BETHESDA, Md.–(BUSINESS WIRE)–$PEB #REIT–Pebblebrook Hotel Trust (NYSE: PEB):
Q3 FINANCIAL HIGHLIGHTS |
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HOTEL OPERATING TRENDS |
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PORTFOLIO UPDATES & REPOSITIONINGS |
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Q4 2023 OUTLOOK |
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(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 used in the table above and elsewhere in this press release. |
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“Our third quarter bottom line results were at the top end of our expectations, even after the negative impact of severe weather events on both coasts and the labor strikes in the entertainment industry that primarily affected our Los Angeles properties. We continued to see healthy occupancy improvements in our urban market hotels, driven by improving group and transient business travel, as well as solid gains in weekend leisure demand. Our third quarter resort portfolio occupancy was flat year-over-year, though it would have been higher if not for the severe weather events. “During the quarter, we successfully completed the redevelopment and reflagging of the former Solamar Hotel as the Margaritaville Hotel San Diego Gaslamp Quarter. This transformation has created an exceptional lifestyle experience in San Diego’s vibrant Gaslamp district, renowned for its entertainment offerings and close proximity to San Diego’s convention center. We’re very excited about the upside opportunity for this fantastic, unique, like-new urban lifestyle hotel.” –Jon E. Bortz, Chairman and Chief Executive Officer of Pebblebrook Hotel Trust
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Third Quarter and Year-to-Date Highlights
Third Quarter |
Nine Months Ended |
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Same-Property and Corporate Highlights |
2023 |
2022 |
Variance |
2023 |
2022 |
Variance |
($ in millions except per share and RevPAR data) |
||||||
Net income (loss) |
($56.5) |
$26.3 |
(314.7%) |
($32.3) |
($45.1) |
NM |
Same-Property Room Revenues(1) |
$257.4 |
$260.1 |
(1.0%) |
$684.0 |
$657.6 |
4.0% |
Same-Property Total Revenues(1) |
$389.1 |
$388.0 |
0.3% |
$1,046.3 |
$987.0 |
6.0% |
Same Property Total Expenses(1) |
$274.8 |
$265.0 |
3.7% |
$762.0 |
$689.6 |
10.5% |
Same Property EBITDA(1) |
$114.3 |
$123.0 |
(7.0%) |
$284.3 |
$297.5 |
(4.4%) |
Adjusted EBITDAre(1) |
$116.1 |
$124.1 |
(6.5%) |
$293.1 |
$299.3 |
(2.1%) |
Adjusted FFO(1) |
$74.1 |
$86.7 |
(14.5%) |
$172.2 |
$195.7 |
(12.0%) |
Adjusted FFO per diluted share(1) |
$0.61 |
$0.66 |
(7.6%) |
$1.39 |
$1.49 |
(6.7%) |
2023 Monthly Results |
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Same-Property Portfolio Highlights(2) |
Jan |
Feb |
Mar |
Apr |
May |
Jun |
Jul |
Aug |
Sep |
($ in millions except per share and RevPAR data) |
|||||||||
Occupancy |
47% |
60% |
67% |
71% |
72% |
77% |
77% |
74% |
75% |
ADR |
$287 |
$293 |
$303 |
$308 |
$303 |
$312 |
$320 |
$298 |
$314 |
RevPAR |
$136 |
$175 |
$202 |
$219 |
$216 |
$241 |
$246 |
$219 |
$237 |
Total Revenues |
$80.8 |
$93.0 |
$115.9 |
$116.9 |
$122.2 |
$128.4 |
$135.6 |
$121.7 |
$131.9 |
Total Revenues Growth Rate (’23 vs. ’22) |
59% |
20% |
10% |
1% |
3% |
(1%) |
0% |
(1%) |
1% |
Hotel EBITDA |
$6.0 |
$18.7 |
$34.6 |
$34.6 |
$37.3 |
$38.8 |
$41.5 |
$34.7 |
$38.1 |
NM = Not Meaningful
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(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. |
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(2) |
Includes information for all the hotels the Company owned as of September 30, 2023, except for the following: |
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“Despite the challenges posed by two significant storm events that resulted in booking interruptions and cancellations, we are pleased to have generated a 3.4% improvement in occupancy during the third quarter, driven primarily by our urban hotels,” noted Mr. Bortz. “As we move into the fourth quarter, group pace compared to the same time last year remains strong, with revenues up over 18%, led by a favorable convention calendar across a number of our urban markets, including San Francisco, Washington, DC, San Diego and Boston. Occupancy growth in our portfolio should continue in the fourth quarter. While we continue to actively monitor macroeconomic trends, thus far, we’ve observed continued stable demand from both the business and leisure segments.”
