Pebblebrook Hotel Trust (NYSE:PEB)

Rebounding real estate market, good management, growth/income play

Buying up hotel properties at low prices with cheap financing. This will pay off "big time" in the future.

Pebblebrook managers managed to get into the industry at the bottom of the cycle. They tend to buy hotels in areas where there is still good demand for them but yet not much room to build new ones. As the US economy improves prices for Hotels will go up. Since there area of concentration are luxury hotels, this class of customers tend to be more resilient to economic issues which will cushion the stock. Only issue that worries me is that as a REIT they are not involved in the day to day management of the hotels and that the management of these hotels are done by a third party.

Pebblebrook Hotel Trust
div = 2.5%
Total Debt / Equity    0.28
Price Earnings    N.A.
Price/Sales    4.18
Price/Book    1.12
Price/Cash Flow    38.80

luxury real estate will bounce back as the economy keeps improving

Trading below book value for a manager that has demonstrated past performance on pulling out more value from hotel properties. And Pebble has some very nice properties on the coasts.

21 Nov 11: In my opinion, this stock has the potential to be one of the best long-term performers in my portfolio over the long term (5-10 years). Management is very experienced and have already demonstrated their ability to execute their business plan. They raised money to purchase hotels after the crash, taking advantage of depressed valuations then invest to both improve revenue and reduce overhead. As earnings ramp up, the dividend will rapidly follow. The common dividend could rapidly approach and then exceed the rate on the preferred shares (PEB.A) which closed today over 8.6%. Combine the future high dividend level with the appreciation potential of the common and you get the best of both worlds, a high dividend based on what you pay today and enormous upside appreciation potential. I purchased about 3.5% of my current portfolio in August paying between $14.25 and $14.65. If we get another pullback to those levels (doubtful but possible), I'll buy more. The only knock on buying more here is that it is a high beta stock. If we get more punishment due to U.S. or European debt concerns (high probability), the shares could be pushed sharply lower. If you think long-term, buy here. If you want to wait for better prices, a pullback will almost certainly bring them. Buy at today's level (below $18) and buy hard below $15.

mkt cap 960m
debt 252m
cash 140m
p/b 1.06
div yield 2.6%
div .48 cents a year

HG

John Bortz, hotel industry veteran, formed PEB to take advantage of hotel property opportunities created by the real estate bubble and subsequent crash. They are buying actual properties, supposedly at a good discount. Supposedly the property values plus cash minus debt establishes a share value of around $20...it is trading around $15 at this time. The company pays a 3% dividend which should increase over time as they are a REIT. Throw in possible share appreciation to $35 and I am in.

Deeply undervalued hotel REIT with 4+% yield. CEO and CFO recently buying at prices under $16.

Trading below asset value. As renovations are completed dividends will increase and raise stock price.

Selling below its assets per share cost.

"blow me down" - popeye

It should be obvious to all that Wall Street is in a funk with no clear cut solutions coming to the fore at this time. And there is certainly no concensus available, let alone even marginally acceptable to the broader market. Things have to push us to the blood-curdling break-point at which time we throw up our hands and say, "OK, I get it and I give." This is the moment witnessing the birth of new hope born of smartly rooted resolve. And this is when people become more amenable to smaller paychecks, less convenient working environments and fewer perks. It is through this acceptance that we will see greater humility in the workplace.

This bodes poorly for luxurious living, iconic extravagances (high end hotel accommodations) and glitzy/showy demonstrations of money mismanagement common to big business in fatter times.

For this pick to work, the holding period needs to work through a massive inventory of paradigm shifting. It will take time. Better to allocate resources elsewhere or suffer further declines in seed money and find yourself trying to paddle upstream---without a boat.

Len

Rising star buy. Twice.
Low debt.
Low P/B.

Pro recommendation from Jeff.

I have little experience with REITs, but it seems reasonable to buy them in the trough of the market. Pebblebrook has great management, former Jones Lang LaSalle guy. Has the makings of an up-and-coming best in breed.

Buying great assets on the cheap--Alex Pape pick.