PEB - Pebblebrook Hotel Trust Reports First Quarter 2023 Results

April, 26 2023 04:02 PM Pebblebrook Hotel Trust of Beneficial Interest

Pebblebrook Hotel Trust (NYSE: PEB):

Q1 FINANCIAL
HIGHLIGHTS

Net loss: ($22.0) million
Same-Property Total RevPAR(1) increased 23.8% vs. 2022
Same-Property EBITDA(1) $59.3 million, 25.4% above 2022
Adjusted EBITDA re (1) $60.8 million, increased 30.8% vs. 2022
Adjusted FFO(1) per diluted share $0.18 vs. $0.11 in 2022

HOTEL OPERATING
TRENDS

Business demand, both group and transient, continues to recover, benefiting our urban markets as well as our resorts; group revenue pace for Q2-Q4 2023 is up 20% over the prior year, with ADR ahead by 8.7%
Leisure demand remains healthy. As expected, Resort ADR premiums remain far above 2019, but less than last year, as occupancies recover. Compared with the prior year, Urban ADR premiums continue to grow, offsetting resort declines. Same-Property ADR declined by 0.8% as Same-Property Occupancy climbed 19.4%
Have not yet seen any slowdown in business or leisure demand due to macro-economic concerns

PORTFOLIO
UPDATES &
REPOSITIONINGS

During the quarter, completed $135.3 million of property sales, including The Heathman Hotel in Portland, Oregon for $45 million, the retail parcel at 909 North Michigan Avenue in Chicago for $27.3 million, and Hotel Colonnade in Coral Gables, Florida for $63 million
Executed contracts to sell Monaco Seattle for $63.3 million and Vintage Seattle for $33.7 million. Both individual sales are targeted to close later in Q2 2023
Made $26.2 million of capital investments during the quarter, including the ongoing major renovations of Hilton San Diego Gaslamp Quarter, Newport Harbor Island Resort, Viceroy Santa Monica, and Jekyll Island Club Resort and the redevelopment of Hotel Solamar into Margaritaville Hotel San Diego Gaslamp Quarter

Q2 2023
OUTLOOK

Net income: $34.0 to $38.9 million
Same-Property RevPAR(1) +1.0% to +4.0% vs. 2022
Adjusted EBITDA re (1) : $107.5 to $113.0 million
Adjusted FFO(1) per diluted share: $0.52 to $0.57

(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.

"First-quarter operating results exceeded our outlook due to improving demand in a number of urban markets, including San Francisco, Portland, Chicago, and Washington, DC. This generated substantial gains in room and non-room revenue with improved profits across our properties in these markets. Our resorts benefited from improving occupancies from recovering group demand with ADR premiums continuing to be far above 2019. Performance at our West Coast resorts would have been better but for the endless rains and cold weather on the West Coast throughout the quarter that negatively affected leisure demand. We completed three property sales during the quarter in an increasingly challenging market, and we executed contracts to sell two additional hotels, both in Seattle, and we expect these sales will close later in the second quarter. We continue to utilize proceeds from property sales to reduce our net debt and repurchase our shares at a significant discount to the underlying saleable private market value of our portfolio.”

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




First Quarter Highlights



First Quarter

Same-Property and Corporate Highlights
2023
2022 (’23 vs. ’22 growth)

($ in millions except per share and RevPAR data)
Net income (loss)
($22.0)
($100.2)
Same-Property Room Revenues(1)
$185.7
$156.6
Same-Property Room Revenues variance

18.6%
Same-Property Total Revenues(1)
$289.7
$234.1
Same-Property Total Revenues variance

23.8%
Same-Property Total Expenses(1)
$230.4
$186.8
Same-Property Total Expenses variance

23.3%
Same-Property EBITDA(1)
$59.3
$47.3
Same-Property EBITDA variance

25.4%
Adjusted EBITDA re (1)
$60.8
$46.5
Adjusted EBITDAre variance

30.8%
Adjusted FFO(1)
$22.4
$14.0
Adjusted FFO per diluted share(1)
$0.18
$0.11
Adjusted FFO per diluted share variance

63.6%




2023 Monthly Results
Same-Property Portfolio Highlights(2)
January
February
March

($ in millions except ADR and RevPAR data)
Occupancy
47.3%
59.9%
66.9%
ADR
$287
$293
$303
RevPAR
$135.9
$175.2
$202.4
Total Revenues
$80.8
$93.0
$115.9
Total Revenues growth rate (2023 vs. 2022)
58.7%
20.2%
9.6%
Hotel EBITDA
$6.0
$18.7
$34.6

⁽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.

