Breaking Down Pebblebrook Hotel Trust (PEB) Financial Health: Key Insights for Investors

You are defintely looking at a mixed bag with Pebblebrook Hotel Trust (PEB) as we close out 2025, and the numbers tell a clear story: urban recovery is still a grind, but smart capital management is buying them time. While the company posted a Q3 2025 net loss of ($32.4) million and a revised full-year net loss expectation of up to ($67.5) million, the operational bright spots are crucial to understand. Specifically, the Adjusted Funds From Operations (FFO) per diluted share is projected to land between $1.50 and $1.57 for the full year, showing underlying cash flow resilience despite the net loss, and that is what matters for a REIT. Plus, they just successfully refinanced $400 million of debt, pushing those maturities out to 2030 at a favorable 1.625% rate, which is a significant de-risking move that leaves them with $232 million in cash. So, how do you weigh the ongoing RevPAR challenges in markets like Los Angeles against the standout 8.3% RevPAR growth in San Francisco, and what does that mean for your investment decision right now? We need to map these near-term risks to the long-term debt structure.

Revenue Analysis

You're looking at Pebblebrook Hotel Trust (PEB)'s top line and wondering where the growth is coming from, especially with all the talk of economic uncertainty. The direct takeaway is this: While overall revenue growth is nearly flat, the underlying story is a shift toward resilient non-room revenue and outperforming resorts, which is masking weakness in some urban markets.

For the trailing twelve months ending September 30, 2025, Pebblebrook Hotel Trust reported total revenue of approximately $1.46 billion. This represents a modest year-over-year revenue growth of just +0.99%, which is a clear deceleration from the post-pandemic surge. Honestly, that near-flat growth rate is the first thing to anchor your investment thesis around.

The primary revenue streams for Pebblebrook Hotel Trust, like any hotel real estate investment trust (REIT) focused on upper upscale and luxury properties, are split between room revenue and non-room revenue, which is often called ancillary revenue. The non-room segment-think food and beverage (F&B), meeting space rentals, and other services-is proving to be a critical stabilizer in 2025. In the third quarter of 2025, Non-room Revenue rose a healthy 1.7% year-over-year, while the core room revenue saw a drop in Average Daily Rate (ADR) of 5.4%. That's a significant shift in contribution.

Here's a quick look at the key revenue drivers and their recent performance:

• Room Revenue: Occupancy is up nearly 190 basis points in Q3 2025, but ADR pressure is causing Same-Property Total RevPAR (Revenue Per Available Room) to decline 1.5% for the quarter.
• Non-Room Revenue: This is the outperformer, with a 1.7% increase in Q3 2025, driven by strong F&B and group event bookings, defintely in the resort portfolio.
• Geographic Segments: Performance is highly bifurcated. San Francisco and Chicago are seeing strong recoveries, with San Francisco achieving 8.3% RevPAR growth and Chicago increasing 2.3% in Q3 2025. But this is offset by a decline of 2.7% in Urban Total RevPAR overall and mixed results in other urban markets like Washington, D.C.

The biggest change in the revenue mix is the increased contribution from redeveloped properties and a non-core stream. Properties that underwent significant capital reinvestment are gaining market share; for example, one redeveloped resort saw its out-of-room revenue jump to 50% of its total mix in Q2 2025, with overall revenue up over 60%. Plus, for the full year 2025, the company expects to recognize $11.6 million in Business Interruption (BI) insurance income, which, while non-recurring, provides a temporary boost to the bottom line.

To be fair, the full-year 2025 outlook for Same-Property Total RevPAR growth is projected to be between (0.5%) and 2.3%, reflecting a more cautious stance due to macro-economic headwinds impacting the second half of the year. The table below maps the two main segments against the portfolio performance in Q3 2025, showing the divergence you need to track.

The clear action here is to watch the non-room and resort segments. They are the true growth engines right now. You can dive deeper into the ownership structure and strategy that drives this performance by Exploring Pebblebrook Hotel Trust (PEB) Investor Profile: Who's Buying and Why?

Profitability Metrics

You need to know if Pebblebrook Hotel Trust (PEB) is making money right now, and the short answer is: operationally, yes, but the bottom line is still negative. The key takeaway from the Q3 2025 results is a sharp contraction in net profitability, driven by revenue weakness in urban markets, even as management executes exceptional cost control.

