Market Overview

Pebblebrook Hotel Trust Reports Second Quarter 2018 Results

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Pebblebrook Hotel Trust (NYSE:PEB) (the "Company") today reported
results for the second quarter ended June 30, 2018. The Company's
results include the following:

     
Second Quarter Six Months Ended June 30,
2018   2017 2018   2017
($ in millions except per share and RevPAR data)
Net income (loss) $58.3   $43.7 $82.8   $57.8
 
Same-Property RevPAR(1) $223.81 $218.19 $209.57 $206.93
Same-Property RevPAR growth rate 2.6% 1.3%
 
Same-Property Total RevPAR(1) $325.39 $315.48 $307.05 $299.67
Same-Property Total RevPAR growth rate 3.1% 2.5%
 
Same-Property EBITDA(1) $74.8 $71.6 $130.4 $126.0
Same-Property EBITDA growth rate 4.5% 3.5%
Same-Property EBITDA Margin(1) 36.2% 35.8% 33.7% 33.4%
 
Adjusted EBITDAre(1) $72.8 $67.2 $132.1 $116.2
Adjusted EBITDAre growth rate 8.4% 13.7%
 
Adjusted FFO(1) $56.0 $52.1 $102.2 $90.9
Adjusted FFO per diluted share(1) $0.81 $0.75 $1.47 $1.28
Adjusted FFO per diluted share growth rate 8.0% 14.8%
 

(1)

 

See tables later in this press release for a description of
same-property information and reconciliations from net income
(loss) to non-GAAP financial measures, including Earnings Before
Interest, Taxes, Depreciation and Amortization ("EBITDA"), EBITDA
for Real Estate ("EBITDAre"), Adjusted EBITDAre, Funds from
Operations ("FFO"), FFO per share, Adjusted FFO and Adjusted FFO
per share.

 

For the details as to which hotels are included in
Same-Property Revenue Per Available Room ("RevPAR"), Same-Property
Total Revenue Per Available Room ("Total RevPAR"), Average Daily
Rate ("ADR"), Occupancy, Revenues, Expenses, EBITDA and EBITDA
Margins appearing in the table above and elsewhere in this press
release, refer to the Same-Property Inclusion Reference Table
later in this press release.

 

"During the second quarter, our portfolio generated healthy year over
year growth in operational results which exceeded our expectations,"
said Jon E. Bortz, Chairman, President and Chief Executive Officer of
Pebblebrook Hotel Trust. "Overall, demand accelerated in the second
quarter from the first quarter, driven by improvements in business
travel demand, both group and transient, and inbound international
travel that has reversed and is now growing. Elevated group spend that
we experienced in the first quarter continued throughout the second
quarter. Leisure remains strong, and non-room revenues continued to
increase above our expectations. This enabled us to beat our second
quarter outlook for Same-Property EBITDA, Adjusted EBITDAre and
Adjusted FFO per diluted share. We expect that the encouraging travel
demand trends we've been experiencing will continue into the second half
of the year as short-term group and transient booking trends are very
positive."

Second Quarter Highlights

  • Net income: The Company's net income was $58.3 million in the
    second quarter of 2018, increasing $14.6 million as compared to the
    same period of 2017.
  • Same-Property RevPAR and Same-Property Total RevPAR:
    Same-Property RevPAR for the quarter increased 2.6 percent versus 2017
    to $223.81. Same-Property ADR climbed 1.5 percent over the prior year
    to $254.81. Same-Property Occupancy grew 1.1 percent to 87.8 percent.
    Same-Property Total RevPAR increased 3.1 percent over the same period
    of 2017 to $325.39.
  • Same-Property EBITDA: The Company's hotels generated $74.8
    million of Same-Property EBITDA for the quarter ended June 30, 2018,
    increasing 4.5 percent over the same period of 2017. Same-Property
    Revenues grew 3.2 percent, while Same-Property Expenses were held to
    an increase of only 2.4 percent. Same-Property EBITDA Margin increased
    47 basis points to 36.2 percent for the second quarter of 2018, as
    compared to the same period last year.
  • Adjusted EBITDAre: The Company's Adjusted EBITDAre
    grew to $72.8 million from $67.2 million in the prior year period, an
    increase of 8.4 percent. Adjusted EBITDAre includes $1.9
    million of business interruption income related to lost EBITDA
    incurred and forecasted in 2018 at LaPlaya Beach Resort & Club
    ("LaPlaya") and $2.4 million of dividend income received from the
    Company's investment in liquid marketable securities, $3.1 million of
    which was not included in the Company's second quarter outlook.
    Beginning this quarter, the Company is reporting and forecasting
    Adjusted EBITDAre. Adjusted EBITDAre is the same as the
    previously reported and forecasted Adjusted EBITDA.
  • Adjusted FFO: The Company's Adjusted FFO increased 7.4 percent
    to $56.0 million from $52.1 million in the prior year period.
  • Dividends: On June 15, 2018, the Company declared a regular
    quarterly cash dividend of $0.38 per share on its common shares, a
    regular quarterly cash dividend of $0.40625 per share on its 6.50%
    Series C Cumulative Redeemable Preferred Shares of Beneficial Interest
    and a regular quarterly cash dividend of $0.39844 per share on its
    6.375% Series D Cumulative Redeemable Preferred Shares of Beneficial
    Interest.