Adjusted EBITDAre, Adjusted FFO and Adjusted FFO per share exclude the amortization of share-based compensation expense. Historical and comparable period results of such non-GAAP financial measures have been adjusted to reflect the exclusion.

⁽²⁾ Includes information for all the hotels the Company owned as of March 31, 2023, except for the following:

1 Hotel San Francisco
LaPlaya Beach Resort & Club

“Our urban hotels led the portfolio growth this quarter, with occupancy up 22.1 percent and ADR rising by 8.7 percent. Total RevPAR at our urban hotels increased 38.4 percent, and their EBITDA more than doubled over the prior-year period,” noted Mr. Bortz. “San Francisco and Washington, DC were our most improved urban markets during the quarter. San Francisco benefited from healthy citywide and corporate group demand as well as improved business transient demand. Our hotels in Washington, DC saw significantly improved business transient, group, and convention demand, as occupancy levels doubled versus the prior year period.”

In addition to several winter storms during Q1, the Company’s hotel operating results were also negatively impacted by the disruption from several ongoing redevelopment projects. These renovations displaced approximately 275 basis points of Same-Property RevPAR growth, approximately $6.8 million of hotel revenues, and approximately $5.0 million of Same-Property EBITDA.

Update on Impact from Hurricane Ian

The Company continues to complete significant repairs and rebuilding at the 189-room LaPlaya Beach Resort & Club. The resort’s Bay Tower (40 rooms) reopened during the first quarter. The Gulf Tower (70 rooms) partially reopened in April. The property’s Beach House (79 rooms) remains closed but is on track to be fully remediated, restored and reopened by the end of this year. The resort is currently operating with limited resort services and amenities, but we expect these to be restored over the next three months as rebuilding these facilities is completed.

The Company anticipates all operational disruption will be covered under the Company’s business interruption and property insurance programs, net of deductibles. A preliminary business interruption settlement of $8.1 million was recorded in Q1 related to lost income from Q4 2022. The Company anticipates an additional preliminary business interruption settlement of approximately $10.0 million to be approved in Q2 2023 relating to lost business from Q1 2023. Pebblebrook expects to record additional business interruption settlements in 2023 as these are determined and finalized with its insurance providers.

Update on Strategic Dispositions

The Company completed three property dispositions during the quarter, generating $135.3 million of sales proceeds. This included The Heathman Hotel (151 rooms) in Portland, Oregon, for $45.0 million, Hotel Colonnade (157 rooms) in Coral Gables, Florida, for $63.0 million, and the retail parcel located at 909 North Michigan Avenue in Chicago, Illinois, adjacent to the Company’s Westin Michigan Avenue for $27.3 million.

The Company has executed individual contracts to sell Monaco Seattle (189 rooms) for $63.3 million and Vintage Seattle (125 rooms) for $33.7 million to separate non-affiliated third parties. Each property sale is subject to normal closing conditions. The Company offers no assurances that these sales will be completed on these terms or at all. The property sales are targeted to be completed later in the second quarter of 2023.

Net proceeds from the Company’s dispositions will be used for general corporate purposes, including reducing the Company’s outstanding debt and repurchasing common and preferred shares.

Common Share Repurchases

Since our last Earnings Release in late February 2023, the Company has repurchased 3.0 million common shares at an average price of $13.85 per share. On a cumulative basis since October 2022, the Company has repurchased 8.5 million common shares, or approximately 6.4 percent of the Company’s previous outstanding share count, at an average price of $14.66 per share, representing an approximate 48% discount to the midpoint of the Company's most recently published estimated Net Asset Value (“NAV”).

Capital Investments and Strategic Property Redevelopments

During the first quarter, the Company completed $26.2 million of capital investments throughout its portfolio. The Company expects to invest a total of $145.0 to $155.0 million in capital improvements in 2023, which includes completing the redevelopment and repositioning projects at Hotel Solamar (to be converted to Margaritaville Hotel San Diego Gaslamp Quarter), Hilton San Diego Gaslamp Quarter, Jekyll Island Club Resort, Viceroy Santa Monica Hotel, Estancia La Jolla Hotel & Spa, the four guesthouses at Southernmost Beach Resort, as well as the development of a new outdoor venue and 11 additional alternative lodging units at Skamania Lodge. We also expect to commence the comprehensive redevelopment and repositioning of Newport Harbor Island Resort in the fourth quarter.

