Press Release

Pebblebrook Hotel Trust Reports Third Quarter 2019 Results

Company Release - 10/24/2019 4:06 PM ET

BETHESDA, Md.--(BUSINESS WIRE)-- Pebblebrook Hotel Trust (NYSE: PEB):

Q3 FINANCIAL
HIGHLIGHTS

 

  • Net income: $30.0 million
  • Same-Property EBITDA1: $145.1 million, (6.5%) YOY
  • Adj. EBITDAre1: $136.5 million, +96.7% YOY
  • Adj. FFO1 per diluted share: $0.77, +4.1% YOY

 

 

 

Q3 OPERATING
HIGHLIGHTS

 

  • Same-Property Total RevPAR1 (1.0%) YOY and RevPAR1 (2.2%) YOY
  • Adjusted EBITDA, Adjusted FFO and Adjusted FFO/diluted share in-line
  • Hotel operating performance slightly below expectations due to further moderation in demand growth and negative impact of lost business from Hurricane Dorian in September
  • RevPAR growth in Philadelphia and Boston offset by weak performance in Seattle, Chicago, San Francisco and Washington, D.C.

 

 

 

STRATEGIC
DISPOSITION
PLAN

 

  • Sold or executed contracts for $171.2 million: sold Hotel Amarano Burbank ($72.9 million), Rouge Hotel ($42.0 million), and Hotel Madera ($23.3 million); and Topaz Hotel contract executed at $33.0 million
  • On track to sell $1.45 billion of properties from the closing of last year’s corporate acquisition; property transaction market remains healthy and active, and pricing remains stable and attractive

 

 

 

BALANCE SHEET

 

  • Net Debt to Trailing 12-Month Corporate EBITDA1 at end of Q3: 4.6x
  • Further progress reducing leverage and optimizing portfolio through strategic property sales since corporate acquisition late last year

 

 

 

2019 OUTLOOK

 

  • Net income: $99.2 million to $103.2 million (midpoint down $52.0 million)
  • Same-Property RevPAR1 Growth Rate: 0.6% to 1.2% (midpoint down 60 bps)
  • Adj. EBITDAre1: $472.7 million to $476.7 million (midpoint down $8.7 million)
  • Adj. FFO1 per diluted share: $2.57 to $2.60 (midpoint down $0.06)

 

During the third quarter, we continued to execute on our strategic disposition program, completing property sales in Los Angeles and Washington, D.C. at very favorable prices and EBITDA multiples. We’re now three quarters of the way to our 2019 property disposition financial goal. Pursuant to our plans to create long-term value, we’ve made further progress on our redevelopment plans, making operator changes at two properties in Washington, D.C. to be redeveloped and repositioned next year, as well as announcing our future plans to comprehensively renovate and rebrand Paradise Point Resort & Spa as a Margaritaville Island Resort. We also managed to meet our overall corporate performance outlook for the quarter, despite slightly weaker than expected results at the property level due to transient travel demand moderating further and lost business due to the negative impact of Hurricane Dorian in September.”

-Jon E. Bortz, Chairman, President and Chief Executive Officer of Pebblebrook Hotel Trust

(1) See tables later in this press release for a description of Same-Property information and reconciliations from net income (loss) to non-GAAP financial measures.

Third Quarter and Year to Date Highlights

Third Quarter

 

Nine Months Ended
September 30,

2019

 

2018

 

2019

 

2018

($ in millions except per share and RevPAR data)

Net income

$30.0

$29.9

$96.2

$112.7

 

Same-Property RevPAR(1)

$226.67

$231.73

$215.28

$213.29

Same-Property RevPAR growth rate

(2.2%)

0.9%

 

 

 

 

 

 

Same-Property Total RevPAR(1)

$323.82

$327.07

 

$311.83

$306.86

Same-Property Total RevPAR growth rate

(1.0%)

 

 

1.6%

 

 

 

 

 

 

 

Same-Property Total Expenses(1)

$275.3

$269.5

 

$818.6

$791.7

Same-Property Total Expense growth rate

2.2%

 

 

3.4%

 

 

 

 

 

 

 

Same-Property EBITDA(1)

$145.1

$155.1

$405.7

$413.1

Same-Property EBITDA growth rate

(6.5%)

(1.8%)

Same-Property EBITDA Margin(1)

34.5%

36.5%

 

33.1%

34.3%

 

Adjusted EBITDAre(1)

$136.5

$69.4

$378.5

$201.4

Adjusted EBITDAre growth rate

96.7%

 

 

87.9%

 

 

Adjusted FFO(1)

$100.5

$51.2

$272.9

$153.4

Adjusted FFO per diluted share(1)

$0.77

$0.74

$2.08

$2.21

Adjusted FFO per diluted share growth rate

4.1%

 

 

(5.9%)

 

(1)

See tables later in this press release for a description of same-property information and reconciliations from net income (loss) to non-GAAP financial measures, including Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), EBITDA for Real Estate (“EBITDAre”), Adjusted EBITDAre, Funds from Operations ("FFO"), FFO per share, Adjusted FFO and Adjusted FFO per share.

 

 

 

For the details as to which hotels are included in Same-Property Room Revenue Per Available Room (“RevPAR”), Same-Property Total Revenue Per Available Room (“Total RevPAR”), Average Daily Rate (“ADR”), Occupancy, Revenues, Expenses, EBITDA and EBITDA Margins appearing in the table above and elsewhere in this press release, refer to the Same-Property Statistical Data table footnotes later in this press release.

  • Net Income: The Company’s net income was $30.0 million in the third quarter of 2019, an increase of $0.1 million as compared to the same period of 2018.
  • Same-Property Operating Statistics: Same-Property Total RevPAR declined 1.0 percent from the third quarter of 2018. Same-Property RevPAR for the third quarter decreased 2.2 percent from the prior year to $226.67, with Same-Property ADR declining 0.6 percent to $259.96 and Same-Property Occupancy decreasing by 1.6 percent to 87.2 percent.
  • Same-Property EBITDA and Margins: The Company’s hotels generated $145.1 million of Same-Property EBITDA for the quarter ended September 30, 2019, down 6.5 percent versus the same period of 2018. Same-Property Revenues declined 1.0 percent, while Same-Property Expenses increased 2.2 percent, resulting in Same-Property EBITDA Margin for the quarter decreasing 202 basis points to 34.5 percent.
  • Operating Performance: Excluding the mandatory California Proposition 13 increases in real estate taxes for the California properties acquired as part of the Company’s corporate acquisition in November 2018, Same-Property Expenses increased just 1.2 percent during the third quarter, resulting in Same-Property EBITDA Margin for the quarter decreasing 143 basis points. Year to date through September, also excluding the Proposition 13 impact, Same-Property Expenses increased 2.4 percent, and Same-Property EBITDA margins declined 53 basis points.

“During the third quarter, our overall performance versus our expectations was impacted by weaker performance in San Diego, Los Angeles, San Francisco and Washington, D.C.,” said Mr. Bortz. “We also lost business at our hotels and resorts located in South Florida, due to the threat of Hurricane Dorian in early September. Despite the moderating demand growth environment, our hotel teams working closely with our asset managers continue to do a tremendous job limiting expense growth and finding creative and sustainable ways to increase efficiencies and productivity and take advantage of our larger scale through executing on new portfolio-wide initiatives, which are now running at an annual rate of savings of $5 million, halfway to achieving our $10 million objective. We expect to steadily execute on our portfolio-wide initiatives program to generate additional expense savings and operating synergies, create long-term value and achieve our objective by the end of next year.”