Update on Impact from Hurricane Ian
The Company continues to make significant progress restoring and reopening the 189-room LaPlaya Beach Resort & Club (“LaPlaya”) in Naples, Florida. The resort’s Bay Tower (40 rooms) and Gulf Tower (70 rooms) are substantially restored and fully operational, with additional resort services and amenities progressively coming online. The Beach House (79 rooms), with its full-service spa and fitness center, is expected to be substantially completed and returned to service in the first quarter of next year.
The Company anticipates that all operational disruption will be covered under its business interruption and property insurance programs, net of deductibles. A preliminary business interruption settlement of $10.9 million was recorded in Q3 related to lost income from Q2 2023. Year to date, the Company has recorded $33.0 million of business interruption proceeds. The Company expects to record additional business interruption settlements as these are determined and finalized with its insurance providers.
Capital Investments and Strategic Property Redevelopments
During the third quarter, the Company completed $33.1 million of capital investments throughout its portfolio, excluding capital expenditures related to the repair and rebuilding of LaPlaya. This includes the redevelopment and reflagging of Solamar Hotel to Margaritaville Hotel San Diego Gaslamp Quarter, which officially occurred on August 15, 2023.
The renovation of the four guesthouses (50 rooms/suites) at Southernmost Beach Resort in Key West, FL is well along, with two of the guesthouses already substantially complete and back in inventory, with the remaining two scheduled to be completed by the end of November. The comprehensive redevelopment and repositioning of Newport Harbor Island Resort is slated to begin in mid-November, with completion expected in Q2 2024.
For 2023, the Company continues to expect to invest a total of $145 to $155 million in capital improvements, which excludes capital expenditures related to the repair and rebuilding of LaPlaya. Since 2018, the Company has reinvested approximately $693 million into redeveloping its assets, including over $257 million of ROI-generating investments which have been primarily major transformations and repositionings of a majority of our properties to higher levels. These ROI investments are expected to generate a healthy return on investment in line with the Company’s previous redevelopment and repositioning projects. By early 2024, substantially all of the Company’s properties will have been recently renovated or redeveloped, and future capital investments and repositionings are expected to be substantially reduced.
Update on Strategic Dispositions
The Company recently executed a contract to sell the 221-room Hotel Zoe Fisherman’s Wharf (“Hotel Zoe”) in San Francisco, California, for $68.5 million to a third party. This sale is targeted to be completed in the fourth quarter of 2023, subject to normal closing conditions. The Company offers no assurances that this sale will be completed on these terms or at all. Assuming the Hotel Zoe sale closes this year, the Company will have completed $300.8 million of property dispositions in 2023 comprised of six property sales. The $300.8 million aggregate sales proceeds reflect a combined 21.8x EBITDA multiple and a 3.8% net operating income capitalization rate (assuming a capital reserve of 4.0% of total hotel revenues) based on the trailing twelve-month performance prior to the completion of each respective sale, or the trailing twelve-month performance ended September 30, 2023 in the case of Hotel Zoe.
Net proceeds from the Company’s dispositions are being used for general corporate purposes, including reducing the Company’s debt, increasing the Company’s cash position, and repurchasing common or preferred shares to further strengthen the Company’s balance sheet and enhance shareholder value.
Common Share Repurchases
The Company did not complete any common share repurchases in Q3 2023 since no property sales were completed in the third quarter. On a cumulative basis since October 2022, the Company has repurchased over 11 million common shares, or approximately 8.4% of the Company’s outstanding common shares, at an average price of $14.51 per share, representing an approximate 50% discount to the midpoint of the Company’s most recently published Net Asset Value (“NAV”) per share.
Balance Sheet and Liquidity
As of September 30, 2023, the Company had $829.0 million in liquidity, consisting of $191.6 million in cash, cash equivalents, and restricted cash, plus $637.4 million of undrawn availability on its senior unsecured revolving credit facility.
The Company’s $2.4 billion of consolidated debt and convertible notes is well-structured, with an effective weighted-average interest rate of 4.4%. The majority of the debt and convertible notes, or 78%, is at an effective weighted-average fixed interest rate of 3.5%, which mitigates exposure to rising interest rates. The remaining 22% of the Company’s debt is at a weighted-average floating interest rate of 7.6%. In addition, approximately 92% of the Company’s outstanding debt is unsecured, and the weighted-average maturity is 2.8 years. The Company has no meaningful debt maturities until Q4 2024.
