Date of Report (Date of Earliest Event Reported): | December 19, 2018 |
(Exact name of registrant as specified in its charter) |
Maryland | 001-34571 | 27-1055421 |
_____________________ (State or other jurisdiction | _____________ (Commission | ______________ (I.R.S. Employer |
of incorporation) | File Number) | Identification No.) |
7315 Wisconsin Avenue, 1100 West, Bethesda, Maryland | 20814 | |
______________________________ (Address of principal executive offices) | ___________ (Zip Code) |
Registrant’s telephone number, including area code: | (240) 507-1300 |
Former name or former address, if changed since last report |
Exhibit No. | Description | |
Press release, issued December 19, 2018, relating to the Company's 2018 Outlook. |
PEBBLEBROOK HOTEL TRUST | |||
December 20, 2018 | By: | /s/ Raymond D. Martz | |
Name: | Raymond D. Martz | ||
Title: | Executive Vice President, Chief Financial Officer, Treasurer and Secretary |
2018 Outlook as of December 19, 2018 | Variance to Prior Outlook as of November 1, 2018 | ||||||||
Low | High | Low | High | ||||||
($ and shares/units in millions, except per share and RevPAR data) | |||||||||
Net income (loss) | $49.1 | $54.1 | ($65.8) | ($65.8) | |||||
Adjusted EBITDAre | $250.3 | $255.3 | $6.4 | $6.4 | |||||
Adjusted EBITDAre growth rate | 7.4% | 9.5% | 2.7% | 2.7% | |||||
Adjusted FFO | $178.0 | $183.0 | ($0.5) | ($0.5) | |||||
Adjusted FFO per diluted share | $2.37 | $2.44 | ($0.20) | ($0.20) | |||||
Adjusted FFO per diluted share growth rate | (7.8%) | (5.1%) | (7.8%) | (7.8%) |
Same-Property RevPAR | $200 | $202 | ($8) | ($8) | |||||
Same-Property RevPAR growth rate | 0.0% | 1.0% | - | - | |||||
Same-Property EBITDA | $258.9 | $263.9 | $6.3 | $6.3 | |||||
Same-Property EBITDA growth rate | (0.8%) | 1.2% | - | - | |||||
Same-Property EBITDA Margin | 31.9 | % | 32.4% | (1.2%) | (1.2%) | ||||
Same-Property EBITDA Margin growth rate | (75 bps) | (25 bps) | - | - | |||||
Corporate cash general and administrative expenses | $17.8 | $17.8 | $0.5 | $0.5 | |||||
Corporate non-cash general and administrative expenses | $6.2 | $6.2 | - | - | |||||
Total capital investments related to renovations, capital maintenance and return on investment projects | $60.0 | $70.0 | - | - | |||||
Weighted-average fully diluted shares and units | 75.0 | 75.0 | 5.5 | 5.5 |
New Q4 2018 Outlook as of December 19, 2018 | Variance to Old Outlook as of November 1, 2018 | |||||||||||||
Low | High | Low | High | |||||||||||
($ and shares/units in millions, except per share and RevPAR data) | ||||||||||||||
Net income (loss) | ($63.6 | ) | ($58.6 | ) | ($65.8 | ) | ($65.8 | ) | ||||||
Same-Property RevPAR | $168 | $169 | ($14 | ) | ($17 | ) | ||||||||
Same-Property RevPAR growth rate | (1.0%) | - | 2.5% | 1.5% | ||||||||||
Same-Property EBITDA | $52.6 | $57.6 | $6.3 | $6.3 | ||||||||||
Same-Property EBITDA growth rate | (12.6%) | (4.3%) | 1.4% | 0.4% | ||||||||||
Same-Property EBITDA Margin | 24.4% | 24.9% | (2.8%) | (2.8%) | ||||||||||
Same-Property EBITDA Margin growth rate | (250 bps) | (200 bps) | 100 bps | 100 bps | ||||||||||
Adjusted EBITDAre | $48.7 | $53.7 | $6.4 | $6.4 | ||||||||||
Adjusted EBITDAre growth rate | 4.1% | 14.8% | 13.7% | 13.7% | ||||||||||
Adjusted FFO | $24.5 | $29.5 | ($0.5 | ) | ($0.5 | ) | ||||||||
Adjusted FFO per diluted share | $0.27 | $0.32 | ($0.09 | ) | ($0.11 | ) | ||||||||
Adjusted FFO per diluted share growth rate | (44.9%) | (34.7%) | (18.4%) | (22.5%) | ||||||||||
Weighted-average fully diluted shares and units | 91.0 | 91.0 | 21.5 | 21.5 |
Pebblebrook Hotel Trust | |||||||||||||||
Reconciliation of Outlook of Net Income (Loss) to FFO and Adjusted FFO | |||||||||||||||
($ in millions, except per share data) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three months ending December 31, 2018 | Year ending December 31, 2018 | ||||||||||||||
Low | High | Low | High | ||||||||||||
Net income (loss) | $ | (64 | ) | $ | (59 | ) | $ | 49 | $ | 54 | |||||
Adjustments: | |||||||||||||||
Depreciation and amortization | 38 | 38 | 113 | 113 | |||||||||||
Loss on sale of hotel properties | 2 | 2 | 2 | 2 | |||||||||||
FFO | $ | (24 | ) | $ | (19 | ) | $ | 164 | $ | 169 | |||||
