Same-Property EBITDA Increased 15.2 Percent; Same-Property RevPAR Increased 8.0 Percent; Adjusted EBITDA Rose 44.8 Percent; Adjusted FFO Per Diluted Share Climbed 64.7 Percent
BETHESDA, Md.– Pebblebrook Hotel Trust (NYSE: PEB) (the “Company”) today reported results for the first quarter ended March 31, 2016. The Company’s results include the following:
First Quarter 2016 2015
($ in millions except per share and RevPAR data)
Net income to common shareholders $6.6 $0.7 Net income per diluted share $0.09 $0.01 Same-Property RevPAR(1) $195.01 $180.50 Same-Property RevPAR growth rate 8.0% Same-Property EBITDA(1) $62.0 $53.8 Same-Property EBITDA growth rate 15.2% Same-Property EBITDA Margin(1) 29.8% 27.6% Adjusted EBITDA(1) $56.2 $38.8 Adjusted EBITDA growth rate 44.8% Adjusted FFO(1) $40.6 $24.4 Adjusted FFO per diluted share(1) $0.56 $0.34 Adjusted FFO per diluted share growth rate 64.7%
(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"), 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 are very pleased with our portfolio’s strong operating results in the first quarter,” said Jon E. Bortz, Chairman, President and Chief Executive Officer of Pebblebrook Hotel Trust. “Our results exceeded our outlook and the industry. Our outperformance was primarily due to strong demand in several of our west coast markets, particularly in San Francisco and Los Angeles, some of which was one-time in nature. We also benefitted from less renovation impact this year versus last year. We remain cautious about 2016 due to weakening business transient demand growth, a lack of visibility and continued global economic headwinds and uncertainties. Consequently, despite our first quarter beat, we are keeping our full year 2016 outlook unchanged.”
First Quarter Highlights
- Same-Property RevPAR and Room Revenue: Same-Property RevPAR in the first quarter of 2016 increased 8.0 percent over the same period of 2015 to $195.01. Same-Property Room Revenue increased by 9.9 percent, greater than RevPAR largely due to the extra day in February and the increase in the Same-Property room count. Same-Property ADR grew 3.1 percent from the prior year quarter to $236.23. Same-Property Occupancy rose 4.8 percent to 82.6 percent. Same-Property RevPAR for our wholly owned properties, which excludes the Company’s 49 percent interest in its six-hotel joint venture (the “Manhattan Collection”), increased 8.9 percent from the prior year period.
- Same-Property EBITDA: The Company’s hotels generated $62.0 million of Same-Property EBITDA for the quarter ended March 31, 2016, climbing 15.2 percent from the same period of 2015. Same-Property Revenues increased 6.8 percent, while Same-Property Expenses rose just 3.6 percent. As a result, Same-Property EBITDA Margin grew 217 basis points to 29.8 percent for the first quarter of 2016, as compared to the same period last year. For the quarter, flow-through of Same-Property Revenues to Same-Property EBITDA was 61.9 percent. Same-Property EBITDA for our wholly owned properties grew 15.9 percent compared with the prior year period.
- Adjusted EBITDA: The Company’s Adjusted EBITDA rose to $56.2 million from $38.8 million in the prior year period, an increase of $17.4 million, or 44.8 percent.
- Adjusted FFO: The Company’s Adjusted FFO climbed 66.6 percent to $40.6 million from $24.4 million in the prior year period.
- Dividends: On March 15, 2016, the Company declared a regular quarterly cash dividend of $0.38 per share on its common shares, an increase of 23 percent from the prior quarterly dividend of $0.31 per share, a regular quarterly cash dividend of $0.50 per share on its 8.00% Series B Cumulative Redeemable Preferred Shares and a regular quarterly cash dividend of $0.40625 per share on its 6.50% Series C Cumulative Redeemable Preferred Shares.
“During the quarter, our RevPAR growth was led by our properties in San Francisco, which benefitted from an overall strong quarter as well as the Super Bowl in February, along with our properties in West Los Angeles and San Diego. Both the West Los Angeles market and our properties experienced better than expected results due partly to the unfortunate displacement of families living in the Porter Ranch neighborhood caused by the natural gas leak in Aliso Canyon,” said Mr. Bortz. “Same-Property RevPAR for our portfolio increased 8.0 percent, above the industry’s 2.7 percent growth and in excess of our 3.0 percent to 6.0 percent outlook. Our hotels that were renovated and repositioned in 2015 also made significant strides in the quarter, increasing occupancy levels, rates and market share penetration. Overall, our performance continues to be depressed by our New York hotels. Same-Property RevPAR excluding the Manhattan Collection grew 8.9 percent for the year, with ADR climbing 4.1 percent.”
