Pebblebrook Hotel Trust Provides 2013 Outlook

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BETHESDA, Md.–(–Pebblebrook Hotel Trust today provided its Outlook for 2013. The Company’s Outlook for 2013, which assumes continued improvement in economic activity, positive business travel trends and other significant assumptions, is as follows:

2013 Outlook
Low High
(in millions except per share/unit,

margin and RevPAR data)

Net income (loss) $40.8 $44.8
Net income (loss) per diluted share $0.66 $0.73
Adjusted EBITDA(1) $145.0 $149.0
Adjusted FFO(1) $90.0 $94.0
Adjusted FFO per diluted share(1) $1.46 $1.53
This 2013 Outlook is based on the following estimates and assumptions:
U.S. GDP Growth 1.75% 2.25%
U.S. Hotel Industry RevPAR Growth(2) 4.5% 6.5%
Pro Forma Portfolio RevPAR(2,3) $182 $186
Pro Forma Portfolio RevPAR Growth(2,3) 5.0% 7.0%
Pro Forma Portfolio Hotel EBITDA(3) $157.0 $162.0
Pro Forma Portfolio Hotel EBITDA Margin(3) 28.0% 28.5%
Pro Forma Portfolio Hotel EBITDA Margin Growth(3) 75 bps 125 bps
Acquisitions $112.5 $112.5
Corporate cash general and administrative expenses $11.0 $11.5
Corporate non-cash general and administrative expenses $3.0 $3.5
Weighted average fully diluted shares and units 61.6 61.6
(1) See tables later in this press release for a reconciliation of net income (loss) to non-GAAP financial measures, including earnings before interest, taxes, depreciation and amortization (“EBITDA”), Adjusted EBITDA, Funds from Operations (“FFO”), Adjusted FFO and Adjusted FFO per diluted share.
(2) “RevPAR” is defined as rooms revenue per available room.
(3) The Company’s estimates and assumptions for pro forma portfolio RevPAR, pro forma portfolio RevPAR growth, pro forma portfolio EBITDA, pro forma portfolio EBITDA margin and pro forma hotel EBITDA margin growth for 2013 include the hotels owned as of December 31, 2012, as well as the unidentified acquisition, as if they had been owned by the Company for the entire year of 2012, except for Hotel Zetta (formerly known as Hotel Milano), which the Company expects to include after it has owned the hotel for one full year, starting in the second quarter.

“We’re very pleased with our portfolio’s continued strong performance during the fourth quarter following the negative impact from Superstorm Sandy and the nor’easter that followed,” noted Jon Bortz, Chairman, President and Chief Executive Officer of Pebblebrook Hotel Trust. “We expect that 2013 will be another great year for the overall hotel industry, as hotel demand growth is expected to continue to exceed supply growth in the U.S., allowing for substantial ongoing improvement in pricing power and average daily rates. We’re forecasting U.S. industry RevPAR to increase between 4.5% and 6.5% over 2012. Our portfolio, comprised of high quality hotels located in major gateway cities, should benefit from this strong recovery in travel and continue to outperform the industry. We’re forecasting Pro Forma Portfolio RevPAR to increase 5.0% to 7.0%, even after accounting for an expected 100 basis point negative impact from our Affinia 50 renovation.”

The Company’s 2013 Outlook includes the disruption associated with the comprehensive renovation and 41-room expansion of the Affinia 50, which is scheduled to begin in late January 2013 and be substantially complete by the fourth quarter of 2013. This renovation is expected to reduce the Company’s forecasted portfolio RevPAR growth by 100 basis points and forecasted Hotel EBITDA margins by 60 to 70 basis points as compared to 2012.

“We’re very excited by the significant value that will be created through this complete renovation and reconfiguration of Affinia 50, allowing us to reposition the hotel at a higher level and add 20% more keys. Combined, these improvements will lead to the generation of significant increases in the hotel’s room revenues and operating cash flow in 2014 and beyond,” noted Mr. Bortz.

The Company’s 2013 Outlook reflects the projected operating and financial performance from the hotels the Company owned as of December 31, 2012, as well as one unidentified hotel acquisition for $112.5 million in one of Pebblebrook’s targeted markets. The Company expects to close on the acquisition of this property, which the Company currently has under contract to purchase, within the next 30 days.

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