"Our hotels performed very well throughout the second quarter and took
advantage of improving business demand fundamentals, driving solid
results across our portfolio," noted Mr. Bortz. "San Francisco was our
strongest market in the second quarter, with RevPAR climbing 15.5
percent, largely attributed to a more active convention calendar at the
Moscone Convention Center, the favorable ramp-up of Hotel Zoe
Fisherman's Wharf, which was redeveloped and transformed last year, and
our newfound ability to drive ADR growth with increased compression in
the San Francisco market. In the second quarter, Same-Property RevPAR
for our portfolio grew 2.6 percent, at the upper end of our guidance of
plus 1.0 percent to 3.0 percent. Same-Property Total Revenue rose 3.2
percent, a direct result of our efforts to enhance the hotel experience
for our guests through enriched amenities and additional value created
in our reconcepted food and beverage outlets and public areas. These
non-room revenues increased by 4.4 percent in the quarter. Our asset
managers and operational teams were able to limit Same-Property Expense
growth to 2.4 percent by relentlessly implementing our best practices
and successfully achieving further efficiencies. As a result,
Same-Property EBITDA increased 4.5 percent, which was $1.4 million above
the upper end of our guidance."

Update on Impact from Hurricane Irma on LaPlaya
Beach Resort & Club

During the second quarter of 2018, the Company executed a finalized
settlement agreement with its insurance carriers providing for $20.5
million of insurance proceeds for the remediation and repair work for
damages caused by Hurricane Irma in September of 2017. This settlement
includes $1.9 million of 2018 business interruption income which was
also recorded as business interruption proceeds in the second quarter of
2018 and was not previously included in the Company's 2018 outlook. The
Company is confident that the resort will be fully restored by the
conclusion of the construction and go-back work later this year.

Capital Reinvestments

In the second quarter, the Company completed $17.1 million of capital
investments throughout its portfolio. In June, the Company substantially
completed its $8.5 million investment in the redevelopment of Hotel
Zephyr Fisherman's Wharf's Zephyr Walk. The approximately 46,000 square
feet of street-level retail space has been significantly upgraded and
enhanced, and the Company will continue its re-leasing efforts
throughout the year. During the remainder of 2018, the Company will
execute additional renovations at a number of properties that will
improve performance in future years, including:

  • Mondrian Los Angeles (estimated at $18.0 million), which will undergo
    a renovation of the guestrooms and guest bathrooms, as well as our
    legendary Skybar, beginning in the fourth quarter of this year, with
    an expected completion date in the first quarter of 2019;
  • W Hotel Boston (estimated at $10.0 million), which will undergo a
    guestroom renovation beginning in the fourth quarter of 2018, with an
    expected completion date in the first quarter of 2019;
  • Sir Francis Drake (estimated at $9.0 million), which includes a lobby
    and an expanded guestroom refresh, featuring guest bathroom tub to
    shower conversions, beginning in the third quarter of this year, to be
    completed at the end of 2018; and
  • Hotel Zelos San Francisco (estimated at $6.0 million), which involves
    a guestroom refresh and an expanded guest bathroom renovation to be
    completed by the end of 2018, which will build on the success of the
    previously transformed lobby, guestroom corridors and the
    award-winning Dirty Habit, all of which were completed in 2014.

Year-to-Date Highlights

  • Net Income: The Company's net income was $82.8 million for the
    six months ended June 30, 2018, an increase of $25.1 million over the
    same period of 2017.
  • Same-Property RevPAR and Same-Property Total Revenue per
    Available Room
    : Same-Property RevPAR for the six months ended June
    30, 2018 increased 1.3 percent over the same period of 2017 to
    $209.57. Year-to-date Same-Property ADR rose 1.1 percent from the
    comparable period of 2017 to $249.90, and year-to-date Same-Property
    Occupancy increased 0.2 percent to 83.9 percent. Same-Property Total
    Revenue per Available Room grew 2.5 percent over the same period of
    2017.
  • Same-Property EBITDA: The Company's hotels generated $130.4
    million of Same-Property EBITDA for the six months ended June 30,
    2018, up 3.5 percent compared to the same period of 2017.
    Same-Property Revenues climbed 2.6 percent, while Same-Property
    Expenses rose just 2.2 percent. As a result, Same-Property EBITDA
    Margin for the six months ended June 30, 2018 increased 28 basis
    points to 33.7 percent as compared to the same period last year.
  • Adjusted EBITDAre: The Company's Adjusted EBITDAre
    increased 13.7 percent, or $15.9 million, to $132.1 million from
    $116.2 million in the prior-year period.
  • Adjusted FFO: The Company's Adjusted FFO grew 12.5 percent to
    $102.2 million from $90.9 million in the prior year period. The
    Company's Adjusted FFO per diluted share increased 14.8 percent to
    $1.47 compared with the same period of 2017.

Capital Markets and Balance Sheet

As of June 30, 2018, the Company had $1.2 billion in consolidated debt
at an effective weighted-average interest rate of 3.5 percent. The
Company had $675.0 million outstanding in the form of unsecured term
loans and $383.0 million outstanding on its $450.0 million senior
unsecured revolving credit facility. As of June 30, 2018, the Company
had $25.5 million of consolidated cash, cash equivalents and restricted
cash.

During the quarter, the Company increased its strategic purchases in
LaSalle Hotel Properties (NYSE:LHO) ("LaSalle") and now holds an
ownership position of approximately 9.8 percent of the outstanding
common shares of LaSalle, comprising approximately $349.8 million of
invested capital. As of June 30, 2018, excluding the dividend income and
associated debt related to the ownership of the LaSalle shares, the
Company's fixed charge coverage ratio was 4.2 times and total net debt
to trailing 12-month corporate EBITDA was 3.4 times.

