Pebblebrook Hotel Trust Reports Challenging 2025 Results and Optimistic 2026 Outlook

Key Highlights for Investors

• 2025 Net Loss: Pebblebrook Hotel Trust reported a net loss of (\$62.2) million, which included significant impairment charges of \$48.9 million from hotel dispositions.
• Same-Property Hotel EBITDA: \$348.2 million, outperforming the midpoint of the company’s guidance by \$2.2 million.
• Adjusted EBITDAre: \$342.5 million, \$6.0 million above guidance midpoint.
• Adjusted FFO per Diluted Share: \$1.58, \$0.05 above guidance midpoint.
• Q4 2025 Operating Outperformance:
  • Same-Property Hotel EBITDA up 3.9% to \$64.6 million.
  • Adjusted EBITDAre up 11.1% to \$69.7 million.
  • Adjusted FFO per diluted share up 35% to \$0.27, aided by share buybacks.
• Revenue Trends:
  • Same-Property Total RevPAR up 2.9% (with core RevPAR up 1.2%).
  • Resort Total RevPAR up 4.9% (reflecting strong leisure and F&B performance).
  • Urban markets balanced, despite government-related disruption; Urban Total RevPAR +1.7%, even with the government shutdown.
  • Out-of-room revenue growth was robust at +5.5%.
• Capital Investments:
  • \$22.7 million spent in Q4 2025; \$74.6 million for the full year.
  • Two hotel sales completed in Q4, generating \$116.3 million in proceeds.
  • \$100 million of net proceeds used to reduce debt.
  • Closed a new \$450 million unsecured term loan (2031 maturity), repaid \$360 million 2027 term loan, and repaid the Margaritaville Hollywood Beach Resort mortgage.
• Balance Sheet:
  • Approximately \$196 million in cash and restricted cash on hand at year-end.
  • Sector-low weighted average interest rate of 4.1%.
  • Net debt to trailing 12-month corporate EBITDA declined to 5.9x.
• Share Buybacks:
  • 6.3 million common shares repurchased in 2025 at an average price of \$11.37 per share.
  • Since October 2022, nearly 14% of outstanding shares repurchased.
  • Preferred shares repurchased at an average 24.3% discount to liquidation preference.
• Dividend Announcements:
  • Quarterly cash dividend of \$0.01 per common share declared.
  • Regular quarterly cash dividends for Series E, F, G, and H Cumulative Redeemable Preferred Shares announced.

2026 Outlook: Cautious Optimism Amid Macro Uncertainty

• Net Income/(Loss): Projected range of (\$10.4) million to \$3.6 million.
• Adjusted EBITDAre: Projected range of \$325.0 million to \$339.0 million.
• Adjusted FFO per Diluted Share: Projected range of \$1.50 to \$1.62.
• Free Cash Flow: Expected between \$104.0 and \$108.0 million (Adjusted FFO less capital investments and common dividends).
• Same-Property Total RevPAR Growth Rate: Forecasted at 2.25% to 4.25%.
• Same-Property Hotel EBITDA: Forecasted to expand, with margin improvement expected.
• Capital Investments: Lower, normalized annual run-rate of \$65-\$75 million anticipated, supporting higher discretionary free cash flow.
• Debt Maturities: No significant maturities until 2028, outside of the December 2026 convertible notes.

