BETHESDA, Md. - Pebblebrook Hotel Trust (NYSE: NYSE:PEB) announced Monday that it has priced a private placement of $400 million in senior notes with an interest rate of 6.375%, maturing in 2029. The offering, made by its operating partnership and a subsidiary, is expected to close on October 3, 2024, subject to customary closing conditions.
The notes are to be senior unsecured obligations of the issuers, backed by guarantees from Pebblebrook Hotel Trust and subsidiaries that support the operating partnership's existing credit facilities. The proceeds from the sale are designated primarily for the repayment of the operating partnership's unsecured term loans, with a portion potentially directed towards repurchasing some of the company's convertible senior notes.
These securities have not been registered under the Securities Act of 1933 or any state securities laws, and thus will be offered only to qualified institutional buyers in accordance with Rule 144A and to certain non-U.S. persons in offshore transactions under Regulation S.
This financial maneuver comes with forward-looking statements that involve risks and uncertainties which could cause actual results to differ from those projected. The company has made it clear that this press release does not constitute an offer to sell or a solicitation of an offer to buy the notes or any other securities.
The information for this article is based on a press release statement from Pebblebrook Hotel Trust.
In other recent news, Pebblebrook Hotel Trust announced its intention to offer $350 million in senior notes due in 2029, primarily to reduce its existing unsecured term loans. The company's recent financial performance exceeded expectations, with increased revenue per available room (RevPAR) and hotel earnings before interest, taxes, depreciation, and amortization (EBITDA). Despite a cautious outlook due to a slowing average daily rate and economic deceleration, Pebblebrook raised its 2024 outlook for key financial metrics and expects healthy revenue growth.
The company has strategically planned to invest $85-90 million in capital expenditures in 2023. Maintaining a strong balance sheet with $110 million in cash, Pebblebrook has no significant debt maturities until October 2025. These developments are part of the company's recent performance and strategic planning.
Analysts note that the company's redeveloped properties have captured more market share, contributing to improved cash flows. Despite concerns about RevPAR growth in the latter half of the year, Pebblebrook is well-positioned for future growth due to its robust financial position and strategic investments. These are the latest developments in the company's ongoing efforts to manage its debt portfolio and strengthen its financial position.
InvestingPro Insights
As Pebblebrook Hotel Trust (NYSE: PEB) gears up for its private placement of senior notes, a glance at the company's financial health through InvestingPro metrics reveals a mixed picture. With a market capitalization of $1.7 billion, the company is trading at a price-to-book ratio of 0.62 as of the last twelve months leading into Q2 2024, suggesting that investors may find the company's stock to be undervalued relative to its assets.
However, a deeper look into Pebblebrook's profitability shows that the company has not been profitable over the last twelve months, with a negative P/E ratio of -36.08. This aligns with the InvestingPro Tip that analysts do not anticipate the company will be profitable this year. The company's revenue growth has been modest at 1.03% over the same period, and while it has managed to maintain dividend payments for 15 consecutive years, the current dividend yield stands at just 0.29%.
InvestingPro Tips also highlight that Pebblebrook's stock price movements are quite volatile, which could be a point of consideration for potential investors. The company's shares are trading at 83.84% of their 52-week high, indicating some recovery in investor sentiment. Moreover, the InvestingPro product lists additional tips for Pebblebrook Hotel Trust, which could provide investors with further insights into the company's financials and stock performance.
For those interested in the long-term value potential, the InvestingPro Fair Value estimate stands at $17.02, which is above the current price and analyst targets, hinting at potential upside for the stock.
In summary, while Pebblebrook's debt issuance strategy may be aimed at improving its financial position, investors should weigh the company's operational performance and market valuation carefully. Additional insights and tips are available on the InvestingPro platform for those looking to delve deeper into Pebblebrook's financial metrics and stock analysis.
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