Proposed Combination with LaSalle Hotel
Properties

On June 11, 2018, the Company issued an offer letter to LaSalle's board,
in which the Company submitted a merger proposal for a strategic
combination with LaSalle, based on a fixed exchange ratio of 0.92 common
share of the Company ("Pebblebrook common shares") for each LaSalle
common share. The Company's offer provides LaSalle's common shareholders
with the option for each share to elect to receive a fixed price of
$37.80 per LaSalle share in cash instead of Pebblebrook common shares,
subject to a cap of 20% of LaSalle shares receiving cash in total and
customary pro ration if the number of LaSalle holders electing to
receive cash instead of stock is oversubscribed. This offer remains
outstanding and was resubmitted to LaSalle's board in a separate letter
on July 20, 2018, and the Company is prepared to move forward with it
immediately. On July 10, 2018, the Company filed a preliminary proxy
statement to urge LaSalle's shareholders to vote with the Company
against the proposed Blackstone take-under offer of $33.50 per share.

The Company remains convinced that a merger with LaSalle presents the
most compelling strategic opportunity for the shareholders of both the
Company and LaSalle, and the Company's Board of Trustees unanimously
supports a combination with LaSalle.

2018 Outlook

The Company has updated its 2018 outlook to reflect the second quarter
Same-Property EBITDA outperformance of $1.4 million and the overall
strengthening in economic activity and accelerating improvements in
group and transient travel demand expected for the remainder of 2018 for
an additional $1.4 million. Partly offsetting the increased outlook for
portfolio Same-Property EBITDA is the increased short-term disruption
from the recently expanded renovation scopes at Sir Francis Drake and
Hotel Zelos San Francisco during the third and fourth quarters of 2018
which are expected to reduce Same-Property EBITDA by $2.8 million,
resulting in no change to the upper end of the Company's 2018
Same-Property EBITDA outlook and a $1.5 million increase to the lower
end of the 2018 Same-Property EBITDA outlook.

The Company's updated 2018 outlook also reflects an additional $4.2
million of interest expense related to the net 5.4 million additional
LaSalle common shares purchased during the second quarter and $1.2
million of reduced dividend income compared to the prior outlook due to
the elimination of the third and fourth quarter common dividends on the
LaSalle shares as agreed by LaSalle's board pursuant to the merger
agreement entered into with Blackstone. On a combined basis, the
increased interest expense and reduced dividend income relating to the
strategic acquisition of the LaSalle common shares will reduce Adjusted
FFO by $5.4 million, or $0.08 per diluted share, versus the Company's
prior outlook. The Company's unrealized gain on investment in LaSalle
common shares as of June 30, 2018 was $20.2 million, which is not
reflected in the Company's 2018 Adjusted EBITDAre or Adjusted FFO.

The Company's strategic investment in LaSalle has significantly impacted
its 2018 outlook. Had the Company not made the strategic investment in
LaSalle, on a full-year basis, the Company's 2018 Adjusted EBITDAre
would be $5.2 million lower, but the Company's Adjusted FFO and Adjusted
FFO per diluted share would be $7.0 million, and $0.10 higher,
respectively.

The Company's 2018 outlook, which assumes no additional acquisitions or
dispositions, reflects the Company's various planned capital investment
projects and includes other significant assumptions, is as follows:

   

2018 Outlook
as of July 25, 2018

 

Variance to Prior Outlook
as of
April 26, 2018

Low   High   Low   High

($ and shares/units in millions, except per share and RevPAR data)

Net income

$112.2   $119.2 $27.8   $26.3
 
Adjusted EBITDAre $241.7 $248.7 $3.7 $2.2
Adjusted EBITDAre growth rate 3.7% 6.7% 1.6% 0.9%
 
Adjusted FFO $177.5 $184.5 ($0.5) ($2.0)
Adjusted FFO per diluted share $2.56 $2.66 - ($0.03)
Adjusted FFO per diluted share growth rate (0.4%) 3.5% - (1.2%)
 

This 2018 outlook is based, in part, on the following estimates
and assumptions:

 
U.S. GDP growth rate 2.50% 2.75% - -
U.S. Hotel Industry RevPAR growth rate 2.5% 3.5% 1.5% 0.5%
Urban Markets RevPAR growth rate 2.0% 3.0% 3.0% 2.0%
 
Same-Property RevPAR $208 $211 - -
Same-Property RevPAR growth rate 0.0% 1.5% - -
 
Same-Property EBITDA $251.6 $258.6 $1.5 -
Same-Property EBITDA growth rate (1.2%) 1.6% 0.5% -
Same-Property EBITDA Margin 33.1% 33.6% - -
Same-Property EBITDA Margin growth rate (75 bps) (25 bps) - -
 
Corporate cash general and administrative expenses $18.2 $18.2 ($0.8) ($0.8)
Corporate non-cash general and administrative expenses $6.5 $6.5 ($0.4) ($0.4)
 
Total capital investments related to renovations, capital
maintenance and return on investment projects
$60.0 $70.0 $5.0 $5.0
 
Weighted-average fully diluted shares and units 69.4 69.4 - -
 

The Company's outlook for the third quarter of 2018 is as follows:

 
Third Quarter 2018 Outlook
Low   High

($ and shares/units in millions,
except per share and RevPAR
data)

Net income $24.4   $27.4
 
Same-Property RevPAR $230 $234
Same-Property RevPAR growth rate 0.0% 2.0%
 
Same-Property EBITDA $72.7 $75.7
Same-Property EBITDA growth rate (2.6%) 1.4%
Same-Property EBITDA Margin 37.0% 37.5%
Same-Property EBITDA Margin growth rate (75 bps) (25 bps)
 
Adjusted EBITDAre $64.6 $67.6
Adjusted EBITDAre growth rate (7.8%) (3.5%)
 
Adjusted FFO $46.8 $49.8
Adjusted FFO per diluted share $0.67 $0.72
Adjusted FFO per diluted share growth rate (16.3%) (10.0%)
 
Weighted-average fully diluted shares and units 69.4 69.4
 

The Company's estimates and assumptions, including the Company's outlook
for 2018 and the third quarter 2018 for Same-Property RevPAR,
Same-Property RevPAR growth rate, Same-Property EBITDA, Same-Property
EBITDA growth rate, Same-Property EBITDA Margin and Same-Property EBITDA
Margin growth rate include the hotels owned as of June 30, 2018, as if
they had been owned by the Company for all of 2017 and 2018, except for
LaPlaya, which is not included in the third or fourth quarters. The
Company's 2018 outlook assumes no additional acquisitions or
dispositions beyond the hotels the Company owned as of June 30, 2018.

