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Pebblebrook (PEB) Provides Operating Update, Revises Outlook

Per Pebblebrook Hotel Trust’s PEB recently released operating update, the company’s same-property operating results for November surpassed its last year’s performance by a considerable margin. The company’s same-property average daily rate (ADR) climbed 16% from the November 2019 levels.

From the beginning of fourth-quarter 2022 through early December, Pebblebrook’s urban markets outperformed fourth-quarter 2021 levels. Moreover, the strong urban performance compared with 2019 levels was mainly led by the company’s properties in Boston, Los Angeles, San Diego and Miami.

Pebblebrook’s west coast resorts outpaced the southeast resorts as the former displayed healthy group and transient demand trends.

Nonetheless, the demand for group and transient business softened more than expected in the weeks before and after the Thanksgiving holiday. Also, due to Hurricane Nicole, PEB’s resorts in the southeast experienced moderate disruptions, cancellations and slower pickup. These had a negative impact on the same-property operating results, and it fell short of the company’s outlook for the month.  

PEB’s same-property occupancy came in at 59%, down from 78% in November 2019. The same-property revenue per available room (RevPAR) and same-property average EBITDA fell 12% and 38%, respectively, from the same period in 2019.

In addition, the rebound in demand in mid-December, prior to the year-end holidays, at the company’s urban hotels has been lower than expected. Further, given the upcoming holiday season, it is likely that business travel around this time may soften, more so due to enhanced work-from-home flexibility.

Along with the operating update, Pebblebrook revised its fourth-quarter 2022 and full-year 2022 outlook.

For fourth-quarter 2022, the adjusted funds from operations (FFO) per share is expected in the range of 13-16 cents, down from its prior estimation of 18-24 cents. The Zacks Consensus Estimate for the same is currently pegged at 25 cents.

It estimates same-property RevPAR to lie between $173 million and $175 million, lower than its earlier guidance of $183-$188 million for fourth-quarter 2022. The same-property EBITDA is projected to be in the band of $61-$65 million, down from the previous estimation of $75-$83 million.

For 2022, Pebblebrook anticipates adjusted FFO per share to lie between $1.61 and $1.64, down from $1.66-$1.72, guided earlier. The Zacks Consensus Estimate for the same presently stands at $1.72.

The same-property RevPAR is expected to be $193 million, lower than its earlier guidance of $195-$196 million for 2022. The same-property EBITDA is anticipated to be in the band of $386.8-$390.8 million, down from the previous estimation of $400.8-$408.8 million.

PEB currently carries a Zacks Rank #4 (Sell).

Its shares have lost 7% in the past three months compared with its industry’s decline of 4%.

Zacks Investment Research
Zacks Investment Research

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Stocks to Consider

Some better-ranked stocks from the REIT sector are VICI Properties VICI, Lamar Advertising LAMR and Chatham Lodging Trust REIT CLDT, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for VICI Properties’ current-year FFO per share is currently pegged at $1.92.

The Zacks Consensus Estimate for Lamar Advertising’s 2022 FFO per share presently stands at $7.34.

The Zacks Consensus Estimate for Chatham Lodging Trust REIT’s ongoing year’s FFO per share is pegged at $1.17, presently.

Note: Anything related to earnings presented in this write-up represent FFO — a widely used metric to gauge the performance of REITs.

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