging real estate investment trust (REIT) reported first-quarter 2023 adjusted funds from operations per share of 18 cents, beating the Zacks Consensus Estimate by 63.6%. Its quarterly performance was driven by healthy leisure demand and continued recovery in business demand, both group and transient, which benefited its urban markets and resorts.
The same-property total revenue per available room (RevPAR) was up 23.8% year over year in the quarter. The same-property EBITDA of $59.3 million was 25.4% above the 2022 level. Moreover, the company made $26.2 million in capital investments during the first quarter.
PEB’s strategic capital-deployment efforts bode well for its growth. The company aims to optimize the use of its dispositions’ proceeds. It is focused on acquisitions and development activities.
Shares of this Zacks Rank #3 (Hold) company have lost 2.7% in the quarter-to-date period compared with its industry’s decline of 4%.
Image Source: Zacks Investment Research
Nonetheless, interest rate hikes, inflation and macroeconomic uncertainty remain key concerns for the company.
The Zacks Consensus Estimate for Iron Mountain’s 2023 funds from operations (FFO) per share is pegged at $3.96.
The Zacks Consensus Estimate for Rexford Industrial’s current-year FFO per share is pegged at $2.19.
The Zacks Consensus Estimate for Stag Industrial’s ongoing year’s FFO per share is pegged at $2.25.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Pebblebrook's (PEB) Operating Trends Match Expectations in Q2
Pebblebrook Hotel Trust (PEB - Free Report) recently provided an update on its operating trend, whereby it noted that, for second-quarter 2023, overall demand and profitability trends continue to align with its expectations.
The company mentioned that although leisure demand is not as strong as the prior year, when demand for suites and other premium room upgrades was higher than historical norms, it remains healthy.
Also, the business transient and group categories are experiencing solid demand. However, the booking window for the same remains short-term. The group room night and average daily rate (ADR) pace is higher than the 2022 level.
For the company’s urban portfolio, the same-property total revenues for April surpassed the 2022 level by 9%. This growth in the urban markets was led by Chicago, San Francisco and Washington DC. However, the major redevelopments at Hilton San Diego Gaslamp Quarter, Hotel Solamar (conversion to Margaritaville) and Viceroy Santa Monica hampered the operating performance of this portfolio to a certain extent.
PEB’s resort portfolio’s same-property total revenues fell 10.5% year over year in April. The decline was primarily due to the major renovations at the Jekyll Island Club Resort and the Estancia La Jolla Hotel & Spa.
As a result of these major redevelopments, the same-property total revenues for the entire portfolio improved only 1% year over year in April. While occupancy improved 190 basis points from the year-ago period, ADR for the portfolio decreased 2.3%.
Per the operating update, Pebblebrook also made meaningful progress in completing major repairs at the 189-room LaPlaya Beach Resort & Club (“LaPlaya”) in Naples, FL, due to Hurricane Ian. The resort has been partially re-opened, and further improvements in resort amenities and services are expected to be completed later in the second quarter. It anticipates the full restoration of the resort by late 2023.
Further, this May, PEB disposed of Hotel Monaco Seattle in Seattle, WA, to a third party for $63.3 million. The sale price of the 189-room property denoted an EBITDA multiple of 11.4X and a net operating income capitalization rate of 7.6% based on the hotel’s operating performance for 2019.
It expects to complete the sale of Vintage Park Seattle later in the second quarter. It intends to use the sale proceeds for general corporate purposes, which may include reducing its outstanding debt and repurchasing its common and preferred shares.
In April, this lodging real estate investment trust (REIT) reported first-quarter 2023 adjusted funds from operations per share of 18 cents, beating the Zacks Consensus Estimate by 63.6%. Its quarterly performance was driven by healthy leisure demand and continued recovery in business demand, both group and transient, which benefited its urban markets and resorts.
The same-property total revenue per available room (RevPAR) was up 23.8% year over year in the quarter. The same-property EBITDA of $59.3 million was 25.4% above the 2022 level. Moreover, the company made $26.2 million in capital investments during the first quarter.
PEB’s strategic capital-deployment efforts bode well for its growth. The company aims to optimize the use of its dispositions’ proceeds. It is focused on acquisitions and development activities.
Shares of this Zacks Rank #3 (Hold) company have lost 2.7% in the quarter-to-date period compared with its industry’s decline of 4%.
Image Source: Zacks Investment Research
Nonetheless, interest rate hikes, inflation and macroeconomic uncertainty remain key concerns for the company.
Stocks to Consider
Some better-ranked stocks from the REIT sector are Iron Mountain (IRM - Free Report) , Rexford Industrial Realty (REXR - Free Report) and Stag Industrial (STAG - 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 Iron Mountain’s 2023 funds from operations (FFO) per share is pegged at $3.96.
The Zacks Consensus Estimate for Rexford Industrial’s current-year FFO per share is pegged at $2.19.
The Zacks Consensus Estimate for Stag Industrial’s ongoing year’s FFO per share is pegged at $2.25.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.