If any of the foregoing estimates and assumptions prove to be
inaccurate, actual results, including the outlook, may vary, and could
vary significantly, from the amounts shown above.

Second Quarter 2018 Earnings Call

The Company will conduct its quarterly analyst and investor conference
call on Thursday, July 26, 2018 at 10:00 AM ET. To participate in the
conference call, please dial (877) 705-6003 approximately ten minutes
before the call begins. Additionally, a live webcast of the conference
call will be available through the Company's website. To access the
webcast, log on to www.pebblebrookhotels.com
ten minutes prior to the conference call. A replay of the conference
call webcast will be archived and available online through the Investor
Relations section of www.pebblebrookhotels.com.

About Pebblebrook Hotel Trust

Pebblebrook Hotel Trust is a publicly traded real estate investment
trust ("REIT") organized to opportunistically acquire and invest
primarily in upper upscale, full-service hotels located in urban markets
in major gateway cities. The Company owns 28 hotels, with a total of
6,973 guest rooms. The Company owns hotels located in 9 states and the
District of Columbia, including: Los Angeles, California (Beverly Hills,
Santa Monica and West Hollywood); San Diego, California; San Francisco,
California; Washington, DC; Coral Gables, Florida; Naples, Florida;
Buckhead, Georgia; Boston, Massachusetts; Minneapolis, Minnesota;
Portland, Oregon; Philadelphia, Pennsylvania; Nashville, Tennessee;
Columbia River Gorge, Washington; and Seattle, Washington. For more
information, please visit us at www.pebblebrookhotels.com
and follow us on Twitter at @PebblebrookPEB.

For further information about the Company's business and financial
results, please refer to the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Risk Factors"
sections of the Company's SEC filings, including, but not limited to,
its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q,
copies of which may be obtained at the Investor Relations section of the
Company's website at
www.pebblebrookhotels.com.

All information in this press release is as of July 25, 2018. The
Company undertakes no duty to update the statements in this press
release to conform the statements to actual results or changes in the
Company's expectations.

Additional Information

This communication does not constitute an offer to buy or
solicitation of an offer to sell any securities. This communication
relates to a proposal which Pebblebrook has made for a business
combination transaction with LaSalle. In furtherance of this proposal
and subject to future developments, Pebblebrook (and, if a negotiated
transaction is agreed, LaSalle) may file one or more registration
statements, proxy statements, tender or exchange offer statements,
prospectuses or other documents with the United States Securities and
Exchange Commission (the "SEC").
This communication is not a
substitute for any proxy statement, registration statement, tender or
exchange offer statement, prospectus or other document Pebblebrook or
LaSalle may file with the SEC in connection with the proposed
transaction.
INVESTORS AND SECURITY HOLDERS OF PEBBLEBROOK AND
LASALLE ARE URGED TO READ ANY SUCH PROXY STATEMENT, REGISTRATION
STATEMENT, TENDER OR EXCHANGE OFFER STATEMENT, PROSPECTUS AND OTHER
DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN
THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
THE PROPOSED TRANSACTION.
Any definitive proxy statement or
prospectus (if and when available) will be delivered to shareholders of
LaSalle or Pebblebrook, as applicable. Investors and security holders
will be able to obtain free copies of these documents (if and when
available) and other documents filed with the SEC by Pebblebrook through
the website maintained by the SEC at
http://www.sec.gov.

Pebblebrook or LaSalle and their respective trustees and executive
officers and other members of management and employees may be deemed to
be participants in the solicitation of proxies in respect of the
proposed transaction. You can find information about Pebblebrook's
executive officers and trustees in Pebblebrook's definitive proxy
statement filed with the SEC on April 27, 2018. You can find information
about LaSalle's executive officers and trustees in LaSalle's definitive
proxy statement filed with the SEC on March 22, 2018. Additional
information regarding the interests of such potential participants will
be included in one or more registration statements, proxy statements,
tender or exchange offer statements or other documents filed with the
SEC if and when they become available. You may obtain free copies of
these documents using the sources indicated above.

This document shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be any
sale of securities in any jurisdiction in which such offer, solicitation
or sale would be unlawful prior to registration or qualification under
the securities laws of any such jurisdiction. No offering of securities
shall be made except by means of a prospectus meeting the requirements
of Section 10 of the Securities Act of 1933, as amended.

