Pebblebrook Obtains Secured loan - Analyst Blog

Pebblebrook Hotel Trust (PEB), a lodging real estate investment trust (REIT), has recently executed a new secured loan of $36 million, collateralized by the Doubletree Bethesda Hotel in Bethesda, Maryland. The five-year secured loan was obtained from Goldman Sachs Commercial Mortgage Capital, L.P., a wholly-owned subsidiary of The Goldman Sachs Group, Inc. (GS), a leading full-service commercial mortgage lender.

Pebblebrook expects to utilize the proceeds from the debt financing to fund future acquisitions and for general corporate purposes. With the deal, the company currently has approximately $282.0 million of cash in hand and full availability under its $150 million senior secured credit facility. Pebblebrook presently has $210.6 million of debt outstanding at a weighted average annual interest rate of 4.28%.

Pebblebrook has recently provided an outlook for fiscal 2011 based on continued improvement in economic activity and positive business travel trends. The company expects 2011 FFO (fund from operations) in the range of $28.2 million to $30.2 million or $0.71 to $0.76 per share, with EBITDA (earnings before interest, tax, depreciation and amortization) of $41 million to $43 million. Fund from operations, a widely used metric to gauge the performance of REITs, is calculated after adding depreciation and amortization and other non-cash expenses to net income. Fiscal 2011 guidance is based on RevPAR (revenue per available room) year-over-year growth of 6% to 8%, with portfolio hotel EBITDA of $50.0 million to $52.0 million.

Pebblebrook operates premium hotel properties in major cities across the U.S., with an emphasis on the coastal markets typified by high barriers to entry. In addition, the company invests in resort properties located near its primary urban target markets, as well as in select destination markets such as Hawaii, south Florida and southern California. The company currently owns 8 hotels, with a total of 2,300 guest rooms.

We presently have a ‘Neutral' recommendation on Pebblebrook, which currently has a Zacks #3 Rank that translates into a short-term ‘Hold' rating and indicates that the stock is expected to perform in line with the overall U.S. equity market for the next 1–3 months.

 
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