Pebblebrook Sees Net Income, RevPAR Spike in Q2

BETHESDA, MD—Pebblebrook Hotel Trust has released its Q2 earnings, marking income and revenue increases throughout its portfolio.

“We’ve spoken previously about the opportunity to drive significant value creating reductions in expenses within our portfolio as a result of our larger size, as well as driving additional revenue growth through portfolio-wide initiatives,” Jon E. Bortz, chairman/president and CEO, Pebblebrook Hotel Trust said in an earnings call. “Based on our successful efforts to date, we believe we’re now achieving savings at an annualized rate of over $5 million. As previously communicated, our target for annual ongoing savings is $10M, and we feel we’re well on our way towards achieving that objective by the end of next year. We can see some of these benefits already in our second quarter.”

Q2 Financial Highlights:

  • Net income: $60.5 million
  • Same-Property EBITDA: $160.6 million, +0.1% YOY
  • Adj. EBITDAre: $151.6 million, +108.2% YOY
  • Adj. FFO per diluted share: $0.85, +4.9% YOY

Q2 Operating Highlights:

  • Same-Property Total RevPAR +2% YOY and RevPAR +1.4% YOY
  • Hotel operating performance at high end of expectations; Adjusted EBITDAre and Adjusted FFO exceeded expectations
  • Healthy RevPAR growth in Boston, San Diego, South Florida and San Francisco, which offset softer RevPAR performance in Seattle, Washington D.C.; Chicago and Portland, OR

Net Income: The company’s net income was $60.5 million in the second quarter of 2019, an increase of $2.2 million as compared to the same period of 2018.

Same-Property Operating Statistics: Same-Property Total RevPAR grew 2% over the second quarter of 2018. Same-Property RevPAR for the second quarter increased 1.4% over the prior year to $231.47, with Same-Property ADR rising 1.7% to $266.56 and Same-Property Occupancy declining by 0.3% to 86.8%.

Same-Property EBITDA and Margins: The company’s hotels generated $160.6 million of Same-Property EBITDA for the quarter ended June 30, 2019, up 0.1% over the same period of 2018. Same-Property Revenues climbed 2%, while Same-Property Expenses increased 3.1%, resulting in Same-Property EBITDA Margin for the quarter decreasing 70 basis points to 36.4%.

Operating Performance: Excluding the mandatory California Proposition 13 increases in real estate taxes for the California properties acquired as part of the company’s corporate acquisition in November 2018, Same-Property Expenses increased just 2.2% during the second quarter, resulting in Same-Property EBITDA Margin for the quarter decreasing only 13 basis points. Year-to-date through June, also excluding the Proposition 13 impact, Same-Property Expenses were well controlled, increasing 3.1% and Same-Property EBITDA margins were down just 2 basis points.

“In the second quarter, Same-Property Total RevPAR growth of 2% was in-line with our expectations as we continue to generate solid non-room revenue growth throughout the portfolio,” Bortz said. “Our hotel operating teams, working closely with our asset managers, delivered better top-line growth than their markets and direct competitors and also did an excellent job of implementing our expanded best practices program while controlling costs. We continue to make significant progress identifying and executing operating synergies due to our newfound economies of scale advantage with our larger portfolio of both lifestyle hotels and operators.”

Capital Investments

In the second quarter, the company completed $32.6 million of capital investments throughout its portfolio. The company has completed $69 million of capital investments and projects year to date through June 2019, including the completion of renovations and property improvements at W Boston, Mondrian Los Angeles, Sofitel Philadelphia at Rittenhouse Square and Skamania Lodge.