Distribution to preferred shareholders | (5 | ) | (5 | ) | (17 | ) | (17 | ) | |||||||
FFO available to common share and unit holders | $ | (29 | ) | $ | (24 | ) | $ | 147 | $ | 152 | |||||
Non-cash ground rent | 1 | 1 | 3 | 3 | |||||||||||
Gain on insurance settlement | — | — | (14 | ) | (14 | ) | |||||||||
Business interruption proceeds | — | — | 6 | 6 | |||||||||||
Unrealized gain on investment | — | — | (24 | ) | (24 | ) | |||||||||
Transaction and other expenses | 53 | 53 | 60 | 60 | |||||||||||
Adjusted FFO available to common share and unit holders | $ | 25 | $ | 30 | $ | 178 | $ | 183 | |||||||
FFO per common share - diluted | $ | (0.32 | ) | $ | (0.26 | ) | $ | 1.96 | $ | 2.03 | |||||
Adjusted FFO per common share - diluted | $ | 0.27 | $ | 0.32 | $ | 2.37 | $ | 2.44 | |||||||
Weighted-average number of fully diluted common shares and units | 91.0 | 91.0 | 75.0 | 75.0 | |||||||||||
To supplement the Company’s consolidated financial statements presented in accordance with U.S. generally accepted accounting principles ("GAAP"), this press release includes certain non-GAAP financial measures as defined under Securities and Exchange Commission ("SEC") rules. These measures are not in accordance with, or an alternative to, measures prepared in accordance with GAAP and may be different from similarly titled non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with the Company’s results of operations determined in accordance with GAAP. Funds from Operations (“FFO”) - FFO represents net income (computed in accordance with GAAP), excluding gains or losses from sales of properties, plus real estate-related depreciation and amortization and after adjustments for unconsolidated partnerships. The Company considers FFO a useful measure of performance for an equity REIT because it facilitates an understanding of the Company's operating performance without giving effect to real estate depreciation and amortization, which assume that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, the Company believes that FFO provides a meaningful indication of its performance. The Company also considers FFO an appropriate performance measure given its wide use by investors and analysts. The Company computes FFO in accordance with standards established by the Board of Governors of Nareit in its March 1995 White Paper (as amended in November 1999 and April 2002), which may differ from the methodology for calculating FFO utilized by other equity REITs and, accordingly, may not be comparable to that of other REITs. Further, FFO does not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments and uncertainties, nor is it indicative of funds available to fund the Company’s cash needs, including its ability to make distributions. The Company presents FFO per diluted share calculations that are based on the outstanding dilutive common shares plus the outstanding Operating Partnership units for the periods presented. The Company also evaluates its performance by reviewing Adjusted FFO because it believes that adjusting FFO to exclude certain recurring and non-recurring items described below provides useful supplemental information regarding the Company's ongoing operating performance and that the presentation of Adjusted FFO, when combined with the primary GAAP presentation of net income (loss), more completely describes the Company's operating performance. The Company adjusts FFO for the following items, which may occur in any period, and refers to this measure as Adjusted FFO: - Non-cash ground rent: The Company excludes the non-cash ground rent expense, which is primarily made up of the straight-line rent impact from a ground lease. - Gain on insurance settlement: The Company excludes the gain on insurance settlement because the Company believes that including this adjustment in FFO does not reflect the underlying financial performance of the Company and its hotels. - Business interruption proceeds: The Company includes business interruption proceeds because the Company believes that including these proceeds reflects the underlying financial performance of the Company and its hotels. - Unrealized