Balance Sheet and Liquidity

As of March 31, 2023, the Company had $146.5 million of consolidated cash, cash equivalents and restricted cash, in addition to $636.9 million of undrawn availability on its senior unsecured revolving credit facility, for total liquidity of $783.4 million. The Company had $2.4 billion in consolidated debt and convertible notes at an effective weighted-average interest rate of 4.1 percent. $1.7 billion, or 71% of the Company’s total outstanding debt and convertible notes, was at an effective weighted-average fixed interest rate of 3.0 percent, and $0.7 billion, or 29% percent, was at a weighted-average floating interest rate of 6.9 percent.

Common and Preferred Dividends

On March 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 distinct collection of experientially focused small brands and independent lifestyle hotels and resorts worldwide founded by Pebblebrook and several industry-leading independent lifestyle hotel operators. As of March 31, 2023, Curator had 97 member hotels and 102 master service agreements with preferred vendor partners, providing Curator member hotels with preferred pricing, enhanced operating terms, and early access to curated new technologies.

Q2 2023 Outlook

Based on current trends and assuming no material disruptions to travel caused by pandemics or worsening macro-economic conditions, the Company’s outlook for Q2 2023 is as follows:




Q2 2023 Outlook

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

Net income
$34.0
$38.9



Adjusted EBITDA re
$107.5
$113.0



Adjusted FFO
$65.0
$70.5
Adjusted FFO per diluted share
$0.52
$0.57

This Q2 2023 Outlook is based, in part, on the following estimates and assumptions:

Same-Property RevPAR

$227.6

$234.4

Same-Property RevPAR variance vs. 2022

1.0%

4.0%

Same-Property EBITDA

$108.0

$113.0

Same-Property EBITDA variance vs. 2022

(15.4%)

(11.5%)

The Company’s Same-Property RevPAR and Same-Property EBITDA assumptions exclude properties expected to be sold in Q2 2023.

The Company’s outlook incorporates the estimated negative impact of displaced revenues and EBITDA associated with the ongoing redevelopments and transformations of Solamar Hotel (conversion to Margaritaville Hotel San Diego Gaslamp Quarter), Hilton San Diego Gaslamp Quarter, Estancia La Jolla Hotel & Spa, Viceroy Santa Monica, Jekyll Island Club Resort, and a small renovation project at The Nines Portland. Same-Property RevPAR growth is expected to be negatively impacted by these major transformation projects in the second quarter by approximately 150 basis points, and Same-Property EBITDA is expected to be reduced by approximately $5.5 million.

The second quarter outlook also incorporates an estimated $10.0 million for an additional preliminary business interruption settlement at LaPlaya relating to lost income from the first quarter of 2023. This amount affects the Company’s Adjusted EBITDAre, Adjusted FFO, and net income.

First Quarter 2023 Earnings Call

The Company will conduct its quarterly analyst and investor conference call on Thursday, April 27, 2023, at 10:00 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 49 hotels

and resorts, totaling approximately 12,500 guest rooms across 14 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; 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 March 31, 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)*

March 31, 2023

December 31, 2022


(Unaudited)


ASSETS

Assets:



Investment in hotel properties, net
$
5,703,446


$
5,874,876

Hotels held for sale

70,859



44,861

Cash and cash equivalents

138,515



41,040

Restricted cash

8,034



11,229

Hotel receivables (net of allowance for doubtful accounts of $292 and $431, respectively)

43,422



45,258

Prepaid expenses and other assets

113,459



116,276

Total assets
$
6,077,735


$
6,133,540





LIABILITIES AND EQUITY





Liabilities:



Unsecured term loans, net of unamortized deferred financing costs

1,372,794



1,372,057

Convertible senior notes, net of unamortized debt premium and discount and deferred financing costs

746,560



746,326

Senior unsecured notes, net of unamortized deferred financing costs

49,940



49,920

Mortgage loans, net of unamortized debt discount and deferred financing costs

218,723



218,990

Accounts payable, accrued expenses and other liabilities

258,934



250,518

Lease liabilities - operating leases

320,469



320,402

Deferred revenues

82,450



73,603

Accrued interest

9,359



4,535

Liabilities related to hotels held for sale

2,214



428

Distribution payable

12,181



12,218

Total liabilities

3,073,624



3,048,997

Commitments and contingencies







Shareholders' Equity:



Preferred shares of beneficial interest, $0.01 par value (liquidation preference $715,000 at March 31, 2023 and December 31, 2022), 100,000,000 shares authorized; 28,600,000 shares issued and outstanding at March 31, 2023 and December 31, 2022

286



286

Common shares of beneficial interest, $0.01 par value, 500,000,000 shares authorized; 123,632,667 shares issued and outstanding at March 31, 2023 and 126,345,293 shares issued and outstanding at December 31, 2022

1,236



1,263

Additional paid-in capital

4,142,491



4,182,359

Accumulated other comprehensive income (loss)

29,891



35,724

Distributions in excess of retained earnings

(1,258,275
)


(1,223,117
)
Total shareholders' equity

2,915,629



2,996,515

Non-controlling interests

88,482



88,028

Total equity

3,004,111



3,084,543

Total liabilities and equity
$
6,077,735


$
6,133,540


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





Three months ended March 31,

2023

2022




Revenues:



Room
$
196,374


$
168,632

Food and beverage

75,763



62,424

Other operating

33,582



27,012

Total revenues
$
305,719


$
258,068





Expenses:



Hotel operating expenses:



Room
$
56,424


$
42,463

Food and beverage

58,672



46,050

Other direct and indirect

99,214



85,847

Total hotel operating expenses

214,310



174,360

Depreciation and amortization

58,369



59,100

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

28,904



30,457

General and administrative

9,988



9,708

Impairment

-



60,983

(Gain) loss on sale of hotel properties

(6,635
)


-

Business interruption insurance income

(8,089
)


-

Other operating expenses

3,670



1,123

Total operating expenses

300,517



335,731

Operating income (loss)

5,202



(77,663
)
Interest expense

(27,430
)


(22,572
)
Other

183



19

Income (loss) before income taxes

(22,045
)


(100,216
)
Income tax (expense) benefit

-



-

Net income (loss)

(22,045
)


(100,216
)
Net income (loss) attributable to non-controlling interests

883



(686
)
Net income (loss) attributable to the Company

(22,928
)


(99,530
)
Distributions to preferred shareholders

(10,988
)


(11,344
)
Net income (loss) attributable to common shareholders
$
(33,916
)

$
(110,874
)








Net income (loss) per share available to common shareholders, basic
$
(0.27
)

$
(0.85
)
Net income (loss) per share available to common shareholders, diluted
$
(0.27
)

$
(0.85
)




Weighted-average number of common shares, basic

125,488,415



130,904,299

Weighted-average number of common shares, diluted

125,488,415



130,904,299

Considerations Regarding Non-GAAP Financial Measures

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.

- 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 and Adjusted EBITDAre 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 and Adjusted EBITDAre does not reflect the underlying financial performance of the Company.

- Finance lease adjustment: The Company excludes the effect of non-cash interest expense from finance leases because it believes that including these non-cash adjustments in FFO and Adjusted EBITDAre 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 and Adjusted EBITDAre does not reflect the underlying financial performance of the Company.

- Non-cash interest expense, one-time operation suspension expenses, early extinguishment of debt, amortization of share-based compensation expense, issuance costs of redeemed preferred shares, and hurricane-related repairs costs: The Company excludes these items because the Company believes that including these adjustments in FFO does not reflect the underlying financial performance of the Company and its hotels.

- One-time operation suspension expenses, amortization of share-based compensation expense, and hurricane-related costs: The Company excludes these items because it believes that including these costs in EBITDAre 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.


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



Three months ended March 31,

2023

2022




Net income (loss)
$
(22,045
)

$
(100,216
)
Adjustments:



Real estate depreciation and amortization

58,284



59,010

Gain on sale of hotel properties

(6,635
)


-

Impairment loss

-



60,983

FFO
$
29,604


$
19,777

Distribution to preferred shareholders and unit holders

(12,152
)


(11,344
)
Issuance costs of redeemed preferred shares

-



-

FFO available to common share and unit holders
$
17,452


$
8,433

Transaction costs

53



15

Non-cash ground rent

1,906



1,938

Management/franchise contract transition costs

112



263

Interest expense adjustment for acquired liabilities

541



722

Finance lease adjustment

734



722

Non-cash amortization of acquired intangibles

(4,049
)


