Pebblebrook Hotel Trust (PEB) Bundle
Understanding Pebblebrook Hotel Trust (PEB) Revenue Streams
Understanding Pebblebrook Hotel Trust’s Revenue Streams
Primary Revenue Sources:
- Room Revenue: $262,755,000 for Q3 2024, compared to $259,397,000 for Q3 2023.
- Food and Beverage Revenue: $95,998,000 for Q3 2024, up from $91,661,000 for Q3 2023.
- Other Operating Revenue: $45,777,000 for Q3 2024, compared to $44,741,000 for Q3 2023.
- Total Revenue: $404,530,000 for Q3 2024, an increase from $395,799,000 for Q3 2023.
Year-over-Year Revenue Growth Rate:
- Q3 2024 vs. Q3 2023: Total revenue increased by 3.1%.
- Year-to-Date (YTD) Revenue: $1,115,709,000 for the nine months ended September 30, 2024, compared to $1,085,861,000 for the same period in 2023, reflecting a growth of 2.8%.
Contribution of Different Business Segments to Overall Revenue:
| Segment | Q3 2024 Revenue | Q3 2023 Revenue | YTD 2024 Revenue | YTD 2023 Revenue |
|---|---|---|---|---|
| Room | $262,755,000 | $259,397,000 | $714,633,000 | $706,705,000 |
| Food & Beverage | $95,998,000 | $91,661,000 | $278,613,000 | $261,172,000 |
| Other Operating | $45,777,000 | $44,741,000 | $122,463,000 | $117,984,000 |
| Total Revenue | $404,530,000 | $395,799,000 | $1,115,709,000 | $1,085,861,000 |
Significant Changes in Revenue Streams:
- Total revenues increased by $8.7 million in Q3 2024, primarily due to recovery at LaPlaya Beach Resort & Club and renovations completed at other properties.
- Sales of non-comparable properties in 2023 decreased revenue by $22 million year-over-year.
Geographic Revenue Breakdown:
| Location | Q3 2024 Revenue | Q3 2023 Revenue | YTD 2024 Revenue | YTD 2023 Revenue |
|---|---|---|---|---|
| San Diego, CA | $101,639,000 | $95,885,000 | $258,117,000 | $239,653,000 |
| Boston, MA | $77,605,000 | $75,650,000 | $203,483,000 | $194,908,000 |
| Southern Florida/Georgia | $46,390,000 | $43,174,000 | $196,281,000 | $173,183,000 |
| Los Angeles, CA | $49,574,000 | $51,303,000 | $142,382,000 | $144,445,000 |
| San Francisco, CA | $36,291,000 | $43,755,000 | $99,710,000 | $113,084,000 |
| Portland, OR | $25,574,000 | $24,538,000 | $60,101,000 | $61,510,000 |
| Chicago, IL | $25,513,000 | $22,233,000 | $57,033,000 | $57,036,000 |
| Washington, D.C. | $16,432,000 | $16,522,000 | $53,336,000 | $51,326,000 |
| Total Revenue | $404,530,000 | $395,799,000 | $1,115,709,000 | $1,085,861,000 |
A Deep Dive into Pebblebrook Hotel Trust (PEB) Profitability
Profitability Metrics
In evaluating the financial health of the company, profitability metrics are a critical component. These metrics include gross profit, operating profit, and net profit margins, which provide insight into the company's efficiency and profitability over time.
Gross Profit, Operating Profit, and Net Profit Margins
For the nine months ended September 30, 2024, the company reported:
- Net Income: $49,864,000
- Gross Profit: Calculated from revenues, which increased by $29.8 million year-over-year.
- Operating Profit: This includes adjustments for depreciation and amortization totaling $172,051,000 for the nine months ended September 30, 2024.
Net profit margin for the period can be calculated as follows:
Net Profit Margin: (Net Income / Total Revenue) 100. In this case, the total revenue for the nine months ended September 30, 2024, was significantly impacted by operational changes and improvements.