Important Shareholder Information & Potential Price-Sensitive Developments

• Impairment Charges: Large impairment charges from hotel sales (\$48.9 million) contributed to the net loss, but reduced exposure to challenged markets (Chicago, Los Angeles).
• Strategic Dispositions: Two hotel sales in 2025 generated \$116.3 million in proceeds, enabling debt reduction and accretive share repurchases.
• Share Repurchases: Aggressive buyback activity (nearly 14% of shares since 2022) at significant discounts to NAV may positively affect future share value, especially if market sentiment improves.
• Operating Efficiency Initiatives: Corporate staffing reduced by ~10%, with automation and lower run-rate costs expected to improve margins and free cash flow.
• Recovery in San Francisco: Hotels in San Francisco reported a 17.5% RevPAR increase for the full year and 37.9% in Q4, with Hotel EBITDA up 20.5%. Management expects continued momentum given robust convention bookings and tech-driven demand.
• LaPlaya Beach Resort Recovery: Restoration completed after hurricanes; \$12.7 million business interruption insurance recovery recognized in 2025. No further BI insurance income expected in 2026, but EBITDA contribution forecast at \$28-\$30 million.
• Balance Sheet Strength: Debt paydowns, sector-low interest rate (4.1%), and net debt/EBITDA improvement position the company well for future growth.
• Curator Hotel & Resort Collection: Curator now includes 91 member properties and 121 preferred vendor agreements, providing advantageous pricing, enhanced contract terms, and early access to innovative technologies (including AI and robotics), strengthening Pebblebrook’s competitive position.
• 2026 Guidance Risks: Outlook assumes no acquisitions/dispositions, excludes impact of macroeconomic deterioration, policy shocks, major weather events (except Winter Storm Fern), and federal shutdowns. Any deviation from these assumptions could materially affect results.
• Major-Events Calendar: 2026 is expected to benefit from a favorable schedule of major leisure events and easy comparisons in challenged markets, potentially driving meaningful revenue and profit growth.

Detailed Market Performance

• San Francisco: Led recovery with 17.5% RevPAR growth and 20.5% Hotel EBITDA growth for 2025, and 37.9% RevPAR growth in Q4.
• Other Urban Markets: Chicago and Portland showed improvement, while Los Angeles faced challenges from wildfires and local disruptions (RevPAR down 10.7% for the year).
• Resorts: Remained resilient throughout the year, with positive RevPAR and profitability trends.
• Weekend Leisure Demand: Upscale and luxury transient customers outperformed expectations, with weekend occupancies up 3.6% for the portfolio and nearly 4% for urban hotels versus prior year.

Balance Sheet & Capital Structure

• Cash, cash equivalents, and restricted cash at year-end: \$196.2 million.
• Senior unsecured revolving credit facility: \$642 million available out of \$650 million.
• Net debt to trailing 12-month corporate EBITDA: 5.9x.
• Weighted-average interest rate: 4.1% (sector-low).
• Debt maturation: No significant maturities until 2028 (outside Dec 2026 convertible notes).
• Share repurchases: 6.3 million common shares in 2025 at \$11.37 average price; nearly 14% of shares repurchased since 2022.
• Preferred shares: 0.5 million repurchased at a 24.3% average discount to liquidation preference.

Operational and Non-GAAP Disclosures

• Pebblebrook provides detailed reconciliations between GAAP and non-GAAP measures (FFO, EBITDA, EBITDAre, Adjusted FFO, Adjusted EBITDAre).
• Non-GAAP metrics are widely used in the lodging REIT sector for operational performance analysis, but investors should note that these metrics are not substitutes for GAAP earnings or cash flow.

Shareholder Call & Further Information

Pebblebrook Hotel Trust will conduct its quarterly analyst and investor conference call on Thursday, February 26, 2026, at 9:00 AM ET. Investors may access the webcast and additional information through the company website.

Conclusion

Pebblebrook Hotel Trust’s 2025 results reflected a volatile year marked by macroeconomic uncertainty, government disruptions, and market-specific challenges. However, strategic asset sales, aggressive share buybacks, operating efficiency gains, and a sector-leading balance sheet position the company for margin expansion and profitability growth in 2026. The company’s guidance for 2026 is cautiously optimistic, with robust demand expected in key markets, especially San Francisco, and a favorable schedule of major leisure events. Shareholders should note the risks associated with macroeconomic and policy developments, which could impact performance. The aggressive buyback strategy, improved balance sheet, and recovery in key urban markets are the most price-sensitive factors and could influence Pebblebrook’s share value materially in the coming year.

Disclaimer: The information in this article is based on Pebblebrook Hotel Trust’s official earnings report and outlook. This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Financial projections and forward-looking statements are subject to risks and uncertainties, including but not limited to macroeconomic conditions, policy changes, weather events, and government disruptions. Investors should review all relevant filings and disclosures and consult a qualified advisor before making investment decisions.

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