BETHESDA, Md.--Pebblebrook Hotel Trust (NYSE: PEB) (the "Company") today reported results for the third quarter ended September 30, 2013. The Company's results include the following:
(1) See tables for this this press release by visiting http://phx.corporate-ir.net/phoenix.zhtml?c=233964&p=irol-news&nyo=0 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"), Adjusted EBITDA, 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 revenue per available room ("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 Inclusion Reference Table later in this press release.
"We're very pleased with the performance of our portfolio during the third quarter, despite economic and political headwinds, as we continued to outperform the hotel industry," said Jon E. Bortz, Chairman, President and Chief Executive Officer of Pebblebrook Hotel Trust. "Our properties located on the west coast, primarily in San Francisco, Seattle and Portland, led the portfolio's performance. The hotel industry continued to generate healthy RevPAR growth in the quarter, as demand outpaced limited new supply, leading to increased pricing power and higher rates for our portfolio and the lodging industry."
Third Quarter Highlights
•Same-Property RevPAR: Same-Property revenue per available room ("Same-Property RevPAR") in the third quarter of 2013 increased 6.2 percent over the same period of 2012 to $202.10. Same-Property average daily rate ("Same-Property ADR") grew 6.3 percent from the third quarter of 2012 to $232.85. Same-Property Occupancy declined 0.1 percent to 86.8 percent.
•Same-Property EBITDA: The Company's hotels generated $47.3 million of Same-Property EBITDA for the quarter ended September 30, 2013, climbing 5.4 percent from the same period of 2012. Same-Property Revenues increased 5.0 percent, while Same-Property Expenses rose 4.8 percent. As a result, Same-Property EBITDA Margin grew to 30.9 percent for the quarter ended September 30, 2013, representing an improvement of 11 basis points as compared to the same period last year.
•Adjusted EBITDA: The Company's Adjusted EBITDA increased to $44.4 million from $35.4 million in the prior year period, a gain of $9.0 million, or 25.5 percent.
•Adjusted FFO: The Company's Adjusted FFO climbed to $28.3 million from $22.0 million in the prior year period, an increase of 28.6 percent.
•Dividends: On September 13, 2013, the Company declared a regular quarterly cash dividend of $0.16 per share on its common shares, a regular quarterly cash dividend of $0.4921875 per share on its 7.875 percent Series A Cumulative Redeemable Preferred Shares, a regular quarterly cash dividend of $0.50 per share on its 8.0 percent Series B Cumulative Redeemable Preferred Shares and a regular quarterly cash dividend of $0.40625 per share on its 6.50 percent Series C Cumulative Redeemable Preferred Shares.
"We were able to grow Same-Property RevPAR by 6.2 percent in the quarter despite disruptions caused by the on-going comprehensive renovation of Affinia 50, which is nearing completion. With very strong occupancy of 86.8 percent, occupancy was roughly flat in the quarter, and ADR gains made up all of our RevPAR growth," added Mr. Bortz. "We're excited about the continued progress we're making in improving operating performance since acquiring our hotels, and we look forward to the future positive impact our array of best practice programs will have on further increasing the margins in our portfolio."
During the third quarter, the Company invested $8.9 million in capital improvements in its portfolio.
In January 2013, the Company, along with its joint venture partner, commenced an $18.0 to $20.0 million comprehensive renovation, reconfiguration and expansion of the Affinia 50, which includes completely renovating its guest rooms, corridors, lobby, public areas and exterior. The reconfiguration of the hotel will increase the number of guest rooms by almost 20 percent, from 210 to 251. The project continues to be on budget and is expected to be substantially complete in November. The Company expects to fund its 49 percent pro rata share of the remaining total project costs with available cash.
On September 18, 2013, the Company up-branded its 310-room Sheraton Delfina Santa Monica to the upper upscale Le Méridien brand. In conjunction with the re-branding and repositioning, the Company expects to incur $0.5 million of transition costs and invest an additional $2.0 million for capital improvements in the hotel. Viceroy Hotels and Resorts continues to manage the property.
In addition to its capital reinvestment programs, Pebblebrook remains committed to implementing a comprehensive array of asset management best practices, initiatives and operating efficiencies throughout its portfolio to boost hotel revenues and improve operating efficiencies in a continuous effort to drive strong margin growth. Since its first hotel acquisition in 2010, the Company has identified almost $17.0 million of annualized best practices and asset management opportunities throughout its portfolio that it has either implemented or is in the process of implementing.
On August 8, 2013, the Company acquired the Redbury Hotel for $34.0 million. The 57-suite, luxury full-service hotel is located in the heart of Hollywood, California. The property continues to be managed by sbe Hotel Group.