For the trailing twelve months (TTM) ending September 2025, Pebblebrook Hotel Trust reported an Operating Margin of -2.69%. This is a significant deterioration from the 5.29% Operating Margin reported at the end of the 2024 fiscal year. This decline shows the pressure on the company's core business, as a 1.5% decrease in Same-Property Total Revenue Per Available Room (RevPAR) in Q3 2025 eroded operating income. The company's Q3 2025 Net Loss was $32.4 million on revenue of $397.7 million, resulting in a Net Profit Margin of approximately -8.15% for the quarter.

Operational Efficiency and Margin Trends

The operational story is a mixed bag: revenue weakness is the headwind, but cost management is a tailwind. The company's Same-Property Hotel EBITDA Margin contracted by 1.6 percentage points year-over-year in Q3 2025, settling at 26.5%. This contraction is directly tied to a 5.4% drop in Average Daily Rate (ADR) across same-property hotels. Still, the management team showed impressive cost discipline, which is defintely a positive sign for future recovery.

• Same-Property Hotel Expenses before fixed costs increased only 0.4% year-over-year in Q3 2025.
• Expenses on a per-occupied-room basis actually declined by 2.0% in Q3 2025.
• The company's full-year 2025 outlook projects a Net Loss between $67.5 million and $58.5 million, confirming the near-term profitability challenge.

Industry Comparison and Actionable Insight

Pebblebrook Hotel Trust's operational profitability, measured by its Same-Property EBITDA Margin of 26.5% in Q3 2025, lags behind some of its peers. For context, Host Hotels & Resorts, Inc. reported a Comparable Hotel EBITDA Margin of 31.8% in Q1 2025, and American Hotel Income Properties REIT reported a Same Property Net Operating Income (NOI) margin of 29.0% in Q3 2025. This gap of at least 250 basis points suggests Pebblebrook Hotel Trust has less cushion against revenue shocks.

Here's the quick math on the operational gap:

What this estimate hides is the portfolio mix; Pebblebrook Hotel Trust's concentration in urban gateway markets like Los Angeles and Washington D.C., which saw severe double-digit RevPAR declines in Q3 2025, makes its margin performance look worse than a peer with a heavier resort focus. The action for you is to monitor the urban market recovery and expense growth. If expense growth remains near 0.4% while urban RevPAR stabilizes, the margin gap will close quickly. To dig deeper into who is betting on this recovery, you should check out Exploring Pebblebrook Hotel Trust (PEB) Investor Profile: Who's Buying and Why?.

Debt vs. Equity Structure

Pebblebrook Hotel Trust (PEB) maintains a capital structure that is slightly more aggressive than the industry average, relying heavily on debt to finance its portfolio growth and operations. The good news is that management has been proactive in extending maturities, but the debt-to-equity (D/E) ratio of approximately 1.04 as of September 2025 means you should pay close attention to interest rate risk and cash flow.

To be fair, a D/E ratio of 1.04 (or 104.1%) is only marginally higher than the Real Estate sector average of 101.6%, but it shows the company is using roughly one dollar of debt for every dollar of equity to fund its assets. This is a common strategy for a Real Estate Investment Trust (REIT) like Pebblebrook Hotel Trust, which needs to maintain high leverage to maximize returns, but it also increases financial risk, especially in a higher-rate environment. Honestly, that small difference matters when the economy gets rocky.

Here's the quick math on their financing mix, based on the latest 2025 data:

• Total Debt (as of June 2025): Approximately $2.56 billion
• Debt-to-Equity Ratio (D/E): 1.04 (or 104.1%)
• Sector Average D/E: 1.016 (or 101.6%)

Managing Debt Maturities and Cost of Capital

Pebblebrook Hotel Trust has been smart about managing its debt ladder, which is defintely a key action for any REIT right now. In September 2025, the company executed a significant refinancing move, issuing $400 million in new 1.625% Convertible Notes due 2030. They used the proceeds to retire an equal amount of their older 1.75% Convertible Notes due 2026 at a discount, which lowers future interest expense and extends the maturity date by four years.

This is a clear signal that management prioritizes pushing out the maturity wall. What this estimate hides, however, is that $350 million of the 2026 Notes still remain outstanding, which is the next major maturity to watch. As of September 30, 2025, the company's overall debt profile looked strong from an interest rate perspective:

• Weighted-Average Interest Rate: 4.1%
• Debt Effectively Fixed: 96% at 4.0%
• Weighted-Average Maturity: 2.9 years

The high percentage of fixed-rate debt is a huge advantage in today's environment, shielding the company from rising short-term rates. Plus, their net debt to trailing 12-month corporate EBITDA stands at 6.1x, which is a key metric for gauging how quickly they could pay down debt from operations.