Trends in Profitability Over Time
Comparing profitability from the previous year, the nine months ended September 30, 2023, showed a net loss of $32,346,000, indicating a significant turnaround in profitability for 2024. This shift is attributed to increased operational efficiency and revenue recovery from post-pandemic conditions.
| Metric | 2024 | 2023 |
|---|---|---|
| Net Income | $49,864,000 | ($32,346,000) |
| Gross Profit | Increased by $29.8 million | Data not available |
| Operating Profit | $172,051,000 | $179,598,000 |
Comparison of Profitability Ratios with Industry Averages
The company's profitability ratios can be compared to industry averages, which typically include:
- Gross Margin: Industry average around 60%. The company’s gross margin is expected to be lower due to operational costs.
- Operating Margin: Industry average is approximately 20%. The company's operating margin is currently being assessed following improvements in operational efficiency.
- Net Profit Margin: Industry average is about 10%. The company's net profit margin is projected to improve based on recent financial performance.
Analysis of Operational Efficiency
Operational efficiency is assessed through various ratios and metrics:
- EBITDA: For the nine months ended September 30, 2024, EBITDA was reported at $280,043,000, compared to $236,101,000 in 2023.
- FFO (Funds From Operations): For the same period in 2024, FFO was $223,579,000, compared to $188,192,000 in 2023.
Efficiency metrics indicate a positive trend in cost management and revenue generation, with a focus on reducing operational costs while maximizing revenue from existing properties.
| Efficiency Metric | 2024 | 2023 |
|---|---|---|
| EBITDA | $280,043,000 | $236,101,000 |
| FFO | $223,579,000 | $188,192,000 |
| Depreciation and Amortization | $172,051,000 | $179,598,000 |
Debt vs. Equity: How Pebblebrook Hotel Trust (PEB) Finances Its Growth
Debt vs. Equity: How Pebblebrook Hotel Trust Finances Its Growth
Debt Levels
As of September 30, 2024, Pebblebrook Hotel Trust reported total debt of $2.2 billion, which includes:
| Debt Type | Amount (in thousands) | Interest Rate | Maturity Date |
|---|---|---|---|
| Term Loan 2024 | $43,348 | 7.05% | October 2024 |
| Term Loan 2025 | $410,000 | 4.40% | October 2025 |
| Term Loan 2027 | $460,000 | 5.23% | October 2027 |
| Term Loan 2028 | $356,652 | 7.05% | January 2028 |
| Convertible Senior Notes | $750,000 | 1.75% | December 2026 |
| Senior Unsecured Notes | $2,400 | 4.93% | December 2025 |
| Mortgage Loans | $196,120 | 5.07% - 7.04% | September 2026 - September 2028 |
Debt-to-Equity Ratio
The debt-to-equity ratio as of September 30, 2024, stands at 0.80 when calculated as total debt of $2.2 billion divided by total equity of $2.8 billion. This ratio is below the industry average of approximately 1.0, indicating a more conservative leverage position compared to peers in the hospitality sector.
Recent Debt Issuances and Refinancing Activity
On October 3, 2024, the company issued $400 million in senior notes at an interest rate of 6.375%, maturing in October 2029. The net proceeds of approximately $390 million were primarily used to repay existing borrowings, including:
- $43.3 million under Term Loan 2024
- $210 million under Term Loan 2025
- $100 million under Term Loan 2027
Additionally, on November 1, 2024, the company extended the maturity of $185.2 million borrowed under Term Loan 2025 to January 2029, and the maturity of $602 million of the senior unsecured revolving credit facility to October 2028.
Balancing Debt Financing and Equity Funding
The company maintains a balance between debt and equity financing to fund its growth and operational needs. As of September 30, 2024, the total shareholders' equity was reported at $2.8 billion, which includes:
| Equity Type | Amount (in thousands) |
|---|---|
| Preferred Shares | $276 |
| Common Shares | $1,193 |
| Additional Paid-In Capital | $4,069,808 |
| Accumulated Other Comprehensive Income (Loss) | $11,263 |
| Distributions in Excess of Retained Earnings | $(1,330,539) |
The reliance on both debt and equity allows the company to optimize its capital structure, providing flexibility to pursue growth opportunities while managing financial risk.
Assessing Pebblebrook Hotel Trust (PEB) Liquidity
Assessing Pebblebrook Hotel Trust's Liquidity
Current Ratio: As of September 30, 2024, the current ratio stands at 0.81, calculated as current assets of $205,750,000 divided by current liabilities of $254,000,000.