(542
)
Non-cash interest expense

-



49

Amortization of share-based compensation expense

2,879



2,355

Hurricane-related costs

2,785



-

Adjusted FFO available to common share and unit holders
$
22,413


$
13,955





FFO per common share - basic
$
0.14


$
0.06

FFO per common share - diluted
$
0.14


$
0.06

Adjusted FFO per common share - basic
$
0.18


$
0.11

Adjusted FFO per common share - diluted
$
0.18


$
0.11





Weighted-average number of basic common shares and units

126,496,795



131,765,112

Weighted-average number of fully diluted common shares and units

126,496,795



131,765,112

See “Considerations Regarding Non-GAAP Financial Measures” of this press release for important considerations regarding our use of non-GAAP financial measures.

Pebblebrook Hotel Trust
Reconciliation of Net Income (Loss) to EBITDA, EBITDAre and Adjusted EBITDAre
*($ in thousands)*
*(Unaudited)*





Three months ended March 31,

2023

2022




Net income (loss)
$
(22,045
)

$
(100,216
)
Adjustments:



Interest expense

27,430



22,572

Income tax expense (benefit)

-



-

Depreciation and amortization

58,369



59,100

EBITDA
$
63,754


$
(18,544
)
Gain on sale of hotel properties

(6,635
)


-

Impairment loss

-



60,983

EBITDAre
$
57,119


$
42,439

Transaction costs

53



15

Non-cash ground rent

1,906



1,938

Management/franchise contract transition costs

112



263

Non-cash amortization of acquired intangibles

(4,049
)


(542
)
Amortization of share-based compensation expense

2,879



2,355

Hurricane-related costs

2,785



-

Adjusted EBITDAre
$
60,805


$
46,468

See “Considerations Regarding Non-GAAP Financial Measures” of this press release for important considerations regarding our use of non-GAAP financial measures. Any differences are a result of rounding.


Pebblebrook Hotel Trust
Reconciliation of Q2 2023 Outlook Net Income (Loss) to FFO and Adjusted FFO
*($ in millions, except per share data)*
*(Unaudited)*





Three months ending June 30, 2023

Low

High




Net income (loss)
$
34


$
39

Adjustments:



Real estate depreciation and amortization

59



59

(Gain) loss on sale of hotel properties

(23
)


(23
)
Impairment loss

-



-

FFO
$
70


$
75

Distribution to preferred shareholders and unit holders

(12
)


(12
)
FFO available to common share and unit holders
$
58


$
63

Non-cash ground rent

2



2

Amortization of share-based compensation expense

3



3

Other

2



2

Adjusted FFO available to common share and unit holders
$
65


$
70





FFO per common share - diluted
$
0.47


$
0.51

Adjusted FFO per common share - diluted
$
0.52


$
0.57





Weighted-average number of fully diluted common shares and units

124.2



124.2


Pebblebrook Hotel Trust
Reconciliation of Q2 2023 Outlook Net Income (Loss) to EBITDA, EBITDAre and Adjusted EBITDAre
*($ in millions)*
*(Unaudited)*





Three months ending June 30, 2023

Low

High




Net income (loss)
$
34


$
39

Adjustments:



Interest expense and income tax expense

32



32

Depreciation and amortization

59



59

EBITDA
$
125


$
130

(Gain) loss on sale of hotel properties

(23
)


(23
)
Impairment loss

-



-

EBITDAre
$
102


$
107

Non-cash ground rent

2



2

Amortization of share-based compensation expense

3



3

Other

1



1

Adjusted EBITDAre
$
108


$
113


Pebblebrook Hotel Trust
Same-Property Statistical Data
*(Unaudited)*





Three months ended March 31,

2023

2022




Same-Property Occupancy

58.0
%


48.5
%
2023 vs. 2022 Increase/(Decrease)

19.6
%






Same-Property ADR
$
295.02


$
297.31

2023 vs. 2022 Increase/(Decrease)

(0.8
%)






Same-Property RevPAR
$
171.05


$
144.33

2023 vs. 2022 Increase/(Decrease)

18.5
%






Same-Property Total RevPAR
$
266.92


$
215.69

*2023 vs. 2022 Increase/(Decrease)*

*23.8*
%

Notes:

The schedule of hotel results for the three months ended March 31 includes information from all of the hotels the Company owned as of March 31, 2023, except for the following:

Q1 Same-Property Exclusions: 1 Hotel San Francisco, LaPlaya Beach Resort & Club

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 March 31,

2023 vs. 2022
Same-Property RevPAR variance:

Washington DC
126.6
%
San Francisco
117.5
%
Seattle
71.6
%
Chicago
50.7
%
Portland
34.5
%
San Diego
19.9
%
Los Angeles
14.9
%
Boston
9.8
%
Other
1.4
%
Southern Florida/Georgia
(7.6
%)


Urban
32.8
%
Resorts
(1.1
%)

Notes:

The schedule of hotel results for the three months ended March 31 includes information from all of the hotels the Company owned as of March 31, 2023, except for the following:

Q1 Same-Property Exclusions: 1 Hotel San Francisco, LaPlaya Beach Resort & Club

"Other" includes Newport, RI 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 March 31,

2023

2022




Same-Property Revenues:



Room
$
185,659


$
156,647

Food and beverage

72,504



53,318

Other

31,555



24,131

Total hotel revenues

289,718



234,096





Same-Property Expenses:



Room
$
53,441


$
39,878

Food and beverage

55,112



40,909

Other direct

7,569



6,273

General and administrative

26,681



21,322

Information and telecommunication systems

4,978



4,129

Sales and marketing

23,984



17,754

Management fees

8,063



7,404

Property operations and maintenance

12,605



10,779

Energy and utilities

10,496



8,871

Property taxes

15,177



18,356

Other fixed expenses

12,340



11,130

Total hotel expenses

230,446



186,805





Same-Property EBITDA
$
59,272


$
47,291





Same-Property EBITDA Margin

20.5
%


20.2
%

Notes:

The schedule of hotel results for the three months ended March 31 includes information from all of the hotels the Company owned as of March 31, 2023, except for the following:

Q1 Same-Property Exclusions: 1 Hotel San Francisco, LaPlaya Beach Resort & Club

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

2019

2019

2019

2019

2019










Occupancy

75
%


86
%


86
%


77
%


81
%
ADR
$
254


$
274


$
271


$
250


$
263

RevPAR
$
190


$
235


$
233


$
192


$
213











Hotel Revenues
$
325.2


$
402.9


$
396.9


$
343.3


$
1,468.4

Hotel EBITDA
$
86.9


$
143.0


$
135.0


$
93.0


$
457.9

Hotel EBITDA Margin

26.7
%


35.5
%


34.0
%


27.1
%


31.2
%











First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Full Year


2022



2022



2022



2022



2022











Occupancy

48
%


69
%


73
%


59
%


62
%
ADR
$
312


$
326


$
325


$
293


$
315

RevPAR
$
151


$
225


$
236


$
173


$
197











Hotel Revenues
$
258.2


$
391.1


$
407.0


$
313.4


$
1,369.8

Hotel EBITDA
$
59.5


$
136.9


$
130.5


$
60.9


$
387.8

Hotel EBITDA Margin

23.0
%


35.0
%


32.1
%


19.4
%


28.3
%











First Quarter









2023


















Occupancy

57
%








ADR
$
300









RevPAR
$
172



















Hotel Revenues
$
300.0









Hotel EBITDA
$
58.4









Hotel EBITDA Margin

19.5
%

Notes:

These historical hotel operating results include information for all of the hotels the Company owned as of March 31, 2023, as if they were owned as of January 1, 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.

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

2023 Same-Property Inclusion Reference Table

Hotels

Hotel Monaco Seattle

Hotel Vintage Seattle

LaPlaya Beach Resort & Club

1 Hotel San Francisco

Notes:

A property marked with an "X" in a specific quarter denotes that the same-property operating results of that property are included in the Same-Property Statistical Data and in the Schedule of Same-Property Results.

The Company's first quarter Same-Property RevPAR, RevPAR Growth, Total RevPAR, Total RevPAR Growth, ADR, Occupancy, Revenues, Expenses, EBITDA and EBITDA Margin include all of the hotels the Company owned as of March 31, 2023, except for the following:
- 1 Hotel San Francisco
- LaPlaya Beach Resort & Club

Operating statistics and financial results may include periods prior to the Company's ownership of the hotels.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230426005857/en/

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

Company Name:	Pebblebrook Hotel Trust of Beneficial Interest
Stock Symbol:	PEB
Market:	NYSE
Website:	pebblebrookhotels.com

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