Update on Strategic Property Redevelopment Plan

The Company continued to implement its Strategic Property Redevelopment Plan during the third quarter. On July 1, 2019, the Company completed two third-party operator transitions: Mason & Rook Hotel and Donovan Hotel, both in Washington, D.C., are now operated by Viceroy Hotels & Resorts. On July 15, 2019, the Company announced that it had executed a license agreement to convert its Paradise Point Resort & Spa in San Diego, California, to a Margaritaville Island Resort after a comprehensive renovation. Year to date, the Company has made considerable progress on its strategic property repositionings, completing third-party operator or brand changes at 9 hotels and resorts across the portfolio.

Capital Investments

In the third quarter, the Company completed $42.1 million of capital investments throughout its portfolio. The Company has completed $111.1 million of capital investments and projects year to date through September 2019, including the first phase of major renovation and property improvements at Hilton San Diego Resort & Spa, which was completed in the third quarter.

The Company intends to start additional major renovation and repositioning projects in the fourth quarter of 2019 or early next year, with completion expected in the first half of next year, including:

  • Donovan Hotel (estimated at $25.0 million, or $130 thousand per key), which will encompass an exhaustive redevelopment and repositioning, expected to begin with the closure of the hotel by the end of November, and upon anticipated completion in the second quarter of 2020, the hotel will be relaunched as the seventh hotel in the Company’s “Unofficial Z Collection” proprietary brand;
  • Westin San Diego Gaslamp Quarter (estimated at $16.0 million), which will consist of a guestroom, lobby, restaurant and bar renovation to commence next month, expected to be completed in the first quarter of 2020;
  • Embassy Suites San Diego Bay Downtown (estimated at $16.0 million), which will receive a comprehensive guest suite renovation to also commence next month and be completed in the first quarter of 2020;
  • Le Parc Suite Hotel (estimated at $12.5 million), which will consist of a comprehensive hotel renovation, including the guestrooms, lobby and public areas, to commence in the first quarter of 2020, expected to be completed in the second quarter of 2020;
  • Viceroy Santa Monica Hotel (estimated at $12.0 million), which will undergo a lobby, public area and meeting space renovation, featuring both interior and exterior enhancements, expected to commence late in the fourth quarter of 2019 and be completed in the second quarter of 2020;
  • Hilton San Diego Resort & Spa Phase 2 (estimated at $10.5 million), which will undergo a reconfiguration and complete renovation of the public areas including the porte-cochere, lobby, entry, pool, restaurants and bars, retail shop, creation of additional event venues, and upgrading of guestrooms and suites, expected to begin late this year and be completed in the second quarter of 2020;
  • Chaminade Resort & Spa (estimated at $10.0 million), which will reposition the property through a redevelopment of the property’s public space, restaurant, lobby, porte-cochere/entry, exterior patio, all meeting space and venues commencing late in the fourth quarter or early in the first quarter, expected to be completed in the second quarter of 2020; and
  • Mason & Rook Hotel (estimated at $8.0 million), which will undergo a complete renovation and upgrading of the entry, lobby, guestrooms, restaurant and bar areas, rooftop pool, bar venue and its meeting spaces beginning in the first quarter of 2020, expected to be completed late in the second quarter of 2020, at which time it will be rebranded as the Viceroy Washington, D.C.

Additionally, the Company intends to continue the following upgrade and repositioning program:

  • The Marker Resort Key West (estimated at $5.0 million), which commenced in the third quarter of 2019, including a renovation of the lobby, pool area, bar, restaurant, fitness center, corridors, guestrooms and an addition of suites, expected to be completed by the end of 2019.

Update on Strategic Disposition Plan

During the third quarter, the Company completed $138.2 million of property sales, including Hotel Amarano Burbank in Los Angeles, California, for $72.9 million, Rouge Hotel in Washington, D.C. for $42.0 million, and Hotel Madera in Washington, D.C. for $23.3 million. In combination with the $310.8 million of sales from the first and second quarters of 2019, the Company has sold properties for a total of $449.0 million year to date.

In October 2019, the Company also announced it executed a contract to sell the Topaz Hotel in Washington, D.C. for $33.0 million. This sale is subject to normal closing conditions, and the Company offers no assurances that the sale will be completed on these terms, or at all. The Company is targeting to complete the transaction late in the fourth quarter of 2019.

The Company continues to be encouraged with pricing levels and overall buyer interest in the investment markets. The Company estimates it will complete or execute contracts to sell an additional $150.0 million of properties during the fourth quarter, which includes the sale of Topaz Hotel for $33.0 million, and an additional $117.0 million for other properties.

Since the Company commenced its strategic disposition plan on November 30, 2018, and assuming the sale of Topaz Hotel is completed, 13 hotels will have been successfully sold or contracted to sell, generating approximately $1.33 billion of gross sales proceeds. The sales to date, including the assumed sale of Topaz Hotel, reflect a very favorable 15.6x EBITDA multiple and a 5.5 percent net operating income capitalization rate (after an assumed annual capital reserve of 4.0 percent of total hotel revenues) based on the operating performance for 2018 of the properties sold.

Balance Sheet and Shareholder Distributions

As of September 30, 2019, the Company had $2.2 billion in consolidated debt at an effective weighted-average interest rate of 3.5 percent. Approximately $1.8 billion, or 80 percent of the Company’s total outstanding debt, was at a weighted-average fixed interest rate of 3.5 percent, and approximately $0.4 billion, or 20 percent, was at a weighted-average floating interest rate of 3.6 percent. Of the Company’s outstanding debt, $2.0 billion was in the form of unsecured term loans and $100.0 million was outstanding on its $650.0 million senior unsecured revolving credit facility. As of September 30, 2019, the Company had $56.8 million of consolidated cash, cash equivalents and restricted cash.

As of September 30, 2019, the Company’s fixed charge coverage ratio was 3.0 times, and total net debt to trailing 12-month corporate EBITDA was 4.6 times.

On September 16, 2019, the Company declared a regular quarterly cash dividend of $0.38 per share on its common shares as well as a regular quarterly cash dividend for the following preferred shares of beneficial interest:

  • $0.40625 per 6.50% Series C Cumulative Redeemable Preferred Share;
  • $0.39844 per 6.375% Series D Cumulative Redeemable Preferred Share;
  • $0.39844 per 6.375% Series E Cumulative Redeemable Preferred Share; and
  • $0.39375 per 6.30% Series F Cumulative Redeemable Preferred Share.

2019 Outlook

The Company is adjusting its 2019 Outlook to reflect the third quarter results and the expectation that the slowing hotel demand trends and economic uncertainty experienced throughout the third quarter will continue in the fourth quarter.

