Pebblebrook Obtains Debt Financing


Pebblebrook Hotel Trust (PEB), a real estate investment trust (:REIT), has recently obtained a new $50.0 million non-recourse secured loan from PNC Bank NA. – the principal subsidiary of the PNC Financial Services Group Inc. (PNC). The five-year loan bears a fixed annual interest rate of 3.90% and is secured by a first mortgage on the company’s “306-room Hotel Sofitel Philadelphia” in Philadelphia, Pennsylvania.

The company intends to utilize the loan proceeds to pay down the outstanding balance on its credit facility, to fund future acquisitions and for general corporate purposes.

Following the proceeds from the Hotel Sofitel Philadelphia refinancing, the company has $261.0 million in consolidated debt and $280.6 million in non-recourse debt at weighted average interest rates of 4.6% and 3.2%, respectively. The company has no outstanding balance on its $200.0 million senior unsecured credit facility. The companyhas approximately $58.8 million in consolidated cash, cash equivalents and restricted cash.

Pebblebrook reported first quarter 2012 adjusted FFO (funds from operations) of 11 cents per share compared with 8 cents per share in the year-earlier quarter. Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

Pebblebrook acquires and invests primarily in upper upscale, full service hotels located in urban markets in major gateway cities.The company has an ownership interest in hotels located in nine states and the District of Columbia, including 14 markets.

Pebblebrook currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We have a long-term Neutral recommendation on the stock. One of its competitors, Host Hotels & Resorts Inc (HST) holds a Zacks #2 Rank, which implies a short- term Buy rating.

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