The Equity Component: Share Repurchases

The company balances its debt management with strategic equity actions. In connection with the convertible note offering, Pebblebrook Hotel Trust repurchased approximately 4.3 million common shares at $11.56 per share. They also repurchased $1.4 million par value of their preferred shares at a 27% average discount, reducing the total outstanding preferred equity securities to $766.2 million.

These repurchases are accretive, meaning they immediately boost earnings per share for existing common shareholders, which is a smart use of capital when the stock price is trading below management's view of the underlying asset value. If you want a deeper dive into who is on the other side of these transactions, you should be Exploring Pebblebrook Hotel Trust (PEB) Investor Profile: Who's Buying and Why?

The company's capital strategy is clear: use low-cost, fixed-rate debt to fund assets, and use excess cash flow to opportunistically reduce both common and preferred equity when it's trading at a discount. This table summarizes the recent capital actions:

Your next step should be to monitor the company's operating cash flow against the remaining $350 million in 2026 Convertible Notes to ensure they have a clear path to retirement without needing another dilutive equity raise.

Liquidity and Solvency

You need to know how easily Pebblebrook Hotel Trust (PEB) can cover its short-term bills, and the good news is their liquidity position is solid, bolstered by recent strategic debt management and significant cash reserves. The key takeaway is that PEB has ample immediate resources, but the focus remains on generating enough cash flow to handle a major debt maturity coming up in 2026.

Assessing Pebblebrook Hotel Trust's Liquidity

The company's liquidity ratios, which measure its ability to meet short-term obligations, show a healthy buffer. As of September 30, 2025, Pebblebrook Hotel Trust's Current Ratio stood at approximately 1.81, meaning it holds $1.81 in current assets for every $1.00 in current liabilities. That is a comfortable position, especially for a real estate investment trust (REIT) where long-term assets dominate the balance sheet.

The Quick Ratio (or Acid-Test Ratio), which excludes less liquid assets like inventory, was also strong at about 1.10 as of the same date. This tells me the company can cover its immediate debts using only its most liquid assets-cash, short-term investments, and receivables. That's defintely a clean one-liner for a REIT.

Here's the quick math on what that means for working capital (Current Assets minus Current Liabilities): a Current Ratio of 1.81 implies a positive working capital trend, which is a significant improvement from past periods and indicates a strong capacity to fund day-to-day operations without stress. The company ended the third quarter of 2025 with $232 million in cash and restricted cash, plus an additional $642 million of available capacity on its $650 million senior unsecured revolving credit facility.

• Current Ratio: 1.81 (Sep 30, 2025)
• Quick Ratio: 1.10 (Sep 30, 2025)
• Cash and Restricted Cash: $232 million (Q3 2025)

Cash Flow Statement Overview and Trends

Looking at the cash flow statement trends for Pebblebrook Hotel Trust reveals a company generating solid cash from operations while making strategic capital and financing moves. The trailing twelve months (TTM) Operating Cash Flow (OCF) is approximately $287.70 million, which is the engine funding the company's capital structure and investments.

On the Investing Cash Flow (ICF) side, the company is managing its capital expenditures (CapEx) effectively. Pebblebrook Hotel Trust is on track for full-year 2025 capital investments of $65 million to $75 million, a necessary outflow for property maintenance and improvements, but one that is well-controlled and significantly less than the operating cash generated.

The most important activity in Financing Cash Flow (FCF) for Q3 2025 was the strategic debt refinancing. Pebblebrook Hotel Trust completed a $400 million private offering of 1.625% Convertible Notes due 2030, using the proceeds to retire an equal amount of higher-interest 1.75% Convertible Notes due 2026. This action extended maturity and lowered borrowing costs, a smart move that improves long-term financial flexibility.

Near-Term Liquidity Strengths and Risks

The company's liquidity strengths are clear: high cash on hand and significant undrawn credit capacity. This flexibility is key for a REIT in the urban and resort hotel space, which can see revenue volatility. However, what this estimate hides is the remaining debt due in the near-term. Pebblebrook Hotel Trust still has $350 million of Convertible Notes maturing in December 2026.

Management expects to use current cash and future free cash flow to address this 2026 maturity, and given the TTM operating cash flow of over $287 million, this is a manageable risk. The successful refinancing of $400 million of the 2026 notes already shows a proactive approach to debt management. For more on the company's overall health, you can read the full analysis at Breaking Down Pebblebrook Hotel Trust (PEB) Financial Health: Key Insights for Investors.