gain on investment: The Company excludes the unrealized gain on investment because the Company believes that including this adjustment in FFO does not reflect the underlying financial performance of the Company and its hotels. - Transaction and other expenses: The Company excludes other expenses, which include hotel acquisition and disposition costs, management/franchise contract transition costs, interest expense adjustment for acquired liabilities, capital lease adjustment, non-cash amortization of acquired intangibles, estimated hurricane related repairs and cleanup costs and interest expense adjustment for novated swaps because the Company believes that including these non-cash adjustments in FFO does not reflect the underlying financial performance of the Company and its hotels. The Company’s presentation of FFO in accordance with the Nareit White Paper, and as adjusted by the Company, should not be considered as an alternative to net income (computed in accordance with GAAP) as an indicator of the Company’s financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of its liquidity. Any differences are a result of rounding. | ||||||||||||||||
Pebblebrook Hotel Trust | ||||||||||||||||
Reconciliation of Outlook of Net Income (Loss) to EBITDAre and Adjusted EBITDAre | ||||||||||||||||
($ in millions) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three months ending December 31, 2018 | Year ending December 31, 2018 | |||||||||||||||
Low | High | Low | High | |||||||||||||
Net income (loss) | $ | (64 | ) | $ | (59 | ) | $ | 49 | $ | 54 | ||||||
Adjustments: | ||||||||||||||||
Interest expense and income tax expense | 19 | 19 | 56 | 56 | ||||||||||||
Depreciation and amortization | 38 | 38 | 113 | 113 | ||||||||||||
EBITDA | $ | (7 | ) | $ | (2 | ) | $ | 218 | $ | 223 | ||||||
Loss on sale of hotel properties | 2 | 2 | 2 | 2 | ||||||||||||
EBITDAre | $ | (5 | ) | $ | — | $ | 220 | $ | 225 | |||||||
Non-cash ground rent | 1 | 1 | 3 | 3 | ||||||||||||
Gain on insurance settlement | — | — | (14 | ) | (14 | ) | ||||||||||
Business interruption proceeds | — | — | 6 | 6 | ||||||||||||
Unrealized gain on investment | — | — | (24 | ) | (24 | ) | ||||||||||
Transaction and other expenses | 53 | 53 | 59 | 59 | ||||||||||||
Adjusted EBITDAre | $ | 49 | $ | 54 | $ | 250 | $ | 255 | ||||||||
To supplement the Company’s consolidated financial statements presented in accordance with U.S. generally accepted accounting principles ("GAAP"), this press release includes certain non-GAAP financial measures as defined under Securities and Exchange Commission ("SEC") rules. These measures are not in accordance with, or an alternative to, measures prepared in accordance with GAAP and may be different from similarly titled non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with the Company’s results of operations determined in accordance with GAAP. Earnings before Interest, Taxes, and Depreciation and Amortization ("EBITDA") - The Company believes that EBITDA provides investors a useful financial measure to evaluate its operating performance, excluding the impact of our capital structure (primarily interest expense) and our asset base (primarily depreciation and amortization). Earnings before Interest, Taxes, and Depreciation and Amortization for Real Estate ("EBITDAre") - The Company believes that EBITDAre provides investors a useful financial measure to evaluate its operating performance, and the Company presents EBITDAre in accordance with the National Association of Real Estate Investment Trusts ("Nareit") guidelines, as defined in its September 2017 white paper "Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate." EBITDAre adjusts EBITDA for the following items, which may occur in any period, and refers to these measures as Adjusted EBITDAre: (1) gains or losses of on the disposition of depreciated property, including gains or losses on change of control; (2) impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate; and (3) adjustments to reflect the entity's share of EBITDAre of unconsolidated affiliates. The Company also evaluates its performance by reviewing Adjusted EBITDAre because it