The 2019 Outlook, which assumes $600.0 million of assets are sold over the course of 2019, with $449.0 million sold year to date and approximately $150.0 million of additional assets sold by the end of the year, is as follows:

Updated
2019 Outlook
as of October 24, 2019

 

Variance to Prior
Outlook

as of July 25, 2019

Low

 

High

 

Low

 

High

($ and shares/units in millions, except per share and RevPAR data)
 
Net income

$99.20

$103.20

($51.00)

($53.00)

 
Adjusted EBITDAre

$472.70

$476.70

($7.70)

($9.70)

Adjusted EBITDAre growth rate

85.50%

87.00%

-3.00%

-3.80%

 
Adjusted FFO

$336.90

$340.90

($7.00)

($9.00)

Adjusted FFO per diluted share

$2.57

$2.60

($0.05)

($0.07)

Adjusted FFO per diluted share growth rate

4.90%

6.10%

-2.00%

-2.90%

 

This 2019 Outlook is based, in part, on the following estimates and assumptions:

 
Asset Sales during 2019

$600.00

$600.00

-

-

Q4 Asset Sales at a 5.5% 2018 NOI Capitalization Rate

$150.00

$150.00

$30.00

$30.00

 
U.S. GDP growth rate

1.50%

2.00%

-

-

U.S. Hotel Industry RevPAR growth rate

0.60%

1.00%

(40 bps) (100 bps)
 
Same-Property RevPAR

$209

$211

($1)

($1)

Same-Property RevPAR growth rate

0.60%

1.20%

-0.40%

-0.80%

 
Same-Property EBITDA

$509.50

$513.50

($7.70)

($9.70)

Same-Property EBITDA growth rate

-2.10%

-1.40%

(150 bps) (200 bps)
Same-Property EBITDA Margin

32.10%

32.20%

-0.50%

-0.50%

Same-Property EBITDA Margin growth rate (100 bps) (90 bps) (50 bps) (50 bps)
 
Corporate cash general and administrative expenses

$26.60

$26.60

($0.50)

($0.50)

Corporate non-cash general and administrative expenses

$8.40

$8.40

-

-

Preopening and other corporate expenses

$3.20

$3.20

-

-

 
Total capital investments related to renovations, capital maintenance and return on investment projects

$160.00

$170.00

$10.00

-

 
Weighted-average fully diluted shares and units

131

131

-0.1

-0.1

 

The Company’s Outlook for the fourth quarter of 2019 is as follows:

Fourth Quarter
2019 Outlook

Low

High

 

($ and shares/units in millions, except per share and RevPAR data)

Net income (loss)

$3.0

$7.0

 

 

 

Q4 Asset Sales at a 5.5% 2018 NOI Capitalization Rate

$150.0

$150.0

 

 

 

Same-Property RevPAR

$192

$196

Same-Property RevPAR growth rate

0.0%

2.0%

 

 

Same-Property EBITDA

$103.8

$107.8

Same-Property EBITDA growth rate

(3.5%)

0.2%

Same-Property EBITDA Margin

28.6%

29.1%

Same-Property EBITDA Margin growth rate

(75 bps)

(25 bps)

 

 

 

Adjusted EBITDAre

$94.2

$98.2

Adjusted EBITDAre growth rate

76.3%

83.8%

 

 

 

Adjusted FFO

$64.0

$68.0

Adjusted FFO per diluted share

$0.49

$0.52

Adjusted FFO per diluted share growth rate

48.5%

57.6%

 

 

 

Weighted-average fully diluted shares and units

131.1

131.1

The 2019 Outlook excludes the following hotels from Same-Property RevPAR, Same-Property RevPAR growth rate, Same-Property EBITDA, Same-Property EBITDA growth rate, Same-Property EBITDA Margin and Same-Property EBITDA Margin growth rate:

  • Liaison Capitol Hill and Hotel Palomar Washington, D.C. for all quarters of both 2019 and 2018 due to their sales during the first quarter of 2019;
  • Onyx Hotel for the second, third and fourth quarters of both 2019 and 2018 due to its sale during the second quarter of 2019;
  • Hotel Amarano Burbank, Rouge Hotel and Hotel Madera for the third and fourth quarters of both 2019 and 2018 due to their sales during the third quarter of 2019;
  • Topaz Hotel for the fourth quarter of both 2019 and 2018 due to its pending sale, expected to be completed during the fourth quarter of 2019; and
  • Donovan Hotel for the fourth quarter of both 2019 and 2018 due to its expected closure in the fourth quarter of 2019 for redevelopment, renovation and rebranding.

If any of the foregoing estimates and assumptions prove to be inaccurate, actual results, including the outlook, may vary and could vary significantly from the amounts shown above.

Third Quarter 2019 Earnings Call

The Company will conduct its quarterly analyst and investor conference call on Friday, October 25, 2019, at 9:00 AM ET. To participate in the conference call, please dial (877) 705-6003 approximately ten minutes before the call begins. Additionally, a live webcast of the conference call will be available through the Company’s website. To access the webcast, log on to www.pebblebrookhotels.com ten minutes before the conference call. A replay of the conference call webcast will be archived and available online through the Investor Relations section of www.pebblebrookhotels.com.

About Pebblebrook Hotel Trust

Pebblebrook Hotel Trust (NYSE: PEB) is a publicly-traded real estate investment trust (“REIT”) and the largest owner of urban and resort lifestyle hotels in the United States. The Company owns 57 hotels, totaling approximately 14,100 guestrooms across 16 urban and resort markets, with a focus on the west coast gateway cities. For more information, visit www.pebblebrookhotels.com and follow us at @PebblebrookPEB.

For further information about the Company’s business and financial results, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of the Company’s SEC filings, including, but not limited to, its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, copies of which may be obtained at the Investor Relations section of the Company’s website at www.pebblebrookhotels.com.

This press release contains certain “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Reform Act of 1995. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “seek,” “anticipate,” “estimate,” “approximately,” “believe,” “could,” “project,” “predict,” “forecast,” “continue,” “assume,” “plan,” references to “outlook” or other similar words or expressions. Forward-looking statements are based on certain assumptions and can include future expectations, future plans and strategies, financial and operating projections and forecasts and other forward-looking information and estimates. Examples of forward-looking statements include the following: projections and forecasts of U.S. GDP growth, U.S. hotel industry RevPAR growth, the Company’s net income, FFO, EBITDA, Adjusted FFO, Adjusted EBITDAre, RevPAR, EBITDA Margin and EBITDA Margin growth, and the Company’s expenses, share count or other financial items; descriptions of the Company’s plans or objectives for future operations, acquisitions, dispositions or services; forecasts of the Company’s future economic performance and its share of future markets; forecasts of hotel industry performance; and descriptions of assumptions underlying or relating to any of the foregoing expectations including assumptions regarding the timing of their occurrence. These forward-looking statements are subject to various risks and uncertainties, many of which are beyond the Company’s control, which could cause actual results to differ materially from such statements. These risks and uncertainties include, but are not limited to, the state of the U.S. economy and the supply of hotel properties, and other factors as are described in greater detail in the Company’s filings with the Securities and Exchange Commission, including, without limitation, the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. Unless legally required, the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

All information in this press release is as of October 24, 2019. The Company undertakes no duty to update the statements in this press release to conform the statements to actual results or changes in the Company’s expectations.

