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Pebblebrook's (PEB) Same-Property Revenues Decline Y/Y in April

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Per Pebblebrook Hotel Trust’s (PEB - Free Report) recently released update, though non-room revenues increased 0.5% in April, same-property total revenues fell 1.2% year over year. Its same-property expenses increased 2.5%.

The overall performance in April was affected due to the calendar shifts of Easter and Passover, as well as moving out of several large conventions to other months.

Shares of the company witnessed a 4.6% decline on the NYSE, following the announcement through the May 23 closing session.

The company noted that for the overall portfolio, same-property revenue per available room (”RevPAR”) exhibited a year-over-year decline of 2.2%, mainly driven by a 3.4% decrease in average daily rate (”ADR”).

Same-property occupancy increased by 0.9 percentage points. The rise was backed by the gains at its recently redeveloped resorts and strong performance in San Diego, Boston and Washington, D.C.

Urban and Resort Properties' Update

For PEB’s urban portfolio, same-property occupancy improved 0.3 percentage points, while same-property ADR witnessed a decline of 2.2%. The urban market performance was led by San Diego, Boston and Washington D.C.

Notably, Pebblebrook's recently redeveloped properties exhibited significant REVPAR gains compared to the previous year. Its Margaritaville Hotel San Diego Gaslamp Quarter saw a remarkable increase of 137%, while Hilton San Diego Gaslamp Quarter experienced a notable climb of 81%.

However, the company's San Francisco properties faced a decline in RevPAR overall, primarily due to the rescheduling of a major convention from April to May this year. Similarly, Chicago's RevPAR also decreased due to a comparatively subdued convention calendar in April when compared to the prior year period.

For the resort portfolio, same-property resorts witnessed an occupancy increase of 310 basis points year over year. However, resort ADR saw a decline of 7%.

Estancia La Jolla Hotel and Spa outperformed all other resorts with an impressive 65% increase in RevPAR after the successful completion of its redevelopment program.

The resorts are also benefiting from significant repositioning and transformational investments throughout the portfolio.

Pebblebrook noted that the redevelopment projects at Newport Harbor Island Resort (Newport, RI), Estancia La Jolla Hotel & Spa (La Jolla, CA) and Skamania Resort (Columbia River Gorge, WA) have substantially completed.

The transformation costs incurred on Newport Harbor, Estancia La Jolla and Skamania were $49 million, $26 million and $20 million, respectively.

Industry Outlook

Overall, the lodging industry is expected to experience a stable operating environment in 2024 due to the continuous improvement in the group business, a gradual recovery in business transient and steady demand for leisure activities. However, elevated interest rates remain a concern.

Over the past three months, shares of this Zacks Rank #3 (Hold) company have declined 8.6% compared with the industry’s fall of 3.9%.

 

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Stocks to Consider

Some better-ranked stocks from the REIT sector are Americold Realty Trust (COLD - Free Report) and Rexford Industrial Realty (REXR - Free Report) each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for COLD’s current-year funds from operations (”FFO”) per share has been raised by 2.2% over the past week to $1.39.

The Zacks Consensus Estimate for REXR’s 2024 FFO per share has moved marginally north in the past two months to $2.34.

Note: Anything related to earnings presented in this write-up represents FFO, a widely used metric to gauge the performance of REITs.


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