Common and Preferred Dividends
On September 15, 2023, the Company declared a quarterly cash dividend of $0.01 per share on its common shares and a regular quarterly cash dividend for the following preferred shares of beneficial interest:
- $0.39844 per 6.375% Series E Cumulative Redeemable Preferred Share;
- $0.39375 per 6.3% Series F Cumulative Redeemable Preferred Share;
- $0.39844 per 6.375% Series G Cumulative Redeemable Preferred Share; and
- $0.35625 per 5.7% Series H Cumulative Redeemable Preferred Share.
Update on Curator Hotel & Resort Collection
Curator Hotel & Resort Collection (“Curator”) is a curated collection of experientially focused small brands and independent lifestyle hotels and resorts worldwide founded by Pebblebrook and several industry-leading independent lifestyle hotel operators. Curator has 99 member hotels and 109 master service agreements with preferred vendor partners. These agreements provide Curator member hotels with preferred pricing, enhanced operating terms, and early access to curated new technologies. Curator’s mission is to help independent lifestyle hotels and resorts achieve their full potential by providing them with the resources and support they need to compete with larger brands and operators while remaining independent.
Q4 2023 Outlook
Based on current trends and assuming no material disruptions to travel caused by pandemics, federal government shutdowns, or worsening macro-economic conditions, the Company’s outlook for Q4 2023 is as follows:
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Q4 2023 Outlook |
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Low |
High |
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($ and shares/units in millions, except per share and RevPAR data) |
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Net income (loss) |
($48.3) |
($42.3) |
Adjusted EBITDAre |
$50.8 |
$56.8 |
Adjusted FFO |
$10.8 |
$16.8 |
Adjusted FFO per diluted share |
$0.09 |
$0.14 |
This Q4 2023 Outlook is based, in part, on the following estimates and assumptions:
Same-Property RevPAR |
$183 |
$188 |
Same-Property RevPAR variance vs. 2022 |
1.0% |
4.0% |
Same-Property Hotel EBITDA |
$57.0 |
$63.0 |
Same-Property Hotel EBITDA variance vs. 2022 |
(9.8%) |
(0.3%) |
The fourth quarter outlook does not assume any business interruption income related to LaPlaya. Based on the above Q4 2023 outlook, the implied full-year 2023 outlook is as follows:
Full Year 2023 Outlook |
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Low |
High |
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($ and shares/units in millions, except per share and RevPAR data) |
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Net income (loss) |
($80.6) |
($74.6) |
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Adjusted EBITDAre |
$344.0 |
$350.0 |
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Adjusted FFO |
$183.0 |
$189.0 |
Adjusted FFO per diluted share |
$1.49 |
$1.54 |
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This Full Year 2023 Outlook is based, in part, on the following estimates and assumptions:
Same-Property RevPAR |
$203 |
$205 |
Same-Property RevPAR variance vs. 2022 |
3.3% |
4.0% |
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Same-Property Hotel EBITDA |
$341.3 |
$347.3 |
Same-Property Hotel EBITDA variance vs. 2022 |
(5.4%) |
(3.7%) |
Third Quarter 2023 Earnings Call
The Company will conduct its quarterly analyst and investor conference call on Friday, October 27, 2023, at 9:00 AM ET. Please dial (877) 407-3982 approximately ten minutes before the call begins to participate. A live webcast of the conference call will also be available through the Investor Relations section of www.pebblebrookhotels.com. To access the webcast, click on https://investor.pebblebrookhotels.com/news-and-events/webcasts/default.aspx ten minutes before the conference call. A replay of the conference call webcast will be archived and available online.
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 and resorts in the United States. The Company owns 47 hotels and resorts, totaling approximately 12,200 guest rooms across 13 urban and resort markets. For more information, visit www.pebblebrookhotels.com and follow us at @PebblebrookPEB.
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 the 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: descriptions of the Company’s plans or objectives for future capital investment projects, operations or services; forecasts of the Company’s future economic performance; forecasts of hotel industry performance; statements regarding expectations of hotel dispositions and use of proceeds; 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 SEC, including, without limitation, the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. 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.
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 filings with the U.S. Securities and Exchange Commission, 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.