For additional information or to receive press releases via email, please visit our website at www.pebblebrookhotels.com

Pebblebrook Hotel Trust
Consolidated Balance Sheets
($ in thousands, except for per share data)
September 30, 2019 December 31, 2018
 
(Unaudited)
ASSETS
Assets:
Investment in hotel properties, net

$

6,329,968

 

$

6,534,193

 

Hotels held for sale

 

28,851

 

 

-

 

Ground lease asset, net

 

-

 

 

199,745

 

Cash and cash equivalents

 

29,758

 

 

83,366

 

Restricted cash

 

27,048

 

 

24,445

 

Hotel receivables (net of allowance for doubtful accounts of $517 and $526, respectively)

 

70,990

 

 

59,897

 

Prepaid expenses and other assets

 

57,998

 

 

76,702

 

Total assets

$

6,544,613

 

$

6,978,348

 

 
 
 
LIABILITIES AND EQUITY
 
Liabilities:
Unsecured revolving credit facilities

$

100,000

 

$

170,000

 

Term loans, net of unamortized deferred financing costs

 

1,963,828

 

 

2,409,284

 

Senior unsecured notes, net of unamortized deferred financing costs

 

99,540

 

 

99,469

 

Mortgage loans, net of unamortized deferred financing costs

 

66,360

 

 

68,145

 

Accounts payable and accrued expenses

 

537,016

 

 

360,279

 

Deferred revenues

 

56,995

 

 

54,741

 

Accrued interest

 

5,674

 

 

2,741

 

Liabilities related to hotels held for sale

 

298

 

 

-

 

Distribution payable

 

58,436

 

 

43,759

 

Total liabilities

 

2,888,147

 

 

3,208,418

 

Commitments and contingencies
 
Equity:
Preferred shares of beneficial interest, $0.01 par value (liquidation preference $510,000 at September 30, 2019 and December 31, 2018), 100,000,000 shares authorized; 20,400,000 shares issued and outstanding at September 30, 2019 and December 31, 2018

204

 

 

 

204

Common shares of beneficial interest, $0.01 par value, 500,000,000 shares authorized; 130,484,956 issued and outstanding at September 30, 2019 and 130,311,289 issued and outstanding at December 31, 2018

1,305

 

 

 

1,303

Additional paid-in capital

 

4,067,529

 

 

4,065,804

 

Accumulated other comprehensive income (loss)

 

(36,672

)

 

1,330

 

Distributions in excess of retained earnings

 

(386,631

)

 

(308,806

)

Total shareholders' equity

 

3,645,735

 

 

3,759,835

 

Non-controlling interests

 

10,731

 

 

10,095

 

Total equity

 

3,656,466

 

 

3,769,930

 

Total liabilities and equity

$

6,544,613

 

$

6,978,348

 

Pebblebrook Hotel Trust
Consolidated Statements of Operations
($ in thousands, except for per share data)
(Unaudited)
 

Three months ended
September 30,

 

Nine months ended
September 30,

2019

 

2018

 

2019

 

2018

 
Revenues:
Room

$

296,622

 

$

146,907

 

$

851,899

 

$

411,396

 

Food and beverage

 

90,088

 

 

43,141

 

 

274,803

 

 

136,919

 

Other operating

 

36,842

 

 

15,432

 

 

106,102

 

 

44,721

 

Total revenues

$

423,552

 

$

205,480

 

$

1,232,804

 

$

593,036

 

 
Expenses:
Hotel operating expenses:
Room

$

71,878

 

$

34,675

 

$

209,707

 

$

99,540

 

Food and beverage

 

64,690

 

 

30,687

 

 

194,981

 

 

93,611

 

Other direct and indirect

 

110,922

 

 

54,301

 

 

330,617

 

 

160,663

 

Total hotel operating expenses

 

247,490

 

 

119,663

 

 

735,305

 

 

353,814

 

Depreciation and amortization

 

69,775

 

 

24,765

 

 

177,376

 

 

74,229

 

Real estate taxes, personal property taxes, property insurance, and ground rent

 

31,588

 

 

11,206

 

 

94,009

 

 

35,809

 

General and administrative

 

8,315

 

 

6,663

 

 

25,753

 

 

14,794

 

Transaction costs

 

4,035

 

 

3,188

 

 

7,576

 

 

5,545

 

(Gain) loss and other operating expenses

 

1,529

 

 

(357

)

 

6,219

 

 

(11,376

)

Total operating expenses

 

362,732

 

 

165,128

 

 

1,046,238

 

 

472,815

 

Operating income (loss)

 

60,820

 

 

40,352

 

 

186,566

 

 

120,221

 

Interest expense

 

(26,465

)

 

(12,647

)

 

(84,512

)

 

(33,274

)

Other

 

7

 

 

3,931

 

 

23

 

 

29,409

 

Income (loss) before income taxes

 

34,362

 

 

31,636

 

 

102,077

 

 

116,356

 

Income tax (expense) benefit

 

(4,382

)

 

(1,719

)

 

(5,924

)

 

(3,628

)

Net income (loss)

 

29,980

 

 

29,917

 

 

96,153

 

 

112,728

 

Net income (loss) attributable to non-controlling interests

 

89

 

 

125

 

 

254

 

 

424

 

Net income (loss) attributable to the Company

 

29,891

 

 

29,792

 

 

95,899

 

 

112,304

 

Distributions to preferred shareholders

 

(8,139

)

 

(4,023

)

 

(24,417

)

 

(12,070

)

Net income (loss) attributable to common shareholders

$

21,752

 

$

25,769

 

$

71,482

 

$

100,234

 

 
 
Net income (loss) per share available to common shareholders, basic

$

0.17

 

$

0.37

 

$

0.55

 

$

1.45

 

Net income (loss) per share available to common shareholders, diluted

$

0.17

 

$

0.37

 

$

0.55

 

$

1.44

 

 
Weighted-average number of common shares, basic

 

130,484,956

 

 

68,912,185

 

 

130,467,193

 

 

68,900,402

 

Weighted-average number of common shares, diluted

 

130,622,130

 

 

69,255,858

 

 

130,690,342

 

 

69,267,098

 

Pebblebrook Hotel Trust
Reconciliation of Net Income (Loss) to FFO and Adjusted FFO
($ in thousands, except per share data)
(Unaudited)
 

Three months ended
September 30,

 

Nine months ended
September 30,

2019

 

2018

 

2019

 

2018

 
Net income (loss)

$

29,980

 

$

29,917

 

$

96,153

 

$

112,728

 

Adjustments:
Depreciation and amortization

 

69,712

 

 

24,713

 

 

177,195

 

 

74,072

 

FFO

$

99,692

 

$

54,630

 

$

273,348

 

$

186,800

 

Distribution to preferred shareholders

 

(8,139

)

 

(4,023

)

 

(24,417

)

 

(12,070

)

FFO available to common share and unit holders

$

91,553

 

$

50,607

 

$

248,931

 

$

174,730

 

Transaction costs

 

4,035

 

 

3,188

 

 

7,576

 

 

5,545

 

Non-cash ground rent

 

1,318

 

 

600

 

 

3,274

 

 

1,807

 

Management/franchise contract transition costs

 

810

 

 

7

 

 

4,783

 

 

55

 

Interest expense adjustment for acquired liabilities

 

