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Pebblebrook's Union Station Hotel Under Contract for Sale

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Pebblebrook Hotel Trust PEB has announced the execution of a contract to sell Union Station Hotel Nashville, Autograph Collection to a third party for $56 million. The company is aimed at accomplishing the sale in the third quarter of this year.

Notably, the Bethesda, MD-based lodging REIT, which focuses on urban and resort lifestyle hotels in the United States, shelled out $52.3 million for this 125-room iconic landmark hotel on Broadway, in the center of downtown Nashville in December 2014. It marked the company’s first hotel investment in Nashville’s central business district.

This upper-upscale, full-service hotel, which emerged as a National Historic Landmark, initially opened in 1900 as the L&N Railroad Station. In 1986, the property was converted to a hotel and later underwent renovations for the conversion of the property to an Autograph Collection by Marriott hotel in 2012.

The coronavirus pandemic continues to wreak havoc, hitting the travel, airline, lodging and tourism, and event industries hard. It has resulted in a declining lodging demand, as states have imposed travel restrictions and mandatory stay-at-home orders to curb the spread, and meetings and conferences have been called off. As a result, business travelers are grounded, while leisure travelers are scared to go on an outing, affecting lodging REITs like Host Hotels & Resorts, Inc. HST, Chatham Lodging Trust CLDT and Sunstone Hotel Investors SHO among others.

Pebblebrook too has not been spared and withdrew its outlook for the ongoing year on Mar 9, as it experienced large number of group cancellations.

In response to both state and local government requirements and recommendations, the company has temporarily suspended operations at 46 of 54 hotels and resorts and lowered 2020 capital investments by $50 million, including deferring certain projects to 2021 and beyond.

The company’s first-quarter 2020 adjusted funds from operations (FFO) per share slumped 71.7% year over year to 13 cents, with same-property total revenues decreasing 23.1% to $255.8 million. As of Mar 31, 2020, the company had cash on hand of $746.8 million as well as no secured debt and no near-term debt maturities. Further, the sale of this property will offer added financial flexibility to sail through the challenging times.

Shares of Pebblebrook have depreciated 49.1%, wider than the 10.2% decline of its industry in the year-to-date period.

Currently, the stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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Host Hotels Resorts, Inc. (HST) : Free Stock Analysis Report
Sunstone Hotel Investors, Inc. (SHO) : Free Stock Analysis Report
Chatham Lodging Trust REIT (CLDT) : Free Stock Analysis Report
Pebblebrook Hotel Trust (PEB) : Free Stock Analysis Report
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