Pebblebrook Hotel Trust launches $350 million convertible notes offering

BETHESDA, Md. - Pebblebrook Hotel Trust (NYSE:PEB), a $1.38 billion market cap hotel REIT with $1.47 billion in annual revenue, announced Tuesday it has launched a private placement of $350 million in Convertible Senior Notes due 2030, with an option for initial purchasers to buy an additional $50 million to cover over-allotments. According to InvestingPro analysis, the company appears undervalued based on its Fair Value metrics.

The hotel real estate investment trust plans to use the proceeds to repurchase certain of its 1.75% Convertible Senior Notes due 2026. The company also intends to repurchase approximately $50 million of its common shares using cash on hand, concurrent with the pricing of the notes. InvestingPro data shows management has been actively buying back shares, with the company maintaining strong liquidity as evidenced by a healthy current ratio of 1.78.

In connection with the offering, Pebblebrook expects to enter into capped call transactions with certain initial purchasers or their affiliates. These transactions are generally designed to reduce potential dilution to common shares upon conversion of the notes and offset cash payments exceeding the principal amount of converted notes.

The company noted that holders of the 2026 notes who sell their notes back to Pebblebrook may enter into or unwind derivatives with respect to the company’s common shares, potentially affecting the market price of those shares and the effective conversion price of the new notes.

The notes will be offered only to qualified institutional buyers under Rule 144A of the Securities Act of 1933. The securities have not been registered under the Securities Act or state securities laws and cannot be offered or sold in the United States absent registration or an applicable exemption.

Pebblebrook Hotel Trust owns 46 hotels with approximately 12,000 guest rooms across 13 urban and resort markets in the United States. The company generated $303.31 million in EBITDA over the last twelve months, though it currently faces profitability challenges. For deeper insights into PEB’s financial health and growth prospects, including 10+ additional ProTips and comprehensive valuation metrics, visit InvestingPro.

This article is based on a press release statement from Pebblebrook Hotel Trust.

In other recent news, Pebblebrook Hotel Trust reported its second-quarter 2025 earnings, showing a mixed performance. The company fell short of earnings per share (EPS) expectations, posting $0.06 compared to the forecasted $0.07. However, it surpassed revenue projections, achieving $407.54 million against the anticipated $398.34 million. In a separate development, Truist Securities adjusted its price target for Pebblebrook Hotel Trust, increasing it from $9.00 to $11.00 while maintaining a Hold rating. The firm also revised its 2025 Adjusted EBITDAre forecast to $342 million from $328 million and raised its AFFO per share estimate to $1.55 from $1.42. These recent developments provide investors with key insights into the company’s financial performance and future expectations.

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