216

 

 

184

 

 

689

 

 

702

 

Capital lease adjustment

 

810

 

 

143

 

 

2,193

 

 

427

 

Non-cash amortization of acquired intangibles

 

(315

)

 

334

 

 

(1,050

)

 

610

 

Estimated hurricane related repairs and cleanup costs

 

-

 

 

74

 

 

-

 

 

1,452

 

Gain on insurance settlement

 

-

 

 

(866

)

 

(672

)

 

(13,954

)

Business interruption proceeds

 

-

 

 

866

 

 

672

 

 

6,135

 

Unrealized gain on investment

 

-

 

 

(3,891

)

 

-

 

 

(24,070

)

Non-cash interest expense

 

1,379

 

 

-

 

 

4,761

 

 

-

 

Early extinguishment of debt

 

726

 

 

-

 

 

1,698

 

 

-

 

Adjusted FFO available to common share and unit holders

$

100,532

 

$

51,246

 

$

272,855

 

$

153,439

 

 
FFO per common share - basic

$

0.70

 

$

0.73

 

$

1.90

 

$

2.53

 

FFO per common share - diluted

$

0.70

 

$

0.73

 

$

1.90

 

$

2.51

 

Adjusted FFO per common share - basic

$

0.77

 

$

0.74

 

$

2.09

 

$

2.22

 

Adjusted FFO per common share - diluted

$

0.77

 

$

0.74

 

$

2.08

 

$

2.21

 

 
Weighted-average number of basic common shares and units

 

130,854,912

 

 

69,148,536

 

 

130,837,149

 

 

69,136,753

 

Weighted-average number of fully diluted common shares and units

 

130,992,086

 

 

69,492,209

 

 

131,060,298

 

 

69,503,449

 

To supplement the Company’s consolidated financial statements presented in accordance with U.S. generally accepted accounting principles ("GAAP"), this press release includes certain non-GAAP financial measures as defined under Securities and Exchange Commission ("SEC") rules.

These measures are not in accordance with, or an alternative to, measures prepared in accordance with GAAP and may be different from similarly titled non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with the Company’s results of operations determined in accordance with GAAP.

Funds from Operations (“FFO”) - FFO represents net income (computed in accordance with GAAP), excluding gains or losses from sales of properties, plus real estate-related depreciation and amortization and after adjustments for unconsolidated partnerships. The Company considers FFO a useful measure of performance for an equity REIT because it facilitates an understanding of the Company's operating performance without giving effect to real estate depreciation and amortization, which assume that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, the Company believes that FFO provides a meaningful indication of its performance. The Company also considers FFO an appropriate performance measure given its wide use by investors and analysts. The Company computes FFO in accordance with standards established by the Board of Governors of Nareit in its March 1995 White Paper (as amended in November 1999 and April 2002), which may differ from the methodology for calculating FFO utilized by other equity REITs and, accordingly, may not be comparable to that of other REITs. Further, FFO does not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments and uncertainties, nor is it indicative of funds available to fund the Company’s cash needs, including its ability to make distributions. The Company presents FFO per diluted share calculations that are based on the outstanding dilutive common shares plus the outstanding Operating Partnership units for the periods presented.

The Company also evaluates its performance by reviewing Adjusted FFO because it believes that adjusting FFO to exclude certain recurring and non-recurring items described below provides useful supplemental information regarding the Company's ongoing operating performance and that the presentation of Adjusted FFO, when combined with the primary GAAP presentation of net income (loss), more completely describes the Company's operating performance. The Company adjusts FFO for the following items, which may occur in any period, and refers to this measure as Adjusted FFO:

- Transaction costs: The Company excludes transaction costs expensed during the period because it believes that including these costs in FFO does not reflect the underlying financial performance of the Company and its hotels.
- Non-cash ground rent: The Company excludes the non-cash ground rent expense, which is primarily made up of the straight-line rent impact from a ground lease.
- Management/franchise contract transition costs: The Company excludes one-time management and/or franchise contract transition costs expensed during the period because it believes that including these costs in FFO does not reflect the underlying financial performance of the Company and its hotels.
- Interest expense adjustment for acquired liabilities: The Company excludes interest expense adjustment for acquired liabilities assumed in connection with acquisitions, because it believes that including these non-cash adjustments in FFO does not reflect the underlying financial performance of the Company.
- Capital lease adjustment: The Company excludes the effect of non-cash interest expense from capital leases because it believes that including these non-cash adjustments in FFO does not reflect the underlying financial performance of the Company.
- Non-cash amortization of acquired intangibles: The Company excludes the non-cash amortization of acquired intangibles, which includes but is not limited to the amortization of favorable and unfavorable leases or management agreements and above/below market real estate tax reduction agreements because it believes that including these non-cash adjustments in FFO does not reflect the underlying financial performance of the Company.
- Estimated hurricane related repairs and cleanup costs: The Company excludes estimated hurricane related repairs and cleanup costs during the period because it believes that including these adjustments in FFO does not reflect the underlying financial performance of the Company and its hotels.
- Gain on insurance settlement: The Company excludes the gain on insurance settlement because the Company believes that including this adjustment in FFO does not reflect the underlying financial performance of the Company and its hotels.
- Business interruption proceeds: The Company includes business interruption proceeds because the Company believes that including these proceeds reflects the underlying financial performance of the Company and its hotels.
- Unrealized gain on investment: The Company excludes the unrealized gain on investment because the Company believes that including this adjustment in FFO does not reflect the underlying financial performance of the Company and its hotels.
- Non-cash interest expense and early extinguishment of debt: The Company excludes non-cash interest expense and early extinguishment of debt because the Company believes that including this adjustment in FFO does not reflect the underlying financial performance of the Company and its hotels.
 
The Company’s presentation of FFO in accordance with the Nareit White Paper, and as adjusted by the Company, should not be considered as an alternative to net income (computed in accordance with GAAP) as an indicator of the Company’s financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of its liquidity.
Pebblebrook Hotel Trust
Reconciliation of Net Income (Loss) to EBITDA, EBITDAre and Adjusted EBITDAre
($ in thousands)
(Unaudited)
 

Three months ended
September 30,

 

Nine months ended
September 30,

2019

 

2018

 

2019

 

2018

 
Net income (loss)

$

29,980

 

$

29,917

 

$

96,153

 

$

112,728

 

Adjustments:
Interest expense

 

26,465

 

 

12,647

 

 

84,512

 

 

33,274

 

Income tax expense (benefit)

 

4,382

 

 

1,719

 

 

5,924

 

 

3,628

 

Depreciation and amortization

 

69,775

 

 

24,765

 

 

177,376

 

 

74,229

 

EBITDA / EBITDAre

$

130,602

 

$

69,048

 

$

363,965

 

$

223,859

 

Transaction costs

 

4,035

 

 

3,188

 

 

7,576

 

 

5,545

 

Non-cash ground rent

 

1,318

 

 

600

 

 

3,274

 

 

1,807

 

Management/franchise contract transition costs

 

810

 

 

7

 

 

4,783

 

 

55

 

Non-cash amortization of acquired intangibles

 

(315

)

 

334

 

 

(1,050

)

 

610

 

Estimated hurricane related repairs and cleanup costs

 

-

 

 

74

 

 

-

 

 

1,452

 

Gain on insurance settlement

 

-

 

 

(866

)

 

(672

)

 

(13,954

)

Business interruption proceeds

 

-

 

 

866

 

 

672

 

 

6,135

 

Unrealized gain on investment

 

-

 

 

(3,891

)

 

-

 

 

(24,070

)

Adjusted EBITDAre

$

136,450

 

$

69,360

 

$

378,548

 

$

201,439

 

To supplement the Company’s consolidated financial statements presented in accordance with U.S. generally accepted accounting principles ("GAAP"), this press release includes certain non-GAAP financial measures as defined under Securities and Exchange Commission ("SEC") rules.

