Pebblebrook Hotel Trust has revised its 2018 and fourth quarter 2018 outlook to reflect the acquisition of LaSalle Hotel Properties on November 30, 2018 and the sale of The Grand Hotel Minneapolis. The company’s revised outlook incorporates one month’s performance of the LaSalle-legacy portfolio as well as the negative impact of the labor strikes in Boston, San Diego and San Francisco, which extended beyond the company’s previous estimates, and the wildfires outside of San Francisco and Los Angeles, which occurred after the company provided its fourth quarter outlook on November 1, 2018.
According to a prepared statement, the company’s revised outlook also incorporates the impact of the higher share count and outstanding debt following the closing of the acquisition of LaSalle Hotel Properties.
“We are very pleased with the progress we have made integrating the LaSalle-legacy portfolio and employees into Pebblebrook,” said Jon E. Bortz, Chairman, President and Chief Executive Officer of Pebblebrook. “Although the Same-Property EBITDA increase from the LaSalle-legacy hotels is not meaningful for the month of December, given that it is seasonally one of the slowest months for the portfolio, the performance of the LaSalle-legacy hotels has been in line with our expectations. In addition, we have reduced our fourth quarter outlook to reflect the sale of The Grand Hotel Minneapolis, which is not included in the Same-Property numbers for the fourth quarter, as well as the negative impact of the labor strikes and the wildfires.”
The company’s integration of the 36 LaSalle-legacy hotels remains on track and within previous expectations. In addition, the expected transaction and closing costs for the LaSalle acquisition look to be below the Company’s previous forecast. The company also remains confident that the previously announced $18 to $20 million of annualized corporate synergies and expense savings will be realized. The company continues to make progress executing on its strategic disposition program to sell between $750.0 million and $1.25 billion of LaSalle-legacy hotels over the next six to twelve months.
The company’s estimates and assumptions, including the company’s outlook for 2018 and the fourth quarter of 2018 for Same-Property RevPAR, Same-Property RevPAR growth rate, Same-Property EBITDA, Same-Property EBITDA growth rate, Same-Property EBITDA Margin and Same-Property EBITDA Margin growth rate include the hotels owned as of December 19, 2018, as if they had been owned by the Company for all of 2017 and 2018, except for LaPlaya Beach Resort & Club, which is not included in the third or fourth quarters, Grand Hotel Minneapolis, which is not included in the fourth quarter, and all 36 LaSalle-legacy hotels, which are only included in December for both 2017 and 2018. The Company’s 2018 outlook assumes no additional acquisitions or dispositions beyond the hotels the Company owned as of December 19, 2018.
As of December 19, 2018, the total number of outstanding common shares and common units is approximately 130.8 million, which reflects the issuance of 61,399,104 common shares and 133,605 common units associated with the acquisition of LaSalle Hotel Properties.