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Pebblebrook (PEB) Sells Retail & Parking Spaces for $30M
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Pebblebrook Hotel Trust (PEB - Free Report) disposed of the Marina City retail space, encompassing 146,000 square feet, and the two parking facilities adjacent to its Hotel Chicago Downtown, Autograph Collection, offering 900 spaces, to a third party.
The sale was carried out for $30 million and reflected a capitalization rate of 6.4% based on the estimated net operating income (NOI) for the year ending Dec 31, 2023.
The lodging real estate investment trust’s (REIT) strategic capital-deployment efforts highlight its prudent capital management practices and bode well for long-term growth. The company is focused on acquisitions and capitalizing on development activities and aims to optimize the use of its dispositions’ proceeds.
PEB was quite active on the disposition front this year and sold seven properties for $330.8 million. The sales reflect a combined EBITDA multiple of 20.6X and a NOI capitalization rate of 4.1%. The rate is calculated assuming a capital reserve of 4% against total property revenues based on the trailing 12-month performance before each sale completion.
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.
Recently, the company issued its operating update for November and noted that operating results for the month outpaced expectations, mainly driven by the solid performance in the urban portfolio.
The overall portfolio’s same-property Hotel revenue per available room (RevPAR) exhibited year-over-year growth of 6.4%, mainly driven by an increase in occupancy and average daily rate (ADR). This was, in turn, led by a strong performance in the urban portfolio, moderate declines in resort rates from normalizing trends and significant share gains throughout the portfolio from redevelopment investments over the last few years.
Total revenues increased around 7% year over year while same-property Hotel EBITDA rose more than 10% due to normalization in operating expense growth.
For the company’s urban portfolio, robust business transient and group business, as well as gains in RevPAR share from properties redeveloped in the last few years, resulted in same-property urban total revenues growth of 10% on a year-over-year basis. An increase in occupancy and rate led to a 9.4% rise in RevPAR. Non-room revenues climbed 11.6% from the year-ago period.
For its resort portfolio, same-property occupancy rose 5.5% in November from the same period in 2022. ADR declined 6.6% year over year as the increase in group demand was partially offset by normalization in leisure trends. From the beginning of the year through Dec 19, 2023, same-property resort occupancy fell 12% compared with 2019 levels while ADR grew at a solid 40%.
For the fourth quarter of 2023, the lodging REIT projects adjusted funds from operations (AFFO) per share in the range of 9-14 cents. The Zacks Consensus Estimate for AFFO is pegged at 11 cents per share, within expectations.
Same-property RevPAR is projected between $183 million and $188 million, indicating year-over-year growth of 1-4%. Same-property Hotel EBITDA is estimated between $57 million and $63 million.
Shares of this Zacks Rank #3 (Hold) company have gained 19.9% in the year-to-date period compared with the industry’s 6.3% upside.
Image Source: Zacks Investment Research
However, persistent macroeconomic uncertainty and a high-interest rate environment pose key near-term concerns for Pebblebrook.
The Zacks Consensus Estimate for EastGroup Properties’ 2023 FFO per share has moved marginally upward in the past two months to $7.70.
The consensus estimate for Stag Industrial’s ongoing year’s FFO per share has increased 1.3% over the past two months to $2.28.
The consensus mark for Park Hotels & Resorts’ current-year FFO per share has moved marginally northward over the past month to $1.99.
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 Retail & Parking Spaces for $30M
Pebblebrook Hotel Trust (PEB - Free Report) disposed of the Marina City retail space, encompassing 146,000 square feet, and the two parking facilities adjacent to its Hotel Chicago Downtown, Autograph Collection, offering 900 spaces, to a third party.
The sale was carried out for $30 million and reflected a capitalization rate of 6.4% based on the estimated net operating income (NOI) for the year ending Dec 31, 2023.
The lodging real estate investment trust’s (REIT) strategic capital-deployment efforts highlight its prudent capital management practices and bode well for long-term growth. The company is focused on acquisitions and capitalizing on development activities and aims to optimize the use of its dispositions’ proceeds.
PEB was quite active on the disposition front this year and sold seven properties for $330.8 million. The sales reflect a combined EBITDA multiple of 20.6X and a NOI capitalization rate of 4.1%. The rate is calculated assuming a capital reserve of 4% against total property revenues based on the trailing 12-month performance before each sale completion.
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.
Recently, the company issued its operating update for November and noted that operating results for the month outpaced expectations, mainly driven by the solid performance in the urban portfolio.
The overall portfolio’s same-property Hotel revenue per available room (RevPAR) exhibited year-over-year growth of 6.4%, mainly driven by an increase in occupancy and average daily rate (ADR). This was, in turn, led by a strong performance in the urban portfolio, moderate declines in resort rates from normalizing trends and significant share gains throughout the portfolio from redevelopment investments over the last few years.
Total revenues increased around 7% year over year while same-property Hotel EBITDA rose more than 10% due to normalization in operating expense growth.
For the company’s urban portfolio, robust business transient and group business, as well as gains in RevPAR share from properties redeveloped in the last few years, resulted in same-property urban total revenues growth of 10% on a year-over-year basis. An increase in occupancy and rate led to a 9.4% rise in RevPAR. Non-room revenues climbed 11.6% from the year-ago period.
For its resort portfolio, same-property occupancy rose 5.5% in November from the same period in 2022. ADR declined 6.6% year over year as the increase in group demand was partially offset by normalization in leisure trends. From the beginning of the year through Dec 19, 2023, same-property resort occupancy fell 12% compared with 2019 levels while ADR grew at a solid 40%.
For the fourth quarter of 2023, the lodging REIT projects adjusted funds from operations (AFFO) per share in the range of 9-14 cents. The Zacks Consensus Estimate for AFFO is pegged at 11 cents per share, within expectations.
Same-property RevPAR is projected between $183 million and $188 million, indicating year-over-year growth of 1-4%. Same-property Hotel EBITDA is estimated between $57 million and $63 million.
Shares of this Zacks Rank #3 (Hold) company have gained 19.9% in the year-to-date period compared with the industry’s 6.3% upside.
Image Source: Zacks Investment Research
However, persistent macroeconomic uncertainty and a high-interest rate environment pose key near-term concerns for Pebblebrook.
Stocks to Consider
Some better-ranked stocks from the REIT sector are EastGroup Properties (EGP - Free Report) , Stag Industrial (STAG - Free Report) and Park Hotels & Resorts (PK - Free Report) . PK currently sports a Zacks Rank #1 (Strong Buy), and EGP and STAG carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for EastGroup Properties’ 2023 FFO per share has moved marginally upward in the past two months to $7.70.
The consensus estimate for Stag Industrial’s ongoing year’s FFO per share has increased 1.3% over the past two months to $2.28.
The consensus mark for Park Hotels & Resorts’ current-year FFO per share has moved marginally northward over the past month to $1.99.
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.