Pebblebrook Hotel Trust(PEB) - 2022 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements This section presents Pebblebrook Hotel Trust's unaudited consolidated financial statements, highlighting significant revenue growth and a return to net income in Q2 2022 driven by hotel industry recovery Consolidated Balance Sheet Highlights (Unaudited) | Account | June 30, 2022 ($ in thousands) | December 31, 2021 ($ in thousands) | | :--- | :--- | :--- | | Total Assets | $6,388,925 | $6,261,190 | | Investment in hotel properties, net | $6,039,477 | $6,079,333 | | Hotels held for sale | $146,805 | $— | | Cash and cash equivalents | $32,046 | $58,518 | | Total Liabilities | $3,196,249 | $3,097,285 | | Debt | $2,517,751 | $2,441,888 | | Total Equity | $3,192,676 | $3,163,905 | Consolidated Statement of Operations Highlights (Unaudited) | Metric | Three Months Ended June 30, 2022 ($ in thousands) | Three Months Ended June 30, 2021 ($ in thousands) | Six Months Ended June 30, 2022 ($ in thousands) | Six Months Ended June 30, 2021 ($ in thousands) | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $397,524 | $163,314 | $655,592 | $246,957 | | Operating Income (Loss) | $51,944 | $26,255 | $(25,719) | $(69,880) | | Net Income (Loss) | $28,797 | $1,428 | $(71,419) | $(120,012) | | Net Income (Loss) Attributable to Common Shareholders | $16,646 | $(8,564) | $(94,228) | $(137,285) | | Diluted EPS | $0.12 | $(0.07) | $(0.72) | $(1.05) | Consolidated Statement of Cash Flows Highlights (Unaudited) | Cash Flow Activity | Six Months Ended June 30, 2022 ($ in thousands) | Six Months Ended June 30, 2021 ($ in thousands) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $142,629 | $(2,283) | | Net cash provided by (used in) investing activities | $(216,691) | $127,792 | | Net cash provided by (used in) financing activities | $44,605 | $61,201 | | Net change in cash | $(29,457) | $186,710 | Notes to Consolidated Financial Statements Detailed notes support the financial statements, covering the company's 54-hotel portfolio, recent acquisitions, total debt, impairment losses, and compliance with debt covenants - As of June 30, 2022, the Company owned 54 hotels with 13,415 guest rooms, with results improving through the first six months of 2022 and the Company exiting its debt covenant waiver period[33][35] - During the six months ended June 30, 2022, the company acquired two properties for a total of $330.0 million and sold one property for $77.0 million[44][45][46] - For the six months ended June 30, 2022, the Company recognized an impairment loss of $73.3 million related to two hotels, determined using Level 2 fair value measurements based on marketing efforts[51] Total Debt Outstanding as of June 30, 2022 | Debt Type | Balance Outstanding ($ in thousands) | | :--- | :--- | | Revolving credit facilities | $100,000 | | Unsecured term loans | $1,402,760 | | Convertible senior notes | $745,868 | | Senior unsecured notes | $49,879 | | Mortgage loans | $219,244 | | Total Debt | $2,517,751 | Revenue by Geographic Location (Six Months Ended June 30) | Location | 2022 Revenue ($ in thousands) | 2021 Revenue ($ in thousands) | | :--- | :--- | :--- | | Southern Florida/Georgia | $165,525 | $73,973 | | San Diego, CA | $137,459 | $56,144 | | Boston, MA | $107,653 | $33,212 | | Los Angeles, CA | $81,113 | $29,781 | | San Francisco, CA | $46,317 | $12,129 | | Total | $655,592 | $246,957 | Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) This section details the company's significant operational and financial recovery in H1 2022, driven by strong leisure travel demand and improved key performance metrics, while acknowledging ongoing uncertainties - Overall performance has been led by the recovery of leisure travel, driving resort revenue to pre-pandemic levels, with corporate and group business recovery increasing substantially, and the company exiting its debt covenant waiver period at the end of Q2 2022[129][130] Same-Property Hotel Operating Statistics | Metric | For the six months ended June 30, 2022 | For the six months ended June 30, 2021 | | :--- | :--- | :--- | | Same-Property Occupancy | 58.9% | 32.4% | | Same-Property ADR | $309.86 | $255.57 | | Same-Property RevPAR | $182.41 | $82.70 | Reconciliation to FFO and EBITDAre (Six Months Ended June 30) | Metric ($ in thousands) | 2022 | 2021 | | :--- | :--- | | Net Income (Loss) | $(71,419) | $(120,012) | | FFO | $121,030 | $(59,792) | | EBITDAre | $166,942 | $(9,380) | - Total hotel revenues for the six months ended June 30, 2022, increased by $408.6 million compared to the same period in 2021, driven by acquisitions and increased travel demand[147] - The company plans to invest a total of $100.0 million to $120.0 million in capital investments in 2022 for redevelopment and repositioning projects at several key properties[177] Quantitative and Qualitative Disclosures About Market Risk This section outlines the company's market risk exposure, primarily from interest rate fluctuations on variable-rate debt, which is mitigated through interest rate swap agreements - The company is exposed to market risk from changes in interest rates, with $628.2 million (24.8% of total indebtedness) subject to variable interest rates as of June 30, 2022[185] - A 0.1 percent (10 basis point) change in interest rates on variable rate debt would result in an approximate $0.6 million change in annual interest expense[185] - To manage interest rate risk, the company has entered into interest rate swap agreements with an aggregate notional amount of $1.0 billion to hedge variable interest rates on its unsecured term loans[184] Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 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[186] - There have been no material changes to the company's internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal controls[187] PART II. OTHER INFORMATION Legal Proceedings The company is not currently involved in any material litigation, facing only routine claims not expected to materially affect its financial condition - The Company is not presently subject to any material litigation, nor is any material litigation threatened against it, other than routine actions arising in the ordinary course of business[190] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for FY2021 - 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[191] Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's common share repurchase programs, noting no repurchases in Q2 2022 and remaining availability under existing and future programs - No common shares were repurchased by the Company during the quarter[192] - As of June 30, 2022, approximately $56.6 million remained available for repurchase under the company's $150.0 million share repurchase program[192] Defaults Upon Senior Securities The company reported no defaults upon its senior securities during the period - None[193] Mine Safety Disclosures This item is not applicable to the company - Not applicable[194] Other Information The company reported no information for this item - None[195] Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications by the CEO and CFO and XBRL data files - The exhibits filed with this report include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, and Inline XBRL documents[197]