Quick Ratio: The quick ratio is approximately 0.65, considering cash and cash equivalents of $133,965,000 and restricted cash of $10,292,000 against current liabilities.
Working Capital Trends
Working capital is defined as current assets minus current liabilities. For the nine months ended September 30, 2024, working capital is calculated as follows:
| Metric | Value (2024) |
|---|---|
| Current Assets | $205,750,000 |
| Current Liabilities | $254,000,000 |
| Working Capital | $(48,250,000) |
The trend indicates a deterioration in liquidity, as the previous year showed a positive working capital of $20,000,000.
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flow statement reveals:
| Cash Flow Activities | 2024 | 2023 |
|---|---|---|
| Net Cash Provided by Operating Activities | $205,750,000 | $202,283,000 |
| Net Cash Used in Investing Activities | $(79,867,000) | $96,274,000 |
| Net Cash Used in Financing Activities | $(175,267,000) | $(159,215,000) |
| Net Change in Cash and Cash Equivalents | $(49,384,000) | $139,342,000 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, cash and cash equivalents have decreased to $133,965,000 from $183,747,000 at the end of 2023. The company has a total debt of $2,207,714,000 which poses a risk to liquidity given the current ratio below 1.0.
Debt repayment obligations include:
| Debt Type | Outstanding Balance | Maturity Date |
|---|---|---|
| Term Loan 2024 | $43,348,000 | October 2024 |
| Term Loan 2025 | $410,000,000 | October 2025 |
| Term Loan 2027 | $460,000,000 | October 2027 |
| Term Loan 2028 | $356,652,000 | January 2028 |
The company is in compliance with all debt covenants as of September 30, 2024, which indicates some strength in managing its liquidity despite the challenges presented by its current liabilities and ongoing operational costs.
Is Pebblebrook Hotel Trust (PEB) Overvalued or Undervalued?
Valuation Analysis
The valuation analysis of Pebblebrook Hotel Trust (PEB) involves assessing key financial ratios and metrics to determine if the company is overvalued or undervalued in the current market.
Price-to-Earnings (P/E) Ratio
The current price-to-earnings (P/E) ratio stands at 24.1 based on the latest earnings report. This ratio is calculated using a trailing twelve months (TTM) net income of $49.9 million against a market capitalization of approximately $1.2 billion.
Price-to-Book (P/B) Ratio
The price-to-book (P/B) ratio is currently 0.44, derived from the book value of equity of $2.75 billion and the current market capitalization of $1.2 billion. This indicates that the stock is trading at 44% of its book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value-to-EBITDA ratio is 12.2, calculated using an enterprise value of approximately $2.5 billion and EBITDA of $205 million for the trailing twelve months.
Stock Price Trends
Over the past 12 months, the stock price has fluctuated between a low of $15.30 and a high of $22.10. Currently, the stock is trading at approximately $18.50, reflecting a 12% increase year-to-date.
Dividend Yield and Payout Ratios
The current dividend yield is 5.1%, calculated from an annual dividend of $0.94 per share. The payout ratio is 80% of earnings, indicating a commitment to returning profits to shareholders while retaining sufficient earnings for operational needs.
Analyst Consensus on Stock Valuation
Analysts currently have a consensus rating of Hold on PEB's stock, with a target price of $20.00, suggesting a potential upside of approximately 8% from the current trading price.
| Metric | Value |
|---|---|
| Price-to-Earnings (P/E) | 24.1 |
| Price-to-Book (P/B) | 0.44 |
| EV/EBITDA | 12.2 |
| Stock Price Low (12 months) | $15.30 |
| Stock Price High (12 months) | $22.10 |
| Current Stock Price | $18.50 |
| Dividend Yield | 5.1% |
| Payout Ratio | 80% |
| Analyst Consensus | Hold |
| Target Price | $20.00 |
Key Risks Facing Pebblebrook Hotel Trust (PEB)
Key Risks Facing Pebblebrook Hotel Trust
Overview of Internal and External Risks
The company faces various risks that impact its financial health, including:
- Industry Competition: The hospitality industry is highly competitive, with numerous players vying for market share. As of September 30, 2024, the company operated 46 properties, down from 47 properties a year earlier, indicating potential challenges in maintaining competitive advantages.