All information in this press release is as of October 26, 2023. 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 share and per-share data) | |||||||
September 30, 2023 | December 31, 2022 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Assets: | |||||||
Investment in hotel properties, net |
$ |
5,553,122 |
$ |
5,874,876 |
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Hotels held for sale |
|
65,453 |
|
|
44,861 |
|
|
Cash and cash equivalents |
|
182,665 |
|
|
41,040 |
|
|
Restricted cash |
|
8,946 |
|
|
11,229 |
|
|
Hotel receivables (net of allowance for doubtful accounts of $519 and $431, respectively) |
|
56,842 |
|
|
45,258 |
|
|
Prepaid expenses and other assets |
|
131,800 |
|
|
116,276 |
|
|
Total assets |
$ |
5,998,828 |
|
$ |
6,133,540 |
|
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LIABILITIES AND EQUITY | |||||||
Liabilities: | |||||||
Unsecured revolving credit facilities |
$ |
– |
|
$ |
– |
|
|
Unsecured term loans, net of unamortized deferred financing costs |
|
1,374,267 |
|
|
1,372,057 |
|
|
Convertible senior notes, net of unamortized debt premium and discount and deferred financing costs |
|
747,028 |
|
|
746,326 |
|
|
Senior unsecured notes, net of unamortized deferred financing costs |
|
49,981 |
|
|
49,920 |
|
|
Mortgage loans, net of unamortized debt discount and deferred financing costs |
|
195,669 |
|
|
218,990 |
|
|
Accounts payable, accrued expenses and other liabilities |
|
272,745 |
|
|
250,518 |
|
|
Lease liabilities – operating leases |
|
320,571 |
|
|
320,402 |
|
|
Deferred revenues |
|
74,576 |
|
|
73,603 |
|
|
Accrued interest |
|
10,720 |
|
|
4,535 |
|
|
Liabilities related to hotels held for sale |
|
1,647 |
|
|
428 |
|
|
Distribution payable |
|
12,156 |
|
|
12,218 |
|
|
Total liabilities |
|
3,059,360 |
|
|
3,048,997 |
|
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Commitments and contingencies | |||||||
Shareholders’ Equity: | |||||||
Preferred shares of beneficial interest, $0.01 par value (liquidation preference $715,000 at | |||||||
September 30, 2023 and December 31, 2022), 100,000,000 shares authorized; 28,600,000 | |||||||
shares issued and outstanding at September 30, 2023 and December 31, 2022 |
|
286 |
|
|
286 |
|
|
Common shares of beneficial interest, $0.01 par value, 500,000,000 shares authorized; | |||||||
120,057,744 shares issued and outstanding at September 30, 2023 and 126,345,293 shares | |||||||
issued and outstanding at December 31, 2022 |
|
1,201 |
|
|
1,263 |
|
|
Additional paid-in capital |
|
4,097,130 |
|
|
4,182,359 |
|
|
Accumulated other comprehensive income (loss) |
|
45,834 |
|
|
35,724 |
|
|
Distributions in excess of retained earnings |
|
(1,295,089 |
) |
|
(1,223,117 |
) |
|
Total shareholders’ equity |
|
2,849,362 |
|
|
2,996,515 |
|
|
Non-controlling interests |
|
90,106 |
|
|
88,028 |
|
|
Total equity |
|
2,939,468 |
|
|
3,084,543 |
|
|
Total liabilities and equity |
$ |
5,998,828 |
|
$ |
6,133,540 |
|
|
Pebblebrook Hotel Trust | |||||||||||||||
Consolidated Statements of Operations | |||||||||||||||
($ in thousands, except share and per-share data) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three months ended |
|
Nine months ended |
|||||||||||||
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
Revenues: | |||||||||||||||
Room |
$ |
259,397 |
|
$ |
277,971 |
|
$ |
706,705 |
|
$ |
707,997 |
|
|||
Food and beverage |
|
91,661 |
|
|
98,080 |
|
|
261,172 |
|
|
261,228 |
|
|||
Other operating |
|
44,741 |
|
|
40,642 |
|
|
117,984 |
|
|
103,060 |
|
|||
Total revenues |
$ |
395,799 |
|
$ |
416,693 |
|
$ |
1,085,861 |
|
$ |
1,072,285 |
|
|||
Expenses: | |||||||||||||||
Hotel operating expenses: | |||||||||||||||
Room |
$ |
68,065 |
|
$ |
66,637 |
|
$ |
189,179 |
|
$ |
167,102 |
|
