Pebblebrook (PEB) Provides Operating Trend Update for Q3

Pebblebrook Hotel (NYSE:PEB) Trust PEB provided an update on the third-quarter operating trend. As regulations related to the pandemic ease with many states reopening, the company also continues to make progress on the resumption of hotel and resort operations.

In fact, since Jul 31, it has reopened 10 additional urban hotels, bringing the total number of hotels and resorts that are open to 34. These 34 properties contributed to around 70% of Pebblebrook’s hotel EBITDA last year and are expected to drive performance in the third quarter.

Moreover, the company’s resorts continue to witness a recovery in occupancy and are enjoying higher average daily room rates than 2019.

In fact, hotel reopening along with gradual recovery in travel demand continues to aid the hotel industry’s operating performance. In fact, Pebblebrook’s 24 hotels, which remained open in July, generated $1 million of hotel EBITDA.

Same-property hotel EBITDA for July is anticipated at negative $6.8 million, including credit from property tax reductions of $1.1 million. Nonetheless, when compared with the recent monthly hotel cash burn of $9-$12 million, hotel EBITDA has improved.

Additionally, the company’s independent/small branded hotels seem to perform better than major-branded hotels. In fact, its 31 independent/small branded hotels realized a loss of $0.7 million in hotel EBITDA in July, lower than the loss of $6.1 million witnessed from its major branded hotels.

Moreover, the company noted that monthly hotel and corporate cash burn was $9-$12 million and $19-$24, respectively. Both were $6 million better than the company’s early May midpoint estimate.

Notably, with group or corporate businesses running to ground due to the pandemic, the hotel industry is witnessing a significant decline in travel demand, thus reducing earnings visibility for hoteliers and hotel REITs alike.

In fact, Pebblebrook reported the second-quarter loss of 58 cents in terms of adjusted funds from operations (“FFO”) per share. In the comparable period last year, the company reported adjusted FFO per share of 85 cents.

Moreover, shares of this Zacks Rank #5 (Strong Sell) company have plunged 55.8% over the past year compared with the industry’s decline of 8%.

Stocks to Consider

Omega Healthcare (NYSE:OHI) Investors, Inc.’s OHI FFO per share estimates for the ongoing year have been unchanged at $3.07 over the past month. The company currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Terreno Realty (NYSE:TRNO) Corporation’s TRNO FFO per share estimates for 2020 have been revised marginally upward to $1.43 over the past month. It currently carries a Zacks Rank of 2.

Duke Realty (NYSE:DRE) Corporation’s DRE Zacks Consensus Estimate for 2020 FFO per share has revised marginally upward to $1.49 over the past week. The company currently carries a Zacks Rank of 2.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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