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8-K - FORM 8-K - Pebblebrook Hotel Trust | w81319e8vk.htm |
Exhibit 99.1
2 Bethesda Metro Center,
Suite 1530, Bethesda, MD 20814 T: (240) 507-1300, F: (240) 396-5626 www.pebblebrookhotels.com |
News Release
Pebblebrook Hotel Trust Provides 2011 Outlook
Bethesda, MD, January 20, 2011 Pebblebrook Hotel Trust (NYSE: PEB) (the
Company) today provided its outlook for 2011. The Companys outlook for 2011, assuming continued
improvement in economic activity, positive business travel trends and the other significant
assumptions detailed below, is as follows:
| Estimated net income of $13.1 million to $15.1 million ($0.33 to $0.38 per diluted share); | ||
| Estimated funds from operations (FFO) of $28.2 million to $30.2 million ($0.71 to $0.76 per diluted share and unit); and, | ||
| Estimated earnings before interest, depreciation, and amortization (EBITDA) of $41.0 million to $43.0 million. |
Net Income, FFO and EBITDA include approximately $2.0 million of acquisition-related expenses.
This 2011 outlook is based on the following estimates and assumptions:
| Hotel industry room revenue per available room (RevPAR) to increase 6.0 percent to 8.0 percent over 2010; | ||
| No additional acquisitions beyond the Argonaut Hotel, which is expected to be completed by February 28, 2011; | ||
| Portfolio RevPAR growth of 6.0 percent to 8.0 percent over 2010; | ||
| Portfolio RevPAR of $134.35 to $136.90; | ||
| Portfolio hotel EBITDA of $50.0 million to $52.0 million; | ||
| Portfolio hotel EBITDA margins of 23.5 percent to 24.7 percent, representing an increase of 170 basis points to 250 basis points over 2010; | ||
| Corporate cash general and administrative expenses of approximately $5.8 million; | ||
| Corporate non-cash general and administrative expenses of approximately $2.7 million; | ||
| Acquisition and related expenses of approximately $2.0 million; | ||
| Total capital investments related to renovations, capital maintenance and return on investment projects of approximately $34.0 million to $37.0 million; | ||
| Interest expense, including the non-cash amortization of deferred financing fees, of approximately $12.8 million; | ||
| Interest income of approximately $1.5 million; | ||
| Weighted average outstanding debt of approximately $245.0 million; and, | ||
| Weighted average fully diluted shares and units of approximately 40.0 million. |
We are extremely pleased with the performance of each of the hotels that we acquired during
2010, as they continue to benefit from the strong rebound in corporate travel, noted Jon Bortz,
Chairman, President and Chief Executive Officer of Pebblebrook Hotel Trust. Growth in
business transient demand remained healthy throughout the fourth quarter and group demand continues
to recover from unprecedented declines in 2008 and 2009. We expect 2011 will be a very strong year
for the overall industry, including our high-quality urban-focused portfolio.
A number of the Companys recently acquired hotels are undergoing, or will undergo, property
repositioning and renovation programs during the first several months of 2011. These programs are
expected to adversely impact operating performance of those hotels during this period, but are
expected to increase revenue growth and the value of those hotels following the completion of these
improvements.
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We have made excellent progress with our renovation and repositioning programs at the Sir
Francis Drake, the Doubletree Bethesda and The Grand Hotel Minneapolis hotels. We expect the
disruption from the work associated with these reinvestment programs to be completed in the
Spring, advised Mr. Bortz. As a result of these ongoing projects, we anticipate our hotel
operating results to be negatively impacted, primarily during the first and second quarters, which
has been reflected in our 2011 outlook. Despite this negative impact, we expect to perform in-line
with the overall industry, setting us up to outperform in 2012 with renovated and repositioned
hotels.
The Companys 2011 outlook includes the operating and financial performance from the hotels
the Company owned as of January 20, 2011 as well as the Argonaut Hotel, which is expected to be
acquired by February 28, 2011. However, because this acquisition is subject to customary closing
requirements and conditions, the Company can give no assurance that the transaction will be
consummated during that time period, or at all. The Companys estimates and assumptions for
portfolio RevPAR growth and portfolio EBITDA margin growth for 2011 include the hotels owned as of
January 20, 2011 as well as the Argonaut Hotel, but exclude The Grand Hotel Minneapolis for the
first three quarters of both 2011 and 2010, because the operating results of that hotel prior to
the Companys acquisition of it in September 2010 were not auditable. The Company expects to
include operating results for The Grand Hotel Minneapolis in year-over-year comparisons after it
has owned the hotel for one full year.