Forward-Looking Statements

This communication may include "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements include, but are not limited to,
statements regarding Pebblebrook's offer to acquire LaSalle, its
financing of the proposed transaction, its expected future performance
(including expected results of operations and financial guidance), and
the combined company's future financial condition, operating results,
strategy and plans. Forward-looking statements may be identified by the
use of the words "anticipates," "expects," "intends," "plans," "should,"
"could," "would," "may," "will," "believes," "estimates," "potential,"
"target," "opportunity," "tentative," "positioning," "designed,"
"create," "predict," "project," "seek," "ongoing," "upside," "increases"
or "continue" and variations or similar expressions.
Other examples
of forward-looking statements include the following: projections and
forecasts of U.S. GDP growth, U.S. hotel industry RevPAR growth, the
Company's net income, FFO, EBITDA, EBITDAre, Adjusted FFO, Adjusted
EBITDAre, RevPAR, EBITDA Margin and EBITDA Margin growth, and the
Company's expenses, share count or other financial items; descriptions
of the Company's plans or objectives for future operations, acquisitions
or services; forecasts of the Company's future economic performance and
its share of future markets; forecasts of hotel industry performance;
and descriptions of assumptions underlying or relating to any of the
foregoing expectations including assumptions regarding the timing of
their occurrence.
These forward-looking statements are subject to
various risks and uncertainties, many of which are beyond the Company's
control, which could cause actual results to differ materially from such
statements.
These assumptions, risks and uncertainties include,
but are not limited to, assumptions, risks and uncertainties discussed
in Pebblebrook's most recent annual or quarterly report filed with the
SEC and assumptions, risks and uncertainties relating to the proposed
transaction, as detailed from time to time in Pebblebrook's and
LaSalle's filings with the SEC, which factors are incorporated herein by
reference. Important factors that could cause actual results to differ
materially from the forward-looking statements made in this
communication are set forth in other reports or documents that
Pebblebrook may file from time to time with the SEC, and include, but
are not limited to: (i) the ultimate outcome of any possible transaction
between Pebblebrook and LaSalle, including the possibilities that
LaSalle will reject a transaction with Pebblebrook, (ii) the ultimate
outcome and results of integrating the operations of Pebblebrook and
LaSalle if a transaction is consummated, (iii) the ability to obtain
regulatory approvals and meet other closing conditions to any possible
transaction, including the necessary shareholder approvals, and (iv) the
risks and uncertainties detailed by LaSalle with respect to its business
as described in its reports and documents filed with the SEC.
All
forward-looking statements attributable to Pebblebrook or any person
acting on Pebblebrook's behalf are expressly qualified in their entirety
by this cautionary statement. Readers are cautioned not to place undue
reliance on any of these forward-looking statements. These
forward-looking statements speak only as of the date hereof. Pebblebrook
undertakes no obligation to update any of these forward-looking
statements to reflect events or circumstances after the date of this
communication or to reflect actual outcomes.

For additional information or to receive press releases via email,
please visit our website at

www.pebblebrookhotels.com

 
Pebblebrook Hotel Trust
Consolidated Balance Sheets
($ in thousands, except for per share data)
 
June 30, 2018 December 31, 2017
(Unaudited)
ASSETS
Assets:
Investment in hotel properties, net $ 2,439,140 $ 2,456,450
Investment in marketable securities 369,999 -
Ground lease asset, net 28,742 29,037
Cash and cash equivalents 17,253 25,410
Restricted cash 8,263 7,123
Hotel receivables (net of allowance for doubtful accounts of $211
and $245, respectively)
34,971 29,206
Prepaid expenses and other assets   55,762     43,642  
Total assets $ 2,954,130   $ 2,590,868  
 
 
 
LIABILITIES AND EQUITY
 
Liabilities:
Unsecured revolving credit facilities $ 383,000 $ 45,000
Term loans, net of unamortized deferred financing costs 670,888 670,406
Senior unsecured notes, net of unamortized deferred financing costs 99,422 99,374
Mortgage debt, net of unamortized deferred financing costs 69,304 70,457
Accounts payable and accrued expenses 138,750 141,290
Deferred revenues 26,433 26,919
Accrued interest 2,270 2,073
Distribution payable   31,429     31,823  
Total liabilities 1,421,496 1,087,342
Commitments and contingencies
 
Equity:
Preferred shares of beneficial interest, $0.01 par value
(liquidation preference $250,000 at
June 30, 2018 and at December 31, 2017), 100,000,000 shares
authorized; 10,000,000
shares issued and outstanding at June 30, 2018 and December 31, 2017 100 100
Common shares of beneficial interest, $0.01 par value, 500,000,000
shares authorized;
68,912,185 issued and outstanding at June 30, 2018 and 68,812,575
issued and
outstanding at December 31, 2017 689 688
Additional paid-in capital 1,684,638 1,685,437
Accumulated other comprehensive income (loss) 11,527 3,689
Distributions in excess of retained earnings   (169,600 )   (191,013 )
Total shareholders' equity   1,527,354     1,498,901  
Non-controlling interests   5,280     4,625  
Total equity   1,532,634     1,503,526  
Total liabilities and equity $ 2,954,130   $ 2,590,868  
       
Pebblebrook Hotel Trust
Consolidated Statements of Operations
($ in thousands, except for per share data)
(Unaudited)
 
Three months ended

June 30,

Six months ended

June 30,

  2018     2017     2018     2017  
 
Revenues:
Room $ 142,018 $ 142,522 $ 264,489 $ 268,092
Food and beverage 49,210 48,387 93,778 92,019
Other operating   15,273     14,808     29,289     27,784  
Total revenues $ 206,501   $ 205,717   $ 387,556   $ 387,895  
 
Expenses:
Hotel operating expenses:
Room $ 33,157 $ 34,640 $ 64,865 $ 67,623
Food and beverage 32,328 32,202 62,924 61,490
Other direct and indirect   54,523     54,281     106,362     106,449  
Total hotel operating expenses 120,008 121,123 234,151 235,562
Depreciation and amortization 24,562 25,950 49,464 52,246
Real estate taxes, personal property taxes, property insurance, and
ground rent
12,488 12,038 24,603 25,750
General and administrative 8,569 6,427 11,179 12,578
Impairment and other losses 583 - 1,378 1,049
Gain on insurance settlement   (8,190 )   -     (13,088 )   -  
Total operating expenses 158,020 165,538 307,687 327,185
Operating income (loss) 48,481 40,179 79,869 60,710
Interest income 59 96 122 96
Interest expense (10,816 ) (9,705 ) (20,627 ) (19,046 )
Other 22,909 (64 ) 25,356 -
Gain on sale of hotel properties   -     14,587     -     14,587  
Income (loss) before income taxes 60,633 45,093 84,720 56,347
Income tax (expense) benefit   (2,338 )   (1,423 )   (1,909 )   1,412  
Net income (loss) 58,295 43,670 82,811 57,759
Net income (loss) attributable to non-controlling interests   192     158     299     213  
Net income (loss) attributable to the Company 58,103 43,512 82,512 57,546
Distributions to preferred shareholders   (4,024 )   (4,024 )   (8,047 )   (8,047 )
Net income (loss) attributable to common shareholders $ 54,079   $ 39,488   $ 74,465   $ 49,499  
 