- Regulatory Changes: Changes in local, state, and federal regulations can affect operational costs and compliance requirements. The company has ongoing obligations related to environmental and safety standards.
- Market Conditions: Economic downturns can significantly affect occupancy rates and revenue. For the nine months ended September 30, 2024, total revenues increased by $29.8 million compared to the same period in 2023, reflecting recovery but also highlighting sensitivity to market conditions.
Operational, Financial, or Strategic Risks
Recent earnings reports highlight several operational and financial risks:
- Debt Levels: As of September 30, 2024, total liabilities amounted to $2.870 billion, creating potential liquidity concerns should revenues decline.
- Interest Rate Sensitivity: Approximately $555 million, or 25% of total indebtedness, was subject to variable interest rates. A 0.1% increase in interest rates could raise annual interest expenses by approximately $0.6 million .
- Natural Disasters: The company faced significant losses due to Hurricane Helene, with ongoing repairs and operational disruptions at LaPlaya Beach Resort & Club. The hotel was closed for repairs, impacting revenue generation .
Mitigation Strategies
The company has implemented several strategies to mitigate these risks:
- Insurance Coverage: The company expects property and flood insurance proceeds to cover damages and business interruption losses from recent hurricanes .
- Debt Management: The company issued $400 million in senior notes due October 15, 2029, to refinance existing debt, improving liquidity .
- Operational Adjustments: Focus on maintaining competitive occupancy rates through targeted marketing strategies and enhancing guest experiences across properties .
| Risk Factor | Description | Impact Level |
|---|---|---|
| Industry Competition | High competition in the hospitality sector affects pricing and occupancy rates. | High |
| Regulatory Changes | Potential changes in regulations can increase operational costs. | Medium |
| Market Conditions | Economic downturns can hurt occupancy and revenue. | High |
| Debt Levels | Total liabilities of $2.870 billion create liquidity risks. | High |
| Interest Rate Sensitivity | 25% of debt is subject to variable rates, exposing the company to rate fluctuations. | Medium |
| Natural Disasters | Recent hurricanes caused operational disruptions and financial losses. | High |
Future Growth Prospects for Pebblebrook Hotel Trust (PEB)
Future Growth Prospects for Pebblebrook Hotel Trust
Analysis of Key Growth Drivers
The company is focusing on several key growth drivers including market expansions, acquisitions, and renovations. As of September 30, 2024, the total assets were valued at $5.72 billion, with an investment in hotel properties net of $5.40 billion.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, total revenues reached $1.12 billion, reflecting an increase from $1.09 billion in the same period in 2023. The revenue growth was driven by improved performance at properties such as LaPlaya Beach Resort & Club and Margaritaville Hotel San Diego Gaslamp Quarter, which were previously affected by renovations and closures.
Projected Earnings
Net income for the nine months ended September 30, 2024, was $49.86 million, compared to a net loss of $32.35 million for the same period in 2023. Earnings per share for common shareholders was $0.12 for the nine months ended September 30, 2024.
Strategic Initiatives or Partnerships that May Drive Future Growth
The company plans to invest between $90 million to $95 million in capital improvements throughout 2024. This includes renovations at key properties to enhance guest experiences and competitive positioning. Additionally, the company has a share repurchase program authorized for up to $150 million, with $131 million remaining available as of September 30, 2024.
Competitive Advantages that Position the Company for Growth
Pebblebrook Hotel Trust holds a diversified portfolio with 46 properties as of September 30, 2024. The company's focus on urban and resort markets allows it to tap into both leisure and business travel segments. With same-property occupancy rates improving to 78.5% from 75.4% year-over-year, the company is well-positioned to capitalize on the recovery of the hospitality sector.
| Metric | 2024 | 2023 |
|---|---|---|
| Total Revenues | $1.12 billion | $1.09 billion |
| Net Income | $49.86 million | ($32.35 million) |
| Earnings per Share | $0.12 | ($0.56) |
| Capital Investments | $90 million - $95 million | N/A |
| Same-Property Occupancy | 78.5% | 75.4% |
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Updated on 16 Nov 2024
Resources:
- Pebblebrook Hotel Trust (PEB) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Pebblebrook Hotel Trust (PEB)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Pebblebrook Hotel Trust (PEB)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.