Pebblebrook Hotel Trust(PEB) - 2022 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements Q1 2022 saw revenues of $258.1 million, a reduced net loss, and positive operating cash flow, driven by travel demand recovery Consolidated Balance Sheets Total assets decreased slightly to $6.18 billion as of March 31, 2022, primarily due to reduced hotel property investments, while cash increased Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2022 (Unaudited) | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Investment in hotel properties, net | $5,975,857 | $6,079,333 | | Cash and cash equivalents | $69,446 | $58,518 | | Total assets | $6,179,373 | $6,261,190 | | Liabilities & Equity | | | | Debt | $2,443,090 | $2,441,888 | | Total liabilities | $3,094,439 | $3,097,285 | | Total equity | $3,084,934 | $3,163,905 | | Total liabilities and equity | $6,179,373 | $6,261,190 | Consolidated Statements of Operations and Comprehensive Income Q1 2022 total revenues surged to $258.1 million, with an improved operating loss of $77.7 million despite a $61.0 million impairment loss Consolidated Statements of Operations (in thousands, except per-share data) | Metric | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :--- | :--- | :--- | | Total revenues | $258,068 | $83,643 | | Total operating expenses | $335,731 | $179,778 | | Impairment loss | $60,983 | $14,856 | | Operating income (loss) | $(77,663) | $(96,135) | | Net income (loss) | $(100,216) | $(121,440) | | Net income (loss) attributable to common shareholders | $(110,874) | $(128,721) | | Net income (loss) per share, diluted | $(0.85) | $(0.98) | Consolidated Statements of Equity Total equity decreased to $3.08 billion due to a net loss and shareholder distributions, partially offset by other comprehensive income - Total equity decreased to $3.08 billion at March 31, 2022, from $3.16 billion at December 31, 2021[24] - The decrease in equity was mainly due to a net loss of $99.5 million attributable to the company and distributions of $11.3 million to preferred shareholders and $1.1 million to common shareholders[24] Consolidated Statements of Cash Flows Q1 2022 saw net cash provided by operating activities of $38.8 million, a turnaround from the prior year, resulting in a net cash increase Consolidated Statements of Cash Flows Highlights (in thousands) | Activity | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $38,832 | $(7,136) | | Net cash provided by (used in) investing activities | $(19,953) | $(9,670) | | Net cash provided by (used in) financing activities | $(15,173) | $5,138 | | Net change in cash and cash equivalents and restricted cash | $3,706 | $(11,668) | Notes to Consolidated Financial Statements Notes detail accounting policies, hotel portfolio, COVID-19 impact, a $61.0 million impairment loss, liquidity, and a subsequent hotel acquisition contract - As of March 31, 2022, the Company owned 53 hotels with 13,247 guest rooms[31] - The COVID-19 pandemic has had a significant negative impact, but results improved in Q1 2022 due to strong leisure travel. The company believes it has sufficient liquidity of $694.4 million to meet obligations for the next 12 months[35][36] - In Q1 2022, the company recognized a $61.0 million impairment loss related to two hotels, determined using Level 2 fair value inputs based on marketing efforts[48] - Subsequent to the quarter end, on April 21, 2022, the company executed a contract to acquire the Inn on Fifth in Naples, Florida, with the purchase expected to be completed by the end of Q2 2022[109] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses significant Q1 2022 operational improvements driven by travel recovery, strong liquidity, planned capital investments, and debt covenant compliance - The demand recovery has been led by strong leisure travel, with a slower recovery in business and group travel. Resort properties are operating at or above pre-pandemic levels[117] Same-Property Hotel Operating Statistics (Q1 2022 vs Q1 2021) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Same-Property Occupancy | 48.3% | 22.1% | | Same-Property ADR | $297.29 | $250.47 | | Same-Property RevPAR | $143.61 | $55.33 | | Same-Property Total RevPAR | $219.75 | $89.02 | Non-GAAP Financial Measures Reconciliation (in thousands) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net income (loss) | $(100,216) | $(121,440) | | FFO | $19,777 | $(51,251) | | EBITDAre | $42,439 | $(25,807) | - The company expects to invest a total of $100.0 million to $120.0 million in capital investments in 2022, including significant redevelopment and repositioning projects[156] - As of March 31, 2022, the company had total liquidity of $694.4 million, consisting of cash, restricted cash, and available borrowings on its senior unsecured revolving credit facility[135] Quantitative and Qualitative Disclosures About Market Risk The company faces interest rate risk from $454.6 million in variable-rate debt, mitigated by interest rate swaps, with a 0.1% rate change impacting annual expense by $0.5 million - As of March 31, 2022, $454.6 million (18.5%) of the company's total debt was subject to variable interest rates[164] - A 0.1% change in interest rates on variable-rate debt would impact annual interest expense by approximately $0.5 million[164] - The company utilizes interest rate swap agreements to hedge against interest rate fluctuations on its unsecured term loans[163] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are effective as of the end of the period covered by the report[165] - No material changes to internal control over financial reporting occurred during the most recent fiscal quarter[166] PART II. OTHER INFORMATION Legal Proceedings The company is not currently subject to any material litigation, nor is any material litigation threatened against it - The Company is not presently subject to any material litigation nor, to the Company's knowledge, is any material litigation threatened against the Company[169] Risk Factors No material changes have occurred from the risk factors previously disclosed in the Annual Report on Form 10-K for 2021 - There have been no material changes from the risk factors disclosed in the "Risk Factors" section of the Annual Report on Form 10-K for the year ended December 31, 2021[170] Unregistered Sales of Equity Securities and Use of Proceeds No common shares were repurchased in Q1 2022, with $56.6 million remaining available under the existing $150.0 million share repurchase program - No shares were repurchased during the period from January 1, 2022, to March 31, 2022[171] - As of March 31, 2022, approximately $56.6 million remained available for repurchase under the company's $150.0 million share repurchase program authorized in 2016[171] Defaults Upon Senior Securities None - None[172] Mine Safety Disclosures Not applicable - Not applicable[173] Other Information None - None[174] Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files - The report includes CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[176] - Interactive Data Files (XBRL) are submitted as part of the filing[176][177]