 
Net income (loss) per share available to common shareholders, basic $ 0.78 $ 0.57 $ 1.08 $ 0.70
Net income (loss) per share available to common shareholders, diluted $ 0.78 $ 0.57 $ 1.07 $ 0.70
 
Weighted-average number of common shares, basic 68,912,185 69,168,788 68,894,413 70,383,149
Weighted-average number of common shares, diluted 69,204,571 69,468,354 69,227,098 70,706,802
       
Pebblebrook Hotel Trust
Reconciliation of Net Income (Loss) to FFO and Adjusted FFO
($ in thousands, except per share data)
(Unaudited)
 
Three months ended

June 30,

Six months ended

June 30,

  2018     2017     2018     2017  
 
Net income (loss) $ 58,295 $ 43,670 $ 82,811 $ 57,759
Adjustments:
Depreciation and amortization 24,510 25,892 49,359 52,129
Gain on sale of hotel properties - (14,587 ) - (14,587 )
Impairment loss   -     -     -     1,049  
FFO $ 82,805   $ 54,975   $ 132,170   $ 96,350  
Distribution to preferred shareholders   (4,024 )   (4,024 )   (8,047 )   (8,047 )
FFO available to common share and unit holders $ 78,781   $ 50,951   $ 124,123   $ 88,303  
Hotel acquisition and disposition costs 1,979 (18 ) 2,357 57
Non-cash ground rent 604 733 1,207 1,467
Management/franchise contract transition costs (4 ) - 48 85
Interest expense adjustment for acquired liabilities 219 15 518 195
Capital lease adjustment 142 138 284 274
Non-cash amortization of acquired intangibles 135 240 276 482
Estimated hurricane related repairs and cleanup costs 583 - 1,378 -
Gain on insurance settlement (8,190 ) - (13,088 ) -
Business interruption proceeds 1,888 - 5,269 -
Unrealized gain on investment (20,179 ) - (20,179 ) -
Other   -     64     -     -  
Adjusted FFO available to common share and unit holders $ 55,958   $ 52,123   $ 102,193   $ 90,863  
 
FFO per common share - basic $ 1.14 $ 0.73 $ 1.80 $ 1.25
FFO per common share - diluted $ 1.13 $ 0.73 $ 1.79 $ 1.24
Adjusted FFO per common share - basic $ 0.81 $ 0.75 $ 1.48 $ 1.29
Adjusted FFO per common share - diluted $ 0.81 $ 0.75 $ 1.47 $ 1.28
 
Weighted-average number of basic common shares and units 69,148,536 69,405,139 69,130,764 70,619,500
Weighted-average number of fully diluted common shares and units 69,440,922 69,704,705 69,463,449 70,943,153
 
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:
 
- Hotel acquisition and disposition costs: The Company excludes
acquisition and disposition transaction costs expensed during the
period because it believes that including these costs in FFO does
not reflect the underlying financial performance of the Company and
its hotels.
- 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.
- Management/franchise contract transition costs: The Company
excludes one-time management and/or franchise contract transition
costs expensed during the period because it believes that including
these costs in FFO does not reflect the underlying financial
performance of the Company and its hotels.
- Interest expense adjustment for acquired liabilities: The Company
excludes interest expense adjustment for acquired liabilities
assumed in connection with acquisitions, because it believes that
including these non-cash adjustments in FFO does not reflect the
underlying financial performance of the Company.
- Capital lease adjustment: The Company excludes the effect of
non-cash interest expense from capital leases because it believes
that including these non-cash adjustments in FFO does not reflect
the underlying financial performance of the Company.
- Non-cash amortization of acquired intangibles: The Company
excludes the non-cash amortization of acquired intangibles, which
includes but is not limited to the amortization of favorable and
unfavorable leases and above/below market real estate tax reduction
agreements because it believes that including these non-cash
adjustments in FFO does not reflect the underlying financial
performance of the Company.
- Estimated hurricane related repairs and cleanup costs: The Company
excludes estimated hurricane related repairs and cleanup costs
during the period because it believes that including these
adjustments in FFO does not reflect the underlying financial
performance of the Company and its hotels.
- 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.
- Other: The Company excludes the ineffective portion of the change
in fair value of the hedging instruments during the period because
it 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.
       
Pebblebrook Hotel Trust
Reconciliation of Net Income (Loss) to EBITDA, EBITDAre
and Adjusted EBITDAre
($ in thousands)
(Unaudited)
 
Three months ended

June 30,

Six months ended

June 30,

  2018     2017     2018     2017  
 
Net income (loss) $ 58,295 $ 43,670 $ 82,811 $ 57,759
Adjustments:
Interest expense 10,816 9,705 20,627 19,046
Income tax expense (benefit) 2,338 1,423 1,909 (1,412 )
Depreciation and amortization   24,562     25,950     49,464     52,246  
EBITDA $ 96,011   $ 80,748   $ 154,811   $ 127,639  
Gain on sale of hotel properties - (14,587 ) - (14,587 )
Impairment loss   -     -     -     1,049  
EBITDAre $ 96,011   $ 66,161   $ 154,811   $ 114,101  
Hotel acquisition and disposition costs 1,979 (18 ) 2,357 57
Non-cash ground rent 604 733 1,207 1,467
Management/franchise contract transition costs (4 ) - 48 85
Non-cash amortization of acquired intangibles 135 240 276 482
Estimated hurricane related repairs and cleanup costs 583 - 1,378 -
Gain on insurance settlement (8,190 ) - (13,088 ) -
Business interruption proceeds 1,888 - 5,269 -
Unrealized gain on investment (20,179 ) - (20,179 ) -
Other   -     64     -     -  
Adjusted EBITDAre $ 72,827   $ 67,180   $ 132,079   $ 116,192  
 