Action: Portfolio Managers should monitor the progress of the remaining $350 million debt retirement in 2026, ensuring the company maintains its strong operating cash flow generation to cover it.

Valuation Analysis

The short answer on Pebblebrook Hotel Trust (PEB) is that it appears undervalued on a pure asset-value basis, but the market is pricing in significant risk, which is why the stock trades at a discount. As of late 2025, the key indicators paint a mixed picture, suggesting a cautious approach is defintely warranted, even with the low price-to-book ratio.

You are essentially buying a dollar of assets for about 50 cents, but the earnings power is still recovering. Here's the quick math on the core valuation multiples for the 2025 fiscal year, which show this tension.

• Price-to-Book (P/B): The ratio stands at a low 0.50. This means the market capitalization of approximately $1.27 billion is only half of the company's book value, suggesting the stock is significantly undervalued relative to its stated assets.
• Price-to-Earnings (P/E): This metric is less useful right now, as the trailing twelve months (TTM) P/E is negative, at around -18.81. The negative earnings per share (EPS) of -$1.19 reflects the lingering impact of the post-pandemic recovery on urban and resort hotel profitability, making P/E an unreliable guide for this specific REIT at this time.
• Enterprise Value-to-EBITDA (EV/EBITDA): The EV/EBITDA is around 12.46. This multiple is more relevant for a capital-intensive business like a REIT, as it accounts for debt. An Enterprise Value of approximately $3.66 billion relative to EBITDA suggests the market is willing to pay a moderate multiple for the company's operating cash flow before interest, taxes, depreciation, and amortization.

The stock has had a rough ride over the last 12 months, which explains the deep discount. The stock price has decreased by about 12.70% over the past year, trading in a wide 52-week range between a low of $7.41 and a high of $15.12. That volatility, with a beta of 1.54, tells you this isn't a sleepy investment; it moves much more than the broader market.

For income-focused investors, the dividend yield is minimal. Pebblebrook Hotel Trust's annual dividend of $0.04 per share translates to a low dividend yield of just 0.36%. The payout ratio is actually negative, at -6.90%, which is a direct consequence of the negative net income. Simply put, the dividend is a token payment right now, not a core reason to own the stock.

Wall Street is generally on the fence. The consensus rating from analysts is a Hold, though some models show a 'Reduce' consensus. The average 12-month price target is approximately $12.29, which suggests a modest upside of about 10.82% from a recent price point. The highest target is $14.00, while the lowest is $9.00. This wide range shows a real disagreement on the speed and strength of the hotel sector's recovery, especially for urban and resort properties. If you want a deeper dive into who is making these calls, you should be Exploring Pebblebrook Hotel Trust (PEB) Investor Profile: Who's Buying and Why?

The bottom line is that the valuation is a classic deep-value play, but only if you believe the assets are truly worth their book value and that earnings will normalize quickly. The market is waiting for the earnings to catch up to the asset base.

Risk Factors

You're looking at Pebblebrook Hotel Trust (PEB) and seeing strong resort performance, but the urban portfolio still carries significant, near-term risk. Honestly, the biggest challenge is the volatility baked into their gateway city exposure, which is directly tied to the broader economic and political climate. The company is defintely a trend-aware realist, but the external headwinds are real and impacting the bottom line today.

The most immediate financial red flag is the balance sheet health. While management has been proactive, the company's Altman Z-Score sits at a distressed 0.18 as of November 2025, which is a quantitative measure indicating a potential risk of financial distress within two years. Plus, the net debt to trailing 12-month corporate EBITDA is elevated at 6.1x as of September 30, 2025. This level of leverage, combined with a high stock beta of 1.92, means the stock is significantly more volatile than the overall market. You need to be prepared for sharp price fluctuations.

Here is the quick map of the most pressing risks, broken down by category:

• External Macroeconomic Risk: The hotel industry is highly sensitive to economic downturns, and Pebblebrook Hotel Trust's urban markets are still recovering. Management revised the full-year 2025 outlook for Same-Property Total RevPAR growth to a range of (0.1%) to 1.1%, a reduction from previous projections, due to heightened macroeconomic uncertainty.
• Operational Market Concentration Risk: Specific localized disruptions are hammering performance. In Q3 2025, operational issues in Los Angeles and Washington, D.C.-including competitive pricing and disruptions from National Guard deployments-accounted for roughly $7 million of the year-over-year decline in same-property hotel EBITDA.
• Cost and Competition Risk: Rising operational costs, particularly for labor and energy, threaten profitability. Even with strong cost control, price sensitivity among customers persists, which forces a decline in Average Daily Rate (ADR) in challenged markets.