On August 28, 2013, the Company acquired the Hotel Modera for $47.5 million. The 174-room urban, boutique, upper upscale full-service hotel is located in downtown Portland, Oregon. The property is now managed by OLS Hotels and Resorts.
"We're very enthusiastic about the $194.0 million of high-quality acquisitions this year in our west coast target markets of San Diego, Los Angeles and Portland," said Mr. Bortz. "We believe these properties offer great opportunities for outsized RevPAR growth, margin expansion and value creation through the implementation of our asset management and best practice initiatives."
Since its initial public offering in December 2009, the Company has acquired 28 properties totaling $2.2 billion of invested capital, including its joint venture with Denihan Hospitality Group, which owns six upper upscale hotels (the "Manhattan Collection") in New York, New York.
•Same-Property RevPAR, ADR and Occupancy: Same-Property RevPAR for the nine months ended September 30, 2013 increased 6.9 percent over the same period of 2012 to $186.21. Year-to-date, Same-Property ADR grew 4.7 percent to $221.39 from the comparable period of 2012, while year-to-date Same-Property Occupancy climbed 2.0 percent to 84.1 percent.
•Same-Property Hotel EBITDA: The Company's hotels generated $119.1 million of Same-Property Hotel EBITDA for the nine months ended September 30, 2013, an improvement of 8.6 percent compared with the same period of 2012. Same-Property Hotel Revenues grew 5.5 percent, while Same-Property Hotel Expenses rose 4.3 percent. As a result, Same-Property Hotel EBITDA Margin for the nine months ended September 30, 2013 improved 80 basis points to 28.1 percent as compared to the same period last year.
•Adjusted EBITDA: The Company's Adjusted EBITDA increased 32.8 percent, or $27.0 million, to $109.3 million from $82.3 million in the prior year period.
•Adjusted FFO: The Company's Adjusted FFO climbed 40.2 percent to $66.7 million from $47.6 million in the prior year period.
As of September 30, 2013, the Company had $550.6 million in consolidated debt and $225.4 million in unconsolidated, non-recourse, secured debt at weighted-average interest rates of 4.4 percent and 3.6 percent, respectively. The Company's total combined consolidated and unconsolidated weighted-average interest rate on its debt is 4.2 percent. The Company had $100.0 million outstanding in the form of an unsecured term loan and no outstanding balance on its $200.0 million senior unsecured revolving credit facility. As of September 30, 2013, the Company had $126.0 million of consolidated cash, cash equivalents and restricted cash and $12.7 million of unconsolidated cash, cash equivalents and restricted cash. The unconsolidated debt, cash, cash equivalents and restricted cash amounts represent the Company's 49 percent pro rata interest in the Manhattan Collection.
On September 30, 2013, as defined in the Company's credit agreement, the Company's fixed charge coverage ratio was 2.2 times and total net debt to trailing 12-month corporate EBITDA was 4.4 times. The Company's total debt to total assets ratio was 32 percent. Excluding its interest in the off-balance sheet Manhattan Collection, the Company's fixed charge coverage ratio was 2.1 times, net debt to trailing 12-month corporate EBITDA was 3.5 times and total debt to total assets ratio was 28 percent.
The Company's outlook for 2013, which assumes no additional acquisitions, has been increased to reflect the Company's third quarter acquisitions of The Redbury Hotel and Hotel Modera, partially offset by the negative impact of the federal government shutdown in October. This outlook, which assumes similar ongoing economic growth, positive business travel trends and other significant assumptions, is as follows:
Pebblebrook Hotel Trust is a publicly traded real estate investment trust ("REIT") organized to opportunistically acquire and invest primarily in upper upscale, full-service hotels located in urban markets in major gateway cities. The Company owns 28 hotels, including 22 wholly owned hotels with a total of 5,191 guest rooms and a 49% joint venture interest in six hotels with a total of 1,733 guest rooms. The Company owns, or has an ownership interest in, hotels located in ten states and the District of Columbia, including: Los Angeles, California (Hollywood, Santa Monica, West Hollywood and Westwood); San Diego, California; San Francisco, California; Miami, Florida; Buckhead, Georgia; Bethesda, Maryland; Boston, Massachusetts; Minneapolis, Minnesota; New York, New York; Portland, Oregon; Philadelphia, Pennsylvania; Columbia River Gorge, Washington; Seattle, Washington; and Washington, DC. For more information, please visit us at www.pebblebrookhotels.com and on Twitter at @PebblebrookPEB.
Contact: Raymond D. Martz, Chief Financial Officer