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 measures used by other companies. In
addition, these non-GAAP measures are not based on any comprehensive
set of accounting rules or principles. Non-GAAP 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:

 

- Hotel acquisition and disposition costs: The Company excludes
acquisition and disposition transaction costs expensed during the
period because it believes that including these costs in EBITDAre
does not reflect the underlying financial performance of the
Company and its hotels.

- 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.

- Management/franchise contract transition costs: The Company
excludes one-time management and/or franchise contract transition
costs expensed during the period because it believes that
including these costs in EBITDAre does not reflect the
underlying financial performance of the Company and its hotels.

- Non-cash amortization of acquired intangibles: The Company
excludes the non-cash amortization of acquired intangibles, which
includes but is not limited to the amortization of favorable and
unfavorable leases and above/below market real estate tax
reduction agreements because it believes that including these
non-cash adjustments in EBITDAre does not reflect the
underlying financial performance of the Company and its hotels.

- Estimated hurricane related repairs and cleanup costs: The
Company excludes estimated hurricane related repairs and cleanup
costs during the period because it believes that including these
adjustments in EBITDAre does not reflect the underlying
financial performance of the Company and its hotels.

- 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.

- Other: The Company excludes the ineffective portion of the
change in fair value of the hedging instruments during the period
because it 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.

 
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

September 30, 2018

  Year ending

December 31, 2018

Low High Low High
 
Net income (loss) $ 24 $ 27 $ 112 $ 119
Adjustments:
Depreciation and amortization   25     25   101     101  
FFO $ 49   $ 52 $ 213   $ 220  
Distribution to preferred shareholders   (4 )   (4 )   (16 )   (16 )
FFO available to common share and unit holders $ 45   $ 48 $ 197   $ 204  
Non-cash ground rent 1 1 2 2
Gain on insurance settlement - - (13 ) (13 )
Business interruption proceeds - - 5 5
Unrealized gain on investment - - (20 ) (20 )
Other   0     0   7     7  
Adjusted FFO available to common share and unit holders $ 47   $ 50 $ 178   $ 185  
 
FFO per common share - diluted $ 0.65 $ 0.70 $ 2.83 $ 2.94
Adjusted FFO per common share - diluted $ 0.67 $ 0.72 $ 2.56 $ 2.66
 
Weighted-average number of fully diluted common shares and units 69.4 69.4 69.4 69.4
 
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.
- Other: 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 and estimated hurricane related repairs and
cleanup costs 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

September 30, 2018

Year ending

December 31, 2018

Low High Low High
 
Net income (loss) $ 24 $ 27 $ 112 $ 119
Adjustments:
Interest expense and income tax expense 14 14 49 49
Depreciation and amortization   25   25   101     101  
EBITDAre $ 63 $ 66 $ 262   $ 269  
Non-cash ground rent 1 1 2 2
Gain on insurance settlement - - (13 ) (13 )
Business interruption proceeds - - 5 5
Unrealized gain on investment - - (20 ) (20 )
Other   1   1   6     6  
Adjusted EBITDAre $ 65 $ 68 $ 242   $ 249  
 
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.

- Other: The Company excludes other expenses, which include hotel
acquisition and disposition costs, management/franchise contract
transition costs, non-cash amortization of acquired intangibles
and estimated hurricane related repairs and cleanup costs 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
Same-Property Statistical Data
(Unaudited)
       
Three months ended

June 30,

Six months ended

June 30,

2018 2017 2018 2017
 
Same-Property Occupancy 87.8% 86.9% 83.9% 83.7%
Increase/(Decrease) 1.1% 0.2%
Same-Property ADR $254.81 $251.08 $249.90 $247.13
Increase/(Decrease) 1.5% 1.1%
Same-Property RevPAR $223.81 $218.19 $209.57 $206.93
Increase/(Decrease) 2.6% 1.3%
 

Notes:

This schedule of hotel results for the three months ended June 30
includes information from all of the hotels the Company owned as
of June 30, 2018. This schedule of hotel results for the six
months ended June 30 includes information from all of the hotels
the Company owned as of June 30, 2018.

 
These hotel results for the respective periods may include
information reflecting operational performance prior to the
Company's ownership of the hotels. Any differences are a result of
rounding.
 
The information above has not been audited and is presented only for
comparison purposes.
 
Pebblebrook Hotel Trust
Same Property Statistical Data - by Market
(Unaudited)
   
Three months ended

June 30,

Six months ended

June 30,

2018 2018
RevPAR variance to prior-year period:
San Francisco 15.5 % 6.8 %
Seattle 4.6 % 1.0 %
Other 2.4 % 2.9 %
Los Angeles (2.6 %) (0.6 %)
Boston (3.0 %) 2.0 %
Portland (3.3 %) (4.0 %)
San Diego (4.5 %) (7.0 %)
 
West Coast 3.6 % 0.7 %
East Coast (0.2 %) 1.7 %
 

Notes:

This schedule of hotel results for the three months ended June 30
includes information from all of the hotels the Company owned as
of June 30, 2018. This schedule of hotel results for the six
months ended June 30 includes information from all of the hotels
the Company owned as of June 30, 2018.