These measures are not in accordance with, or an alternative to, measures prepared in accordance with GAAP and may be different from similarly titled non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Company’s results of operations determined in accordance with GAAP.

Earnings before Interest, Taxes, and Depreciation and Amortization ("EBITDA") - The Company believes that EBITDA provides investors a useful financial measure to evaluate its operating performance, excluding the impact of our capital structure (primarily interest expense) and our asset base (primarily depreciation and amortization).

Earnings before Interest, Taxes, and Depreciation and Amortization for Real Estate ("EBITDAre") - The Company believes that EBITDAre provides investors a useful financial measure to evaluate its operating performance, and the Company presents EBITDAre in accordance with the National Association of Real Estate Investment Trusts ("Nareit") guidelines, as defined in its September 2017 white paper "Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate." EBITDAre adjusts EBITDA for the following items, which may occur in any period, and refers to these measures as Adjusted EBITDAre: (1) gains or losses on the disposition of depreciated property, including gains or losses on change of control; (2) impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate; and (3) adjustments to reflect the entity's share of EBITDAre of unconsolidated affiliates.

The Company also evaluates its performance by reviewing Adjusted EBITDAre because it believes that adjusting EBITDAre to exclude certain recurring and non-recurring items described below provides useful supplemental information regarding the Company's ongoing operating performance and that the presentation of Adjusted EBITDAre, when combined with the primary GAAP presentation of net income (loss), more completely describes the Company's operating performance. The Company adjusts EBITDAre for the following items, which may occur in any period, and refers to these measures as Adjusted EBITDAre:

- Transaction costs: The Company excludes transaction costs expensed during the period because it believes that including these costs in EBITDAre does not reflect the underlying financial performance of the Company and its hotels.
- Non-cash ground rent: The Company excludes the non-cash ground rent expense, which is primarily made up of the straight-line rent impact from a ground lease.
- Management/franchise contract transition costs: The Company excludes one-time management and/or franchise contract transition costs expensed during the period because it believes that including these costs in EBITDAre does not reflect the underlying financial performance of the Company and its hotels.
- Non-cash amortization of acquired intangibles: The Company excludes the non-cash amortization of acquired intangibles, which includes but is not limited to the amortization of favorable and unfavorable leases or management agreements and above/below market real estate tax reduction agreements because it believes that including these non-cash adjustments in EBITDAre does not reflect the underlying financial performance of the Company and its hotels.
- Estimated hurricane related repairs and cleanup costs: The Company excludes estimated hurricane related repairs and cleanup costs during the period because it believes that including these adjustments in EBITDAre does not reflect the underlying financial performance of the Company and its hotels.
- Gain on insurance settlement: The Company excludes the gain on insurance settlement because the Company believes that including this adjustment in EBITDAre does not reflect the underlying financial performance of the Company and its hotels.
- Business interruption proceeds: The Company includes business interruption proceeds because the Company believes that including these proceeds reflects the underlying financial performance of the Company and its hotels.
- Unrealized gain on investment: The Company excludes the unrealized gain on investment because the Company believes that including this adjustment in EBITDAre does not reflect the underlying financial performance of the Company and its hotels.

The Company’s presentation of EBITDAre, and as adjusted by the Company, should not be considered as an alternative to net income (computed in accordance with GAAP) as an indicator of the Company’s financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of its liquidity.
Pebblebrook Hotel Trust
Strategic Disposition Program Summary
(Unaudited)
 
Date of
disposition
Sales price
($ in millions)
EBITDA
multiple
Net operating
capitalization rate
Sales price
per key
($ in thousands)
 
 
Hotel dispositions:
Park Central San Francisco and Park Central New York / WestHouse New York 11/30/2018

$

715.0

 

16.5x

 

5.1%

 

$

443

Gild Hall, New York 11/30/2018

 

38.8

15.8x

5.3%

 

298

Embassy Suites Philadelphia Center City 11/30/2018

 

67.0

11.0x

8.1%

 

233

The Grand Hotel Minneapolis 12/4/2018

 

30.0

8.5x

10.4%

 

214

The Liaison Capitol Hill 2/14/2019

 

111.0

16.9x

4.9%

 

324

Hotel Palomar Washington, DC 2/22/2019

 

141.5

14.9x

5.9%

 

422

Onyx Hotel 5/29/2019

 

58.3

15.3x

5.9%

 

521

Hotel Amarano Burbank 7/16/2019

 

72.9

15.8x

5.7%

 

552

Rouge Hotel 9/12/2019

 

42.0

17.4x

5.0%

 

307

Hotel Madera 9/26/2019

 

23.3

14.3x

5.7%

 

284

Topaz Hotel* TBD

 

33.0

19.5x

4.4%

 

333

 
Total / Average

$

1,333

15.6x

5.52%

$

391

The EBITDA multiple and net operating capitalization rate are based on the applicable hotel's estimated trailing twelve-month operating performance for 2018. The net operating income capitalization rate is based on an assumed annual capital reserve of 4.0% of total hotel revenues. The EBITDA Multiple and net operating capitalization rate for Hotel Amarano Burbank reflect an estimated adjustment for the annualized impact of real estate taxes for California's Proposition 13 because the Company believes the adjusted hotel results for this period provide investors and analysts with an understanding of the hotel-level operating performance.

These hotel results for the respective periods may include information reflecting operational performance prior to the Company's ownership of the hotels. Any differences are a result of rounding.

The information above has not been audited and is presented only for comparison purposes.

*The contracted sale of Topaz Hotel is subject to normal closing conditions, and the Company offers no assurances that this sale will be completed.
Pebblebrook Hotel Trust
Reconciliation of 2019 Outlook Net Income (Loss) to FFO and Adjusted FFO
($ in millions, except per share data)
(Unaudited)
 

Three months ending
December 31, 2019

 

Year ending
December 31, 2019

Low

 

High

 

Low

 

High

 
Net income (loss)

$

3

 

$

7

 

$

99

 

$

103

 

Adjustments:
Depreciation and amortization

 

80

 

 

80

 

 

257

 

 

257

 

Loss (gain) on sale of hotel properties

 

(21

)

 

(21

)

 

(21

)

 

(21

)

FFO

$

62

 

$

66

 

$

335

 

$

339

 

Distribution to preferred shareholders

 

(8

)

 

(8

)

 

(33

)

 

(33

)

FFO available to common share and unit holders

$

54

 

$

58

 

$

302

 

$

306

 

Non-cash ground rent

 

4

 

 

4

 

 

7

 

 

7

 

Non-cash interest expense

 

1

 

 

1

 

 

6

 

 

6

 

Other

 

5

 

 

5

 

 

22

 

 

22

 

Adjusted FFO available to common share and unit holders

$

64

 

$

68

 

$

337

 

$

341

 

 
FFO per common share - diluted

$

0.41

 

$

0.44

 

$

2.31

 

$

2.34

 

Adjusted FFO per common share - diluted

$

0.49

 

$

0.52

 

$

2.57

 

$

2.60

 

 
Weighted-average number of fully diluted common shares and units

 

131.1

 

 

131.1

 

 

131.0

 

 

131.0

 

To supplement the Company’s consolidated financial statements presented in accordance with U.S. generally accepted accounting principles ("GAAP"), this press release includes certain non-GAAP financial measures as defined under Securities and Exchange Commission ("SEC") rules.

