Pebblebrook Hotel Trust (PEB), a lodging real estate investment trust (REIT), has recently announced a secondary offering of 5 million 7.875% Series A Cumulative Redeemable Preferred Shares at $25.00 each to raise cash and increase liquidity. The company anticipates generating net proceeds of approximately $120.9 million from the offer.
Pebblebrook intends to utilize the proceeds to fund future acquisitions to capitalize on the improving hotel market fundamentals in the U.S. According to a report published by Jones Lang LaSalle Incorporated (JLL), a leading REIT that provides corporate, financial and investment management services, hotel sales and acquisitions would increase to the tune of 25% in 2011 in the Americas with investors vying for premium assets.
In its report, Jones Lang has cited that a healthy rebound in the U.S. business and leisure travel has attracted a wide array of investors in the hotel industry, including investors from the Middle East.
According to Smith Travel Research Inc., an independent research company in the lodging industry, hotel revenue per available room (RevPAR) in the top 25 U.S. markets rose to $76.61 during the first 11 months of 2010 from $71.55 in the year-ago period.
Jones Lang expects REITs to be the dominant buyers in 2011, with private equity groups and institutional investors increasingly joining the party as leverage levels and terms pick up with stabilization in the market.
Pebblebrook operates premium hotel properties in major cities across the U.S., with an emphasis on the coastal markets typified by high barriers to entry. In addition, the company invests in resort properties located near its primary urban target markets, as well as in select destination markets such as Hawaii, south Florida and southern California. The company currently owns 9 hotels, with a total of 2,552 guest rooms.
We presently have a Neutral recommendation on Pebblebrook, which currently has a Zacks #3 Rank that translates into a short-term Hold rating and indicates that the stock is expected to perform in line with the overall U.S. equity market for the next 1–3 months.
JONES LANG LASL (JLL): Free Stock Analysis Report
PEBBLEBROOK HTL (PEB): Free Stock Analysis Report
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