believes that adjusting EBITDAre to exclude certain recurring and non-recurring items described below provides useful supplemental information regarding the Company's ongoing operating performance and that the presentation of Adjusted EBITDAre, when combined with the primary GAAP presentation of net income (loss), more completely describes the Company's operating performance. The Company adjusts EBITDAre for the following items, which may occur in any period, and refers to these measures as Adjusted EBITDAre: - Non-cash ground rent: The Company excludes the non-cash ground rent expense, which is primarily made up of the straight-line rent impact from a ground lease. - Gain on insurance settlement: The Company excludes the gain on insurance settlement because the Company believes that including this adjustment in EBITDAre does not reflect the underlying financial performance of the Company and its hotels. - Business interruption proceeds: The Company includes business interruption proceeds because the Company believes that including these proceeds reflects the underlying financial performance of the Company and its hotels. - Unrealized gain on investment: The Company excludes the unrealized gain on investment because the Company believes that including this adjustment in EBITDAre does not reflect the underlying financial performance of the Company and its hotels. - Transaction and other expenses: The Company excludes other expenses, which include hotel acquisition and disposition costs, management/franchise contract transition costs, non-cash amortization of acquired intangibles, estimated hurricane related repairs and cleanup costs and interest expense adjustment for novated swaps because the Company believes that including these non-cash adjustments in EBITDAre does not reflect the underlying financial performance of the Company and its hotels. The Company’s presentation of EBITDAre, and as adjusted by the Company, should not be considered as an alternative to net income (computed in accordance with GAAP) as an indicator of the Company’s financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of its liquidity. Any differences are a result of rounding. | ||||||||||||||||
Pebblebrook Hotel Trust | |||||||||||||||||||||
Historical Operating Data | |||||||||||||||||||||
($ in millions except ADR and RevPAR data) | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Historical Operating Data: | |||||||||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Full Year | |||||||||||||||||
2017 | 2017 | 2017 | 2017 | 2017 | |||||||||||||||||
Occupancy | 78 | % | 87 | % | 88 | % | 77 | % | 83 | % | |||||||||||
ADR | $ | 241 | $ | 260 | $ | 253 | $ | 239 | $ | 249 | |||||||||||
RevPAR | $ | 189 | $ | 226 | $ | 222 | $ | 184 | $ | 205 | |||||||||||
Hotel Revenues | $ | 371.0 | $ | 444.5 | $ | 434.4 | $ | 381.6 | $ | 1,631.6 | |||||||||||
Hotel EBITDA | $ | 111.9 | $ | 168.0 | $ | 158.0 | $ | 115.4 | $ | 553.3 | |||||||||||
Hotel EBITDA Margin | 30.2 | % | 37.8 | % | 36.4 | % | 30.2 | % | 33.9 | % | |||||||||||
First Quarter | Second Quarter | Third Quarter | |||||||||||||||||||
2018 | 2018 | 2018 | |||||||||||||||||||
Occupancy | 76 | % | 87 | % | 88 | % | |||||||||||||||
ADR | $ | 235 | $ | 262 | $ | 257 | |||||||||||||||
RevPAR | $ | 179 | $ | 229 | $ | 227 | |||||||||||||||
Hotel Revenues | $ | 359.7 | $ | 453.7 | $ | 446.6 | |||||||||||||||
Hotel EBITDA | $ | 100.2 | $ | 169.8 | $ | 161.5 | |||||||||||||||
Hotel EBITDA Margin | 27.9 | % | 37.4 | % | 36.2 | % | |||||||||||||||
These historical hotel operating results include information for all of the hotels the Company owned as of December 19, 2018. These historical operating results include periods prior to the Company's ownership of the hotels. The information above does not reflect the Company's corporate general and administrative expense, interest expense, property acquisition costs, depreciation and amortization, taxes and other expenses. Any differences are a result of rounding. The information above has not been audited and has been presented only for comparison purposes. | |||||||||||||||||||||
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