Zacks_Analysts' Blog : Pebblebrook Closes Loan Financing - Analyst Blog

Pebblebrook Hotel Trust (PEB) recently executed a non-recourse secured loan worth $46.0 million through Cornerstone Real Estate Advisers, one of the world's largest real estate investment advisers.

The loan carries a fixed interest rate of 4.36% with a term of five years secured by a first mortgage on the company’s 183-room Hotel Monaco Washington, DC. The proceeds from the loan will be used to repay the existing $35.0 million mortgage loan on the Hotel Monaco Washington, DC. This apart, the company expects to utilize the proceeds to fund future acquisitions and for general business purposes.

Pebblebrook reported third quarter 2011 FFO (funds from operations) of 34 cents per share compared with 11 cents per share in the year-earlier quarter. Funds from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

As of September 30, 2011, the company had $251.8 million in consolidated debt and $291.7 million in non-recourse debt at weighted average interest rates of 4.4% and 3.2%, respectively. The company had no outstanding balance on its $200.0 million senior unsecured credit facility. As of September 30, 2011, the company had $84.0 million of consolidated cash, cash equivalents and restricted cash.

Pebblebrook, through Pebblebrook Hotel, L.P., operates as a real estate investment trust (REIT). The company acquires and invests in hotel properties located primarily in major U. S. cities, with an emphasis on the major coastal markets. The company intends to focus on full-service hotel properties in the upscale segment of the lodging industry.

Pebblebrook currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, Host Hotels & Resorts Inc (HST) also holds a Zacks #3 Rank.