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Pebblebrook Disposes of Westin Michigan to Strengthen Its Financials
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Key Takeaways
Pebblebrook sold the 752-room Westin Michigan Avenue Chicago for $72M to boost financial flexibility.
The deal reflected a 15.6X EBITDA multiple and 3.5% NOI cap rate based on recent performance.
Pebblebrook plans to cut debt and repurchase shares while keeping its 2025 outlook largely unchanged.
Pebblebrook Hotel Trust (PEB - Free Report) recently announced the disposition of the Westin Michigan Avenue Chicago in Chicago, IL, for $72 million. The property comprising 752 room units was sold to a third party. The sale highlights the company’s efforts to improve its financial flexibility.
Based on the financials for the trailing 12 months ended Sept. 30, 2025, the sales price represented a 15.6X EBITDA multiple and a 3.5% NOI capitalization rate, excluding consideration of a brand-mandated property improvement plan and other significant capital expenditures.
The company intends to utilize the sale proceeds for general corporate purposes, with a focus on improving its debt position. Part of it is to be used for the repurchase of the company’s common shares and is to be judiciously allocated to other capital priorities to maximize shareholder value.
PEB Strengthens Its Balance Sheet
Last November, PEB sold another property, the 133-room Montrose at Beverly Hills in West Hollywood, CA, for $44.25 million to a third party. With the completion of the two asset sales, Pebblebrook expects to have consolidated debt and convertible notes outstanding at $2.1 billion and $761 million of preferred equity. Its net debt to trailing 12-month corporate EBITDA is expected to be reduced to around 5.9X.
The company anticipates that the loss of hotel-level EBITDA for the remaining year will be fully offset by lower interest expense from reduced outstanding debt balance. As such, the above dispositions would not significantly impact the company’s 2025 financial performance, and its fourth-quarter and full-year 2025 outlook remains largely unchanged.
However, PEB is facing meaningful pressure from weak results in Los Angeles and Washington, D.C. The prolonged government shutdown is intensifying cancellations and slowing demand, while soft group business, weak international inbound travel and macro uncertainty are further limiting pricing power and RevPAR growth.
In the past three months, shares of this Zacks Rank #3 (Hold) company have declined 6.7% against the industry's growth of 1.7%.
The Zacks Consensus Estimate for WPC’s 2025 FFO per share has moved northward marginally over the past week to $4.92.
The consensus estimate for TRNO’s 2025 FFO per share has been revised upward by 4.6% to $2.71 over the past month.
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 Disposes of Westin Michigan to Strengthen Its Financials
Key Takeaways
Pebblebrook Hotel Trust (PEB - Free Report) recently announced the disposition of the Westin Michigan Avenue Chicago in Chicago, IL, for $72 million. The property comprising 752 room units was sold to a third party. The sale highlights the company’s efforts to improve its financial flexibility.
Based on the financials for the trailing 12 months ended Sept. 30, 2025, the sales price represented a 15.6X EBITDA multiple and a 3.5% NOI capitalization rate, excluding consideration of a brand-mandated property improvement plan and other significant capital expenditures.
The company intends to utilize the sale proceeds for general corporate purposes, with a focus on improving its debt position. Part of it is to be used for the repurchase of the company’s common shares and is to be judiciously allocated to other capital priorities to maximize shareholder value.
PEB Strengthens Its Balance Sheet
Last November, PEB sold another property, the 133-room Montrose at Beverly Hills in West Hollywood, CA, for $44.25 million to a third party. With the completion of the two asset sales, Pebblebrook expects to have consolidated debt and convertible notes outstanding at $2.1 billion and $761 million of preferred equity. Its net debt to trailing 12-month corporate EBITDA is expected to be reduced to around 5.9X.
The company anticipates that the loss of hotel-level EBITDA for the remaining year will be fully offset by lower interest expense from reduced outstanding debt balance. As such, the above dispositions would not significantly impact the company’s 2025 financial performance, and its fourth-quarter and full-year 2025 outlook remains largely unchanged.
However, PEB is facing meaningful pressure from weak results in Los Angeles and Washington, D.C. The prolonged government shutdown is intensifying cancellations and slowing demand, while soft group business, weak international inbound travel and macro uncertainty are further limiting pricing power and RevPAR growth.
In the past three months, shares of this Zacks Rank #3 (Hold) company have declined 6.7% against the industry's growth of 1.7%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the broader REIT sector are W.P. Carey (WPC - Free Report) and Terreno Realty (TRNO - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for WPC’s 2025 FFO per share has moved northward marginally over the past week to $4.92.
The consensus estimate for TRNO’s 2025 FFO per share has been revised upward by 4.6% to $2.71 over the past month.
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.