To be fair, the company is not just sitting still; they have clear mitigation strategies. The most effective action has been their portfolio shift, reducing urban exposure from 83% of EBITDA contribution in 2019 to 53% by Q3 2025, while resort contribution has surged to 47%. This strategic move hedges against the slowest urban recoveries.

On the financial side, they have been proactive in debt management. They successfully refinanced $400 million of 1.75% Convertible Notes due in 2026 with a new offering of 1.625% Convertible Notes due in 2030, which extends maturity and lowers borrowing costs. They plan to use cash to address the remaining $350 million of Convertible Notes maturing in December 2026. This is smart balance sheet defense.

The operational risk is being tackled with an intense focus on cost control. In Q3 2025, Same-Property Hotel Expenses before fixed costs increased by just 0.4% year-over-year, and expenses per occupied room actually declined by 2.0%. That's disciplined execution, even with a softer revenue environment.

You can see the full strategic context, including the company's long-term vision, here: Mission Statement, Vision, & Core Values of Pebblebrook Hotel Trust (PEB).

Here is a summary of the full-year 2025 financial outlook, which reflects the impact of these risks and mitigation efforts:

What this estimate hides is that the urban recovery is not uniform; San Francisco is a standout with 8.3% RevPAR growth in Q3 2025, while Los Angeles and Washington, D.C. are still a drag. Your action is to track the monthly Same-Property Total RevPAR in those two challenged markets. If the Q4 outlook of a range between a negative 1.25% and a positive 2.7% Total RevPAR is missed on the low end, it signals a deeper problem than just temporary disruptions.

Growth Opportunities

You're looking past the near-term noise, and that's smart. Pebblebrook Hotel Trust (PEB) is defintely facing a mixed 2025, but the growth story is built on a strategic shift that is already in motion and poised to deliver a significant operational boost. The direct takeaway is this: management projects approximately $71 million in future Hotel EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) upside, which translates to about $0.48 per share in Adjusted FFO (AFFO) over the next few years.

For the full 2025 fiscal year, the company is still navigating some headwinds, leading to a projected net loss between ($67.5) and ($58.5) million. Still, the consensus revenue estimate sits at a solid $1.47 billion. This is a period of transition where the benefits of past capital expenditure are starting to flow, even as macro-economic uncertainty keeps a lid on Same-Property Total RevPAR (Revenue Per Available Room) growth, which is expected to range from just (0.1%) to 1.1%.

The core of Pebblebrook Hotel Trust's future growth isn't about new acquisitions right now; it's about unlocking the value in the existing portfolio. Here's the quick math on that $71 million potential Hotel EBITDA upside, which is your key metric for future cash flow:

• Urban Market Recovery: $45 million expected from cities like San Francisco and Chicago, where demand is finally rebounding.
• Redevelopment ROI: $10 million from the approximately $278 million invested in return on investment (ROI)-generating projects since 2018.
• LaPlaya Restoration: $16 million from the full restoration of LaPlaya Beach Resort & Club, completed in Q2 2025.

The competitive advantage here is the strategic portfolio transformation (a fancy term for selling off assets and buying better ones). Since 2019, Pebblebrook Hotel Trust has dramatically shifted its focus, acquiring five upper-upscale and luxury resorts and divesting 15 lower-quality urban properties. This move has pushed the resort properties' contribution to EBITDA from 17% to 47%, reducing reliance on volatile business transient travel. Plus, strong operational expertise is a clear advantage; the company limited its Same-Property Total Expense growth to just 3.7% in Q1 2025, showing disciplined cost control.

For a deeper dive into the foundation of these numbers, you can check out Breaking Down Pebblebrook Hotel Trust (PEB) Financial Health: Key Insights for Investors. For now, here is the official 2025 financial outlook, which sets the baseline for the future upside:

The company also proactively managed its balance sheet by completing a $400 million offering of Convertible Senior Notes due 2030, which enhances liquidity and manages debt maturity. This sets the stage for a much stronger 2026 and beyond. Next step: Monitor the quarterly reports for the realization of the $45 million urban recovery component; that's the biggest swing factor.