Morningstar | LaSalle Portfolio Should Provide Pebblebrook Higher Growth Despite Hotel Headwinds
Pebblebrook Hotel Trust is the largest U.S. lodging REIT focused on owning independent and boutique hotels. After Pebblebrook merged with LaSalle Hotel Properties in December 2018, the company owns more than 60 upper-upscale hotels, with more than 14,500 rooms located in urban, gateway markets. Pebblebrook's combined portfolio has a higher revenue per available room price point and EBITDA margin than its hotel REIT peers.The recent merger with LaSalle provides Pebblebrook some new avenues to create value for shareholders. The company doubled in size while taking on only a portion of the general and administrative costs, making the combined company more efficient. The combination should also allow Pebblebrook access to cheaper debt. Pebblebrook's CEO, Jon Bortz, previously ran LaSalle and acquired many of the hotels in that portfolio. His knowledge of those hotels combined with management's demonstrated ability to maximize margins should allow him to implement cost-saving initiatives that drive up margins. Additionally, management has begun an extensive renovation program across both the LaSalle portfolio and the legacy portfolio that will drive EBITDA gains over time.However, Pebblebrook will have to deal with many issues that will hinder its ability to increase profits over the next few years. While occupancies are at all-time highs, rate growth is limited because of the increased price discoverability from online travel agencies and review websites. Supply levels in many key markets keep revenue growth down even as demand growth remains healthy. While the impact of alternative lodging options like Airbnb on Pebblebrook's urban, high-quality and business-focused hotels is limited most nights, it does limit Pebblebrook's ability to push rates on nights when it would have typically generated the highest profits. With the economic cycle stretching out, expense growth has picked up and made it harder for Pebblebrook to consistently drive net operating income growth. We think these are limiting factors that make internal growth difficult for the company.Pebblebrook Hotel Trust is an internally managed hotel investment company. Substantially all of the company's assets are held by, and all of the operations are conducted through its Operating Partnership, Pebblebrook Hotel, L.P. The company is engaged in acquisition and investment in hotel properties located primarily in U.S. cities, including Atlanta, Boston, Chicago, Key West, Los Angeles, Miami, Nashville, Naples, New York, Philadelphia, Portland, Santa Monica, San Diego, San Francisco, Seattle and Washington, D.C., with a focus on main gateway urban markets. The company targets investments in resort properties located near its primary target markets, as well as in select destination resort markets.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.