These measures are not in accordance with, or an alternative to, measures prepared in accordance with GAAP and may be different from similarly titled non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with the Company’s results of operations determined in accordance with GAAP.

Funds from Operations (“FFO”) - FFO represents net income (computed in accordance with GAAP), excluding gains or losses from sales of properties, plus real estate-related depreciation and amortization and after adjustments for unconsolidated partnerships. The Company considers FFO a useful measure of performance for an equity REIT because it facilitates an understanding of the Company's operating performance without giving effect to real estate depreciation and amortization, which assume that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, the Company believes that FFO provides a meaningful indication of its performance. The Company also considers FFO an appropriate performance measure given its wide use by investors and analysts. The Company computes FFO in accordance with standards established by the Board of Governors of Nareit in its March 1995 White Paper (as amended in November 1999 and April 2002), which may differ from the methodology for calculating FFO utilized by other equity REITs and, accordingly, may not be comparable to that of other REITs. Further, FFO does not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments and uncertainties, nor is it indicative of funds available to fund the Company’s cash needs, including its ability to make distributions. The Company presents FFO per diluted share calculations that are based on the outstanding dilutive common shares plus the outstanding Operating Partnership units for the periods presented.

The Company also evaluates its performance by reviewing Adjusted FFO because it believes that adjusting FFO to exclude certain recurring and non-recurring items described below provides useful supplemental information regarding the Company's ongoing operating performance and that the presentation of Adjusted FFO, when combined with the primary GAAP presentation of net income (loss), more completely describes the Company's operating performance. The Company adjusts FFO for the following items, which may occur in any period, and refers to this measure as Adjusted FFO:

- Non-cash ground rent: The Company excludes the non-cash ground rent expense, which is primarily made up of the straight-line rent impact from a ground lease.
- Non-cash interest expense: The Company excludes non-cash interest expense because the Company believes that including this adjustment in FFO does not reflect the underlying financial performance of the Company and its hotels.
- Other: The Company excludes other expenses, which include transaction costs, management/franchise contract transition costs, interest expense adjustment for acquired liabilities, capital lease adjustment, non-cash amortization of acquired intangibles and estimated hurricane related repairs and cleanup costs because the Company believes that including these non-cash adjustments in FFO does not reflect the underlying financial performance of the Company and its hotels.

The Company’s presentation of FFO in accordance with the Nareit White Paper, and as adjusted by the Company, should not be considered as an alternative to net income (computed in accordance with GAAP) as an indicator of the Company’s financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of its liquidity.

Any differences are a result of rounding.
Pebblebrook Hotel Trust
Reconciliation of 2019 Outlook Net Income (Loss) to EBITDA, EBITDAre and Adjusted EBITDAre
($ in millions)
(Unaudited)
 
Three months ending
December 31, 2019
Year ending
December 31, 2019
Low High Low High
 
Net income (loss)

$

3

 

$

7

 

$

99

 

$

103

 

Adjustments:
Interest expense and income tax expense

 

24

 

 

24

 

 

114

 

 

114

 

Depreciation and amortization

 

80

 

 

80

 

 

257

 

 

257

 

EBITDA

$

107

 

$

111

 

$

470

 

$

474

 

Loss (gain) on sale of hotel properties

 

(21

)

 

(21

)

 

(21

)

 

(21

)

EBITDAre

$

86

 

$

90

 

$

449

 

$

453

 

Non-cash ground rent

 

4

 

 

4

 

 

7

 

 

7

 

Other

 

4

 

 

4

 

 

17

 

 

17

 

Adjusted EBITDAre

$

94

 

$

98

 

$

473

 

$

477

 

To supplement the Company’s consolidated financial statements presented in accordance with U.S. generally accepted accounting principles ("GAAP"), this press release includes certain non-GAAP financial measures as defined under Securities and Exchange Commission ("SEC") rules.

These measures are not in accordance with, or an alternative to, measures prepared in accordance with GAAP and may be different from similarly titled non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with the Company’s results of operations determined in accordance with GAAP.

Earnings before Interest, Taxes, and Depreciation and Amortization ("EBITDA") - The Company believes that EBITDA provides investors a useful financial measure to evaluate its operating performance, excluding the impact of our capital structure (primarily interest expense) and our asset base (primarily depreciation and amortization).

Earnings before Interest, Taxes, and Depreciation and Amortization for Real Estate ("EBITDAre") - The Company believes that EBITDAre provides investors a useful financial measure to evaluate its operating performance, and the Company presents EBITDAre in accordance with the National Association of Real Estate Investment Trusts ("Nareit") guidelines, as defined in its September 2017 white paper "Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate." EBITDAre adjusts EBITDA for the following items, which may occur in any period, and refers to these measures as Adjusted EBITDAre: (1) gains or losses of on the disposition of depreciated property, including gains or losses on change of control; (2) impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate; and (3) adjustments to reflect the entity's share of EBITDAre of unconsolidated affiliates.

The Company also evaluates its performance by reviewing Adjusted EBITDAre because it believes that adjusting EBITDAre to exclude certain recurring and non-recurring items described below provides useful supplemental information regarding the Company's ongoing operating performance and that the presentation of Adjusted EBITDAre, when combined with the primary GAAP presentation of net income (loss), more completely describes the Company's operating performance. The Company adjusts EBITDAre for the following items, which may occur in any period, and refers to these measures as Adjusted EBITDAre:

- Non-cash ground rent: The Company excludes the non-cash ground rent expense, which is primarily made up of the straight-line rent impact from a ground lease.
- Other: The Company excludes other expenses, which include transaction costs, management/franchise contract transition costs, non-cash amortization of acquired intangibles and estimated hurricane related repairs and cleanup costs because the Company believes that including these non-cash adjustments in EBITDAre does not reflect the underlying financial performance of the Company and its hotels.

The Company’s presentation of EBITDAre, and as adjusted by the Company, should not be considered as an alternative to net income (computed in accordance with GAAP) as an indicator of the Company’s financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of its liquidity.