Capital Reinvestment and Asset Management
During the first quarter, the Company made $36.3 million of capital improvements throughout its portfolio, which includes the Company’s 49 percent interest in the Manhattan Collection. The Company completed renovations at Hotel Zeppelin San Francisco (formerly the Prescott Hotel San Francisco), The Nines, a Luxury Collection Hotel, Portland and Hotel Monaco Washington DC. We also commenced the renovation of Union Station Hotel Nashville, Autograph Collection in the first quarter.
In March, the Company completed a $35.0 million transformative renovation, repositioning and addition of 32 guest rooms at Hotel Zeppelin San Francisco. “We’re very excited about the launch of Hotel Zeppelin,” noted Mr. Bortz. “The initial guest response to our uniquely designed Hotel Zeppelin has been fantastic. This hotel is well situated in the Union Square market and should benefit from continued healthy business and leisure demand in the vibrant and growing San Francisco market as the hotel ramps to stabilization over the next few years.”
During the remainder of 2016 and early 2017, the Company has various major renovations and repositionings it plans to undertake at a number of its properties that will improve performance in future years, including:
- Union Station Hotel Nashville, Autograph Collection (estimated at $15.5 million), which has already begun its phased comprehensive guest rooms, public space and meeting space renovation expected to be completed in the third quarter of 2016;
- The Westin Colonnade, Coral Gables (estimated at $18.0 million), which already began its phased comprehensive guest rooms, public area and meeting space renovation, expected to be completed and re-launched as a Tribute Portfolio property late in the third quarter of 2016;
- Hotel Palomar Los Angeles Beverly Hills (estimated at $9.0 million), which will undergo a guest rooms and public space renovation to begin in the fourth quarter of 2016 with expected completion in the first quarter of 2017;
- Mondrian Los Angeles (estimated at $8.0 million), which will undergo a guest rooms renovation to begin in the fourth quarter of 2016 with expected completion in the first quarter of 2017;
- Revere Hotel Boston Common (estimated at $20.0 million), which will undergo a comprehensive property renovation to start in the fourth quarter of 2016 with expected completion in the first quarter of 2017; and
- The Tuscan Fisherman’s Wharf, a Best Western Plus Hotel (estimated at $15.0 million), which will undergo a comprehensive property renovation beginning early in 2017.
Balance Sheet
As of March 31, 2016, the Company had $1.3 billion in consolidated debt and $225.4 million in unconsolidated, non-recourse, secured debt, at weighted-average interest rates of 3.5 percent and 3.6 percent, respectively. The Company had $675.0 million outstanding in the form of unsecured term loans and $180.0 million outstanding on its $450.0 million senior unsecured revolving credit facility. As of March 31, 2016, the Company had $38.3 million of consolidated cash, cash equivalents and restricted cash and $12.9 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 interest in the Manhattan Collection.
On March 31, 2016, as defined in the Company’s credit agreement, the Company’s fixed charge coverage ratio was 3.0 times and total net debt to trailing 12-month corporate EBITDA was 5.1 times. Excluding its interest in the off-balance sheet Manhattan Collection, the Company’s fixed charge coverage ratio was 3.1 times, and net debt to trailing 12-month corporate EBITDA was 4.8 times.
Capital Markets
Year-to-date, Pebblebrook completed several capital markets transactions to help maintain its strong balance sheet and prudent capital structure including increasing two of its unsecured term loans, redeeming preferred shares and retiring mortgage debt:
- On January 6, 2016, the Company announced that it exercised the accordion options on two of its existing unsecured term loans to borrow an additional $150.0 million;
- On March 11, 2016, the Company redeemed all 5,600,000 of its issued and outstanding 7.875% Series A Cumulative Preferred Shares; and
- On April 5, 2016, the Company repaid the $62.8 million mortgage secured by the Embassy Suites San Diego Bay – Downtown, which was subject to a 6.28 percent interest rate.
“As evidenced by our recent debt originations and the redemption of our Series A Cumulative Preferred Shares, we’ve been able to significantly reduce our annualized fixed charges,” noted Raymond D. Martz, Chief Financial Officer of Pebblebrook Hotel Trust. “In 2016, we expect to make additional strides toward increasing our cash flow and reducing our leverage ratio through the refinancing of our higher-rated mortgage debt and through the potential disposition of a select number of properties.”
To view full financial results and tables click on PDF icon or visit:
http://investor.pebblebrookhotels.com/file.aspx?IID=4243454&FID=34046622