 
"Other" includes Atlanta (Buckhead), GA; Coral Gables, FL;
Minneapolis, MN; Naples, FL; Nashville, TN; Philadelphia, PA and
Washington, DC.
 
These hotel results for the respective periods may include
information reflecting operational performance prior to the
Company's ownership of the hotels. Any differences are a result of
rounding.
 
The information above has not been audited and is presented only for
comparison purposes.
 
Pebblebrook Hotel Trust
Hotel Operational Data
Schedule of Same-Property Results
($ in thousands)
(Unaudited)
       
Three months ended

June 30,

Six months ended

June 30,

  2018     2017     2018     2017  
 
Same-Property Revenues:
Room $ 142,018 $ 138,389 $ 264,489 $ 260,809
Food and beverage 49,210 48,372 93,778 91,987
Other   15,248     13,341     29,246     24,893  
Total hotel revenues   206,476     200,102     387,513     377,689  
 
Same-Property Expenses:
Room $ 33,157 $ 33,213 $ 64,865 $ 64,535
Food and beverage 32,328 32,183 62,924 61,458
Other direct 3,073 3,239 5,920 6,171
General and administrative 15,830 14,781 30,500 29,155
Information and telecommunication systems 2,748 2,742 5,699 5,482
Sales and marketing 15,950 15,383 31,388 30,154
Management fees 6,091 5,975 11,395 11,198
Property operations and maintenance 5,567 5,517 11,059 11,013
Energy and utilities 4,125 3,992 8,244 7,974
Property taxes 7,693 6,623 15,334 14,788
Other fixed expenses   5,112     4,904     9,781     9,712  
Total hotel expenses   131,674     128,552     257,109     251,640  
       
Same-Property EBITDA $ 74,802   $ 71,550   $ 130,404   $ 126,049  
 
Same-Property EBITDA Margin 36.2 % 35.8 % 33.7 % 33.4 %
 

Notes:

This schedule of hotel results for the three months ended June 30
includes information from all of the hotels the Company owned as
of June 30, 2018. This schedule of hotel results for the six
months ended June 30 includes information from all of the hotels
the Company owned as of June 30, 2018.

 
These hotel results for the respective periods may include
information reflecting operational performance prior to the
Company's ownership of the hotels. Any differences are a result of
rounding.
 
The information above has not been audited and is presented only for
comparison purposes.
 
Pebblebrook Hotel Trust
Same-Property Inclusion Reference Table
                                   
Hotels     Q1         Q2         Q3         Q4    
 
Sir Francis Drake X X X X
InterContinental Buckhead Atlanta X X X X
Hotel Monaco Washington DC X X X X
The Grand Hotel Minneapolis X X X X
Skamania Lodge X X X X
Le Méridien Delfina Santa Monica X X X X
Sofitel Philadelphia X X X X
Argonaut Hotel X X X X
The Westin San Diego Gaslamp Quarter X X X X
Hotel Monaco Seattle X X X X
Mondrian Los Angeles X X X X
W Boston X X X X
Hotel Zetta San Francisco X X X X
Hotel Vintage Seattle X X X X
Hotel Vintage Portland X X X X
W Los Angeles - West Beverly Hills X X X X
Hotel Zelos San Francisco X X X X
Embassy Suites San Diego Bay - Downtown X X X X
Hotel Modera X X X X
Hotel Zephyr Fisherman's Wharf X X X X
Hotel Zeppelin San Francisco X X X X
The Nines, a Luxury Collection Hotel, Portland X X X X
Hotel Colonnade Coral Gables, a Tribute Portfolio Hotel X X X X
Hotel Palomar Los Angeles Beverly Hills X X X X
Union Station Hotel Nashville, Autograph Collection X X X X
Revere Hotel Boston Common X X X X
LaPlaya Beach Resort & Club X X
Hotel Zoe Fisherman's Wharf X X X X
 

Notes:

A property marked with an "X" in a specific quarter denotes that the
same-property operating results of that property are included in the
Same-Property Statistical Data and in the Schedule of Same-Property
Results.
 

The Company's second quarter Same-Property RevPAR, RevPAR Growth,
Total RevPAR, Total RevPAR Growth, ADR, Occupancy, Revenues,
Expenses, EBITDA and EBITDA Margin include all of the hotels the
Company owned as of June 30, 2018. Operating statistics and
financial results may include periods prior to the Company's
ownership of the hotels.

 

The Company's estimates and assumptions for Same Property RevPAR,
RevPAR Growth, ADR, Occupancy, Revenues, Expenses, EBITDA and
EBITDA Margin for the Company's 2018 outlook include all of the
hotels the Company owned as of June 30, 2018, except for LaPlaya
Beach Resort & Club for Q3 and Q4 in both 2018 and 2017 because it
was closed during a portion of the third and fourth quarters of
2017 due to the impact from Hurricane Irma. The operating
statistics and financial results in this press release may include
periods prior to the Company's ownership of the hotels.

 
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 81% 87% 88% 79% 84%
ADR $243 $251 $256 $236 $247
RevPAR $196 $218 $226 $186 $206
 
Hotel Revenues $177.6 $200.1 $201.9 $179.7 $759.2
Hotel EBITDA $54.5 $71.6 $74.6 $53.6 $254.2
Hotel EBITDA Margin 30.7% 35.8% 36.9% 29.8% 33.5%
 
First Quarter Second Quarter
2018 2018
 
Occupancy 80% 88%
ADR $244 $255
RevPAR $195 $224
 
Hotel Revenues $181.0 $206.5
Hotel EBITDA $55.6 $74.8
Hotel EBITDA Margin 30.7% 36.2%
 

Notes:

These historical hotel operating results include information for
all of the hotels the Company owned as of June 30, 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 is presented only for
comparison purposes.

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