Any differences are a result of rounding.
Pebblebrook Hotel Trust
Same-Property Statistical Data
(Unaudited)
 

Three months ended
September 30,

 

Nine months ended
September 30,

2019

 

2018

 

2019

 

2018

 
Same-Property Occupancy

87.2%

88.6%

83.1%

83.9%

Increase/(Decrease)

(1.6%)

(1.0%)

Same-Property ADR

$259.96

$261.57

$258.95

$254.09

Increase/(Decrease)

(0.6%)

1.9%

Same-Property RevPAR

$226.67

$231.73

$215.28

$213.29

Increase/(Decrease)

(2.2%)

0.9%

 
Same-Property Total RevPAR

$323.82

$327.07

$311.83

$306.86

Increase/(Decrease)

(1.0%)

1.6%

Notes:
This schedule of hotel results for the three months ended September 30 includes information from all of the hotels the Company owned as of September 30, 2019. This schedule of hotel results for the nine months ended September 30 includes information from all of the hotels the Company owned as of September 30, 2019 and excludes Onyx Hotel for Q2 and Q3 in both 2019 and 2018 due to its sale in the second quarter of 2019 as well as Hotel Amarano Burbank, Rouge Hotel and Hotel Madera for Q3 in both 2019 and 2018 due to their sales in the third quarter of 2019.

These hotel results for the respective periods may include information reflecting operational performance prior to the Company's ownership of the hotels. Any differences are a result of rounding.

The information above has not been audited and is presented only for comparison purposes.
Pebblebrook Hotel Trust
Same-Property Statistical Data - by Market
(Unaudited)
 
 
 

Three months ended
September 30,

 

Nine months ended
September 30,

2019

 

2019

Same-Property RevPAR variance to prior-year period:
Boston

1.7%

4.5%

San Diego

0.8%

2.2%

Southern Florida

(0.5%)

4.8%

Portland

(2.5%)

(4.0%)

Los Angeles

(2.5%)

(2.5%)

Other

(2.7%)

(2.5%)

Washington DC

(4.2%)

(4.4%)

San Francisco

(4.9%)

6.2%

Chicago

(6.0%)

(6.4%)

Seattle

(7.9%)

(7.8%)

 
East Coast

(0.4%)

1.4%

West Coast

(2.7%)

1.4%

Notes:
This schedule of hotel results for the three months ended September 30 includes information from all of the hotels the Company owned as of September 30, 2019. This schedule of hotel results for the nine months ended September 30 includes information from all of the hotels the Company owned as of September 30, 2019 and excludes Onyx Hotel for Q2 and Q3 in both 2019 and 2018 due to its sale in the second quarter of 2019 as well as Hotel Amarano Burbank, Rouge Hotel and Hotel Madera for Q3 in both 2019 and 2018 due to their sales in the third quarter of 2019.

"Other" includes Atlanta (Buckhead), GA; Nashville, TN; New York City, NY; Philadelphia, PA; and Santa Cruz, CA.

These hotel results for the respective periods may include information reflecting operational performance prior to the Company's ownership of the hotels. Any differences are a result of rounding.

The information above has not been audited and is presented only for comparison purposes.
Pebblebrook Hotel Trust
Hotel Operational Data
Schedule of Same-Property Results
($ in thousands)
(Unaudited)
 

Three months ended
September 30,

 

Nine months ended
September 30,

2019

 

2018

 

2019

 

2018

 
Same-Property Revenues:
Room

$

294,291

 

$

300,851

 

$

845,234

 

$

837,388

 

Food and beverage

 

89,675

 

 

86,421

 

 

273,246

 

 

264,616

 

Other

 

36,449

 

 

37,365

 

 

105,832

 

 

102,735

 

Total hotel revenues

 

420,415

 

 

424,637

 

 

1,224,312

 

 

1,204,739

 

 
Same-Property Expenses:
Room

$

71,036

 

$

71,188

 

$

207,467

 

$

204,882

 

Food and beverage

 

64,179

 

 

60,400

 

 

193,106

 

 

182,771

 

Other direct

 

6,561

 

 

6,280

 

 

18,435

 

 

17,836

 

General and administrative

 

31,110

 

 

30,240

 

 

93,689

 

 

90,882

 

Information and telecommunication systems

 

5,554

 

 

5,502

 

 

16,910

 

 

17,115

 

Sales and marketing

 

30,735

 

 

29,448

 

 

90,476

 

 

87,976

 

Management fees

 

10,866

 

 

14,236

 

 

34,534

 

 

38,102

 

Property operations and maintenance

 

12,736

 

 

12,143

 

 

38,262

 

 

36,377

 

Energy and utilities

 

10,418

 

 

10,211

 

 

28,900

 

 

27,876

 

Property taxes

 

19,074

 

 

17,026

 

 

59,853

 

 

53,251

 

Other fixed expenses

 

13,056

 

 

12,819

 

 

36,948

 

 

34,616

 

Total hotel expenses

 

275,325

 

 

269,493

 

 

818,580

 

 

791,684

 

 
Same-Property EBITDA

$

145,090

 

$

155,144

 

$

405,732

 

$

413,055

 

 
Same-Property EBITDA Margin

 

34.5

%

 

36.5

%

 

33.1

%

 

34.3

%

Notes:
This schedule of hotel results for the three months ended September 30 includes information from all of the hotels the Company owned as of September 30, 2019. This schedule of hotel results for the nine months ended September 30 includes information from all of the hotels the Company owned as of September 30, 2019 and excludes Onyx Hotel for Q2 and Q3 in both 2019 and 2018 due to its sale in the second quarter of 2019 as well as Hotel Amarano Burbank, Rouge Hotel and Hotel Madera for Q3 in both 2019 and 2018 due to their sales in the third quarter of 2019.

These hotel results for the respective periods may include information reflecting operational performance prior to the Company's ownership of the hotels. Any differences are a result of rounding.

The information above has not been audited and is presented only for comparison purposes.
Pebblebrook Hotel Trust
Historical Operating Data
($ in millions except ADR and RevPAR data)
(Unaudited)
 
 
Historical Operating Data:

First Quarter

 

Second Quarter

 

Third Quarter

 

Fourth Quarter

 

Full Year

2018

 

2018

 

2018

 

2018

 

2018

 
Occupancy

76%

87%

89%

77%

82%

ADR

$238

$263

$262

$247

$253

RevPAR

$181

$229

$232

$192

$208

 
Hotel Revenues

$340.1

$424.1

$424.6

$371.1

$1,559.8

Hotel EBITDA

$95.6

$156.9

$155.1

$109.1

$516.8

Hotel EBITDA Margin

28.1%

37.0%

36.5%

29.4%

33.1%

 

First Quarter

 

Second Quarter

 

Third Quarter

2019

 

2019

 

2019

 
Occupancy

76%

87%

87%

ADR

$251

$268

$260

RevPAR

$190

$232

$227

 
Hotel Revenues

$355.8

$433.2

$420.4

Hotel EBITDA

$98.4

$157.5

$145.1

Hotel EBITDA Margin

27.7%

36.3%

34.5%

Notes:
These historical hotel operating results include information for all of the hotels the Company owned as of September 30, 2019. These historical operating results include periods prior to the Company's ownership of the hotels. The information above does not reflect the Company's corporate general and administrative expense, interest expense, property acquisition costs, depreciation and amortization, taxes and other expenses. Any differences are a result of rounding.

The information above has not been audited and is presented only for comparison purposes.

 

Raymond D. Martz, Chief Financial Officer, Pebblebrook Hotel Trust - (240) 507-1330

Source: Pebblebrook Hotel Trust