Pebblebrook (PEB) sells Vintage Portland Hotel for $32.9 million – September 16, 2022
Pebblebrook Hotel Trust (PEB – Free Report) announced that it has completed the sale of the Vintage Portland Hotel in Portland, OR. The 117-room property was sold to a third party for $32.9 million.
PEB recorded a net operating loss of $0.1 million and hotel EBITDA of $0.1 million for the hotel in the last 12 months ended June 30, 2022.
The sale price of the Vintage Portland Hotel reflects an EBITDA multiple of 11.7X and a net operating income capitalization rate of 7.1% based on the hotel’s operating performance for 2019. Thus, the Disposal of ownership seems a strategic fit for Pebblebrook.
In August 2022, PEB sold the Spero Hotel in San Francisco, California, and the Sofitel Philadelphia at Rittenhouse Square in Philadelphia, Pennsylvania, for $71 million and $80 million, respectively.
Pebblebrook intends to use the proceeds from the sale of the properties for general corporate purposes, including reducing its outstanding borrowings related to its recent hotel acquisitions. This is in line with the company’s investment strategy.
The accommodation industry is currently experiencing a rebound in traffic, due to widespread vaccination campaigns and relaxations of pandemic-related regulations. This has led to an increase in demand for the city and resort hotels and resorts of Pebblebrook in the United States.
Amid the recovery, PEB’s strategic capital deployment efforts bode well for its growth. The company aims to optimize the use of proceeds from its disposals. He focuses on acquisitions and development activities.
During the six months ended June 30, 2022, Pebblebrook acquired Inn on Fifth in Naples, Florida for $156 million and Gurney’s Newport Resort & Marina in Newport, RI for $174 million.
It also sold The Marker San Francisco in San Francisco, California for $77 million during this period.
In the second quarter, Pebblebrook invested $22.5 million in its portfolio, including completing the redevelopment and transformation of Hotel Vitale into 1 Hotel San Francisco for $28 million.
Analysts seem bullish on Zacks Rank #3 (Hold) stock. Zacks’ consensus estimate for the company’s third-quarter 2022 FFO per share has been revised up 22.6% in the past two months to 65 cents.
PEB shares have gained 6.2% in the period since the start of the quarter, outperforming the industry rally by 0.9%.
Image source: Zacks Investment Research
Actions to consider
Some higher ranked stocks in the REIT sector are Extra space storage (EXR – free report), Host Hotels and Resorts (HST – free report) and Xenia Hotels & Resorts (XHR – Free Report), each carrying a Zacks Rank #2 (Buy) at present. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks consensus estimate for Extra Space Storage’s FFO per share for the current year has risen 1.6% over the past month to $8.46.
The Zacks consensus estimate for Host Hotels’ FFO per share for the current year has risen 3.5% north over the past month to $1.79.
Zacks consensus estimate for 2022 FFO per Xenia Hotels & Resorts share rose 2.6% over the past month to $1.59.
Note: Everything related to earnings presented in this description represents funds from operations (FFO) – a metric widely used to assess the performance of REITs.