If any of the foregoing estimates and assumptions prove to be inaccurate, actual results,
including the 2011 outlook, may vary, and could vary significantly, from the amounts shown above.
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
large urban and resort markets with an emphasis on the major coastal cities. The company owns
eight hotels with a total of 2,300 guest rooms.
This press release contains certain forward-looking statements relating to, among other
things, potential property acquisitions and projected financial and operating results.
Forward-looking statements are generally identifiable by use of forward-looking terminology such as
may, will, should, potential, intend, expect, seek, anticipate, estimate,
approximately, believe, could, project, predict, forecast, continue, assume, plan
or other similar words or expressions. Forward-looking statements are based on certain assumptions
and can include future expectations, future plans and strategies, financial and operating
projections and forecasts and other forward-looking information and estimates. Examples of
forward-looking statements include the following: projections and forecasts of net income, FFO,
EBITDA, RevPAR, the Companys expenses, share count and other financial items; descriptions of the
Companys plans or objectives for future operations, acquisitions, capital investments or services;
forecasts of the Companys future economic performance and its share of future markets; forecasts
of hotel industry performance; and descriptions of assumptions and estimates 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 Companys control, which could cause actual results to differ materially
from such statements. These risks and uncertainties include, but are not limited to, the state of
the U.S. economy and the supply of hotel properties, and other factors as are described in greater
detail in the Companys filings with the Securities and Exchange Commission, including, without
limitation, the Companys Prospectus on Form 424(b)(1) filed on July 23, 2010. Unless legally
required, the Company disclaims any obligation to update any forward-looking statements, whether as
a result of new information, future events or otherwise.
For further information about the Companys business and financial results, please refer to the
Managements Discussion and Analysis of Financial Condition and Results of Operations and Risk
Factors sections of the Companys 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 Companys website at www.pebblebrookhotels.com.
All information in this release is as of January 20, 2011. The Company undertakes no duty to
update the statements in this release to conform the statements to actual results or changes in the
Companys expectations.
###
Additional Contacts:
Raymond D. Martz, Chief Financial Officer, Pebblebrook Hotel Trust (240) 507-1330
For additional information or to receive press releases via email, please visit our website at
www.pebblebrookhotels.com
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Pebblebrook Hotel Trust
2011 Outlook
Reconciliation of Net Income (Loss) attributable to common shareholders to FFO and EBITDA
(In thousands)
(Unaudited)
2011 Outlook
Reconciliation of Net Income (Loss) attributable to common shareholders to FFO and EBITDA
(In thousands)
(Unaudited)
2011 Outlook | ||||||||
Low End | High End | |||||||
Net Income (Loss) |
$ | 13,100 | $ | 15,100 | ||||
Depreciation and amortization |
15,100 | 15,100 | ||||||
FFO |
$ | 28,200 | $ | 30,200 | ||||
2011 Outlook | ||||||||
Low End | High End | |||||||
Net Income (Loss) |
$ | 13,100 | $ | 15,100 | ||||
Interest expense |
12,800 | 12,800 | ||||||
Income tax (benefit) expense |
| | ||||||
Depreciation and amortization |
15,100 | 15,100 | ||||||
EBITDA |
$ | 41,000 | $ | 43,000 | ||||
This press release includes certain non-GAAP financial measures as defined under Securities and
Exchange Commission (SEC) Rules to supplement the Companys consolidated financial statements,
presented in accordance with U.S. generally accepted accounting principles (GAAP).
These measures are not in accordance with, or an alternative to, measures prepared in accordance
with GAAP and may be different from 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 Companys results of operations determined in accordance with GAAP.
Funds from Operations Funds from operations (FFO) represents net income (computed in accordance
with GAAP), 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 operating performance of its properties
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 managements 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 Companys 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.
Earnings before Interest, Income Taxes, and Depreciation and Amortization (EBITDA) We believe
that EBITDA provides investors a useful financial measure to evaluate our operating performance,
excluding the impact of our capital structure (primarily interest expense) and our asset base
(primarily depreciation and amortization). Interest Income is included in the calculation of
EBITDA. The Company anticipates that interest income is more meaningful currently than it may be
in subsequent years.
The Companys presentation of FFO, in accordance with the NAREIT White Paper, and EBITDA should not
be considered as an alternative to net income (computed in accordance with GAAP) as an indicator of
the Companys financial performance or to cash flow from operating activities (computed in
accordance with GAAP) as an indicator of its liquidity. The table above is a reconciliation of the
Companys FFO and EBITDA calculations to net income in accordance with GAAP.