|||
Food and beverage |
|
69,091 |
|
|
69,296 |
|
|
196,748 |
|
|
179,859 |
|
|||
Other direct and indirect |
|
112,596 |
|
|
115,589 |
|
|
324,164 |
|
|
307,317 |
|
|||
Total hotel operating expenses |
|
249,752 |
|
|
251,522 |
|
|
710,091 |
|
|
654,278 |
|
|||
Depreciation and amortization |
|
63,272 |
|
|
60,372 |
|
|
179,598 |
|
|
179,746 |
|
|||
Real estate taxes, personal property taxes, property insurance, and ground rent |
|
32,905 |
|
|
34,641 |
|
|
91,380 |
|
|
98,118 |
|
|||
General and administrative |
|
11,549 |
|
|
10,281 |
|
|
32,739 |
|
|
29,675 |
|
|||
Impairment |
|
71,416 |
|
|
12,865 |
|
|
71,416 |
|
|
86,119 |
|
|||
(Gain) loss on sale of hotel properties |
|
– |
|
|
(6,194 |
) |
|
(30,219 |
) |
|
(6,194 |
) |
|||
Business interruption insurance income |
|
(10,881 |
) |
|
– |
|
|
(32,985 |
) |
|
– |
|
|||
Other operating expenses |
|
3,829 |
|
|
989 |
|
|
9,876 |
|
|
4,045 |
|
|||
Total operating expenses |
|
421,842 |
|
|
364,476 |
|
|
1,031,896 |
|
|
1,045,787 |
|
|||
Operating income (loss) |
|
(26,043 |
) |
|
52,217 |
|
|
53,965 |
|
|
26,498 |
|
|||
Interest expense |
|
(31,022 |
) |
|
(25,020 |
) |
|
(87,996 |
) |
|
(70,753 |
) |
|||
Other |
|
1,403 |
|
|
123 |
|
|
2,538 |
|
|
156 |
|
|||
Income (loss) before income taxes |
|
(55,662 |
) |
|
27,320 |
|
|
(31,493 |
) |
|
(44,099 |
) |
|||
Income tax (expense) benefit |
|
(822 |
) |
|
(1,015 |
) |
|
(853 |
) |
|
(1,015 |
) |
|||
Net income (loss) |
|
(56,484 |
) |
|
26,305 |
|
|
(32,346 |
) |
|
(45,114 |
) |
|||
Net income (loss) attributable to non-controlling interests |
|
658 |
|
|
1,237 |
|
|
2,999 |
|
|
1,359 |
|
|||
Net income (loss) attributable to the Company |
|
(57,142 |
) |
|
25,068 |
|
|
(35,345 |
) |
|
(46,473 |
) |
|||
Distributions to preferred shareholders |
|
(10,988 |
) |
|
(11,344 |
) |
|
(32,963 |
) |
|
(34,031 |
) |
|||
Net income (loss) attributable to common shareholders |
$ |
(68,130 |
) |
$ |
13,724 |
|
$ |
(68,308 |
) |
$ |
(80,504 |
) |
|||
Net income (loss) per share available to common shareholders, basic |
$ |
(0.57 |
) |
$ |
0.10 |
|
$ |
(0.56 |
) |
$ |
(0.62 |
) |
|||
Net income (loss) per share available to common shareholders, diluted |
$ |
(0.57 |
) |
$ |
0.10 |
|
$ |
(0.56 |
) |
$ |
(0.62 |
) |
|||
Weighted-average number of common shares, basic |
|
120,057,744 |
|
|
130,905,132 |
|
|
122,394,293 |
|
|
130,904,772 |
|
|||
Weighted-average number of common shares, diluted |
|
120,057,744 |
|
|
131,149,783 |
|
|
122,394,293 |
|
|
130,904,772 |
|
|||
Considerations Regarding Non-GAAP Financial Measures
|
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This press release includes certain non-GAAP financial measures. 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. 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 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 FFO and Adjusted EBITDAre 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 and Adjusted EBITDAre, when combined with the primary GAAP presentation of net income (loss), more completely describes the Company’s operating performance. The Company adjusts FFO available to common share and unit holders for the following items, which may occur in any period, and refers to this measure as Adjusted FFO and Adjusted EBITDAre: – 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. The Company presents weighted-average number of basic and fully diluted common shares and units by excluding the dilutive effect of shares issuable upon conversion of convertible debt. The Company’s presentation of FFO and Adjusted EBITDAre 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. 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. |
Contacts
Raymond D. Martz, Chief Financial Officer, Pebblebrook Hotel Trust – (240) 507-1330