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TheStreet Open House

Pebblebrook Hotel Trust Reports Second Quarter 2013 Results

Stocks in this article: PEB

On June 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 4.2 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 3.3 times and total debt to total assets ratio was 28 percent.

Subsequent Events

On July 24, the Company announced that it will up-brand and reposition its 310-room Sheraton Delfina Santa Monica to the upper upscale Le Méridien brand. This conversion is expected to be complete in the fourth quarter of 2013. In conjunction with the re-branding and repositioning, the Company expects to incur approximately $0.5 million of transition costs and invest an additional $2.0 million for capital improvements in the hotel. Viceroy Hotels and Resorts will continue to manage the property.

2013 Outlook

The Company's outlook for 2013, which assumes no additional acquisitions, incorporates the Company’s recently completed capital markets activities and assumes continued improvement in economic activity, positive business travel trends and other significant assumptions, is as follows:

       
2013 Outlook
Low     High

($ and shares/units in millions,

except per share and RevPAR data)

Net income $40.0 $42.0
Net income per diluted share $0.65 $0.68
 
Adjusted EBITDA $147.0 $149.0
 
Adjusted FFO $86.5 $88.5
Adjusted FFO per diluted share $1.40 $1.44
 

This 2013 outlook is based, in part, on the following estimates and assumptions:

 
U.S. GDP growth rate 1.75% 2.25%
U.S. Hotel Industry RevPAR growth rate 5.0% 6.5%
 
Same-Property RevPAR $183.00 $186.00
Same-Property RevPAR growth rate 5.5% 7.0%
 
Same-Property EBITDA $159.0 $162.0
Same-Property EBITDA Margin 28.0% 28.5%
Same-Property EBITDA Margin growth rate 75 bps 125 bps
 
Corporate cash general and administrative expenses $11.5 $12.0
Corporate non-cash general and administrative expenses $3.0 $3.5
 
Total capital investments related to renovations, capital maintenance and return on investment projects $55.0 $65.0
 
Weighted-average fully diluted shares and units 61.6 61.6
 

The Company’s outlook for the third quarter of 2013 is as follows:

 
Third Quarter 2013 Outlook
Low     High

($ and shares/units in millions,

except per share and RevPAR data)

Same-Property RevPAR $199 $202
Same-Property RevPAR growth rate 5.0% 6.0%
 
Same-Property EBITDA $45.4 $46.9
Same-Property EBITDA Margin 31.2% 31.7%
Same-Property EBITDA Margin growth rate 25 bps 75 bps
 
Adjusted EBITDA $42.0 $43.5
 
Adjusted FFO $25.1 $26.6
Adjusted FFO per diluted share $0.41 $0.43
 
Weighted-average fully diluted shares and units 61.6 61.6
 

The Company’s 2013 and Third Quarter Outlooks reflect the Company’s 49 percent pro rata interest in the Manhattan Collection.

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