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Pebblebrook (PEB) Divests Hotel Vintage Seattle for $33.7M
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As previously announced, Pebblebrook Hotel Trust (PEB - Free Report) recently closed the disposition of Hotel Vintage Seattle situated in Seattle, WA. The 125-room property was sold to a third party for $33.7 million. The move is in sync with the company’s investment strategy.
PEB recorded a net operating income of $0.8 million and a Hotel EBITDA of $1.1 million for the hotel in the trailing 12 months ended Mar 31, 2023.
The sales price of the property denotes an EBITDA multiple of 31X and a net operating income capitalization rate of 2.3%. Moreover, based on the hotel’s operating performance for 2019, the sales price indicates an EBITDA multiple of 11.2X and a net operating income capitalization rate of 7.3%.
The net operating income for both periods is calculated after an assumed annual capital reserve of 4% of total hotel revenues. Thus, the disposition of the property seems a strategic fit for Pebblebrook.
The company 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 a similar move, this May, Pebblebrook concluded the sale of Hotel Monaco Seattle in Seattle, WA, to a third party for $63.3 million. It recorded a net operating income of $1.6 million and a Hotel EBITDA of $2.1 million for the hotel in the trailing 12 months ended Mar 31, 2023.
The sale price of the 189-room property reflects 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.
Further, in March 2023, the company sold off of The Hotel Colonnade Coral Gables, Autograph Collection, a 157-room property in Coral Gables, FL, to a third party for $63 million and 909 North Michigan Avenue, a 5,860 square feet, three-tenant fully occupied high-street retail parcel, to a third party for $27.3 million.
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.
Additionally, this lodging real estate investment trust (REIT) recently released its operating trend for the second quarter of 2023, whereby it noted that overall demand and profitability trends continue to align with its expectations.
PEB 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, although the booking window for the same remains short-term. The group room night and average daily rate pace is higher than the 2022 level.
Nonetheless, interest rate hikes, inflation and macroeconomic uncertainty remain key concerns for the company.
Shares of this Zacks Rank #3 (Hold) company have lost 3.9% in the quarter-to-date period compared with the industry’s fall of 7%.
Image: Bigstock
Pebblebrook (PEB) Divests Hotel Vintage Seattle for $33.7M
As previously announced, Pebblebrook Hotel Trust (PEB - Free Report) recently closed the disposition of Hotel Vintage Seattle situated in Seattle, WA. The 125-room property was sold to a third party for $33.7 million. The move is in sync with the company’s investment strategy.
PEB recorded a net operating income of $0.8 million and a Hotel EBITDA of $1.1 million for the hotel in the trailing 12 months ended Mar 31, 2023.
The sales price of the property denotes an EBITDA multiple of 31X and a net operating income capitalization rate of 2.3%. Moreover, based on the hotel’s operating performance for 2019, the sales price indicates an EBITDA multiple of 11.2X and a net operating income capitalization rate of 7.3%.
The net operating income for both periods is calculated after an assumed annual capital reserve of 4% of total hotel revenues. Thus, the disposition of the property seems a strategic fit for Pebblebrook.
The company 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 a similar move, this May, Pebblebrook concluded the sale of Hotel Monaco Seattle in Seattle, WA, to a third party for $63.3 million. It recorded a net operating income of $1.6 million and a Hotel EBITDA of $2.1 million for the hotel in the trailing 12 months ended Mar 31, 2023.
The sale price of the 189-room property reflects 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.
Further, in March 2023, the company sold off of The Hotel Colonnade Coral Gables, Autograph Collection, a 157-room property in Coral Gables, FL, to a third party for $63 million and 909 North Michigan Avenue, a 5,860 square feet, three-tenant fully occupied high-street retail parcel, to a third party for $27.3 million.
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.
Additionally, this lodging real estate investment trust (REIT) recently released its operating trend for the second quarter of 2023, whereby it noted that overall demand and profitability trends continue to align with its expectations.
PEB 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, although the booking window for the same remains short-term. The group room night and average daily rate pace is higher than the 2022 level.
Nonetheless, interest rate hikes, inflation and macroeconomic uncertainty remain key concerns for the company.
Shares of this Zacks Rank #3 (Hold) company have lost 3.9% in the quarter-to-date period compared with the industry’s fall of 7%.
Image Source: Zacks Investment Research
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 represents FFO — a widely used metric to gauge the performance of REITs.