Pebblebrook Hotel

We'll be right back. We'll be right back. ¶¶ ¶¶ ¶¶ Oh, tell me what I got. I got this feeling that the time is just a-holding me down. I'll use this feeling or else I'll tear up this town. Now they've got to cut loose, boy, loose. Can't stop them from cutting their shoes. Please, Louise, pull me off of my knees. Jack, get back. Come on, they're always back. Lose, don't lose. Everybody cut loose. Oh, man. Thank you. Oh, my Lord, come on, come on, let's go. Good, good news. Never mind, come on, let's go. ¶¶ ¶¶ We'll be right back. ¶¶ ¶¶ ¶¶ ¶¶ I've been workin' Oh, tell me what I've done. I've done this. Oh, tell me what I've done. I've done this. Oh, tell me what I've done. Now I've got to cut loose, put loose. Can't stop me from cutting that juice. Please, Louise, pull me off of my knees. Jack, get back. Come on, before we crash. Lose, don't lose. Everybody's up for loose. You're playing it. I'm trying to tell you. Oh, my Lord, come on, come on, let's go. Lose, go lose, never mind, just go lose. We'll be right back. Pull me up on my knees. Jack, get back. Come on, you're four weeks back. Lose, you're loose. Ain't everybody got the point to lose? Point to lose. Point to lose. We can go to Sunday. Three, two weeks. Pull me up on my knees. Jack, get back.

Greetings and welcome to Pebble Brook Hotel Trust first quarter earnings conference call. At this time, all participants are on the listen only mode. A question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Raymond Martz, co-president and chief financial officer. Thank you. Please go ahead.

Thank you, Donna, and good morning, everyone. Welcome to our first quarter 2026 earnings call. Joining me today is John Bortz, our Chairman and Chief Executive Officer, and Tom Fisher, our Co-President and Chief Investment Officer. But before we begin, I'd like to remind everyone that our remarks are as of today, April 29, 2026, and today's comments may include forward-looking statements that are subject to various risks and uncertainties. Please review our SEC filings for a detailed discussion of these risk factors and visit our website for reconciliations of any non-GAAP financial measures mentioned today. Now let's jump into the first quarter financial results. We had an exceptional first quarter with results well above the high end of our outlook across key earnings metrics. Same property hotel EBITDA increased 27.6% to $82.2 million, coming in 8.2 million above the high end of our outlook. Adjusted EBITDA was 73.3 million, up 29.5% from last year, and 9.3 million above the high end. Adjusted FFO for diluted share doubled year over year to 32 cents, which was nine cents above the high end of our outlook. So this was a very strong quarter by any measure. Even more important, performance was not narrowly driven. While we had a great setup, the strength was broad across the portfolio, and the performance came from both stronger revenues and superb expense control. At the property level, same property occupancy increased 550 basis points, ADR increased 2.8%, and rep part increased 11.8%, and total revenue increased 10.1%. Same property total expenses increased just 5.6%, driving 327 basis points of hotel EBITDA margin expansion. More than half of the incremental same property revenue flowed through to hotel EBITDA. That reflects the strategic operating initiatives we've been implementing across the portfolio, the benefits from our investments in revenue-generating amenities and venues, and strong execution by our property teams and asset managers. The strength extended across the portfolio, with 32 hotels exceeding revenue forecasts and 34 exceeding GOP forecasts in the quarter. And San Francisco was exceptional. While it benefited from the Super Bowl and a large citywide convention that shifted into the first quarter, all segments, including business and leisure transient, were incredibly strong and continue to recover. Repar increased a robust 44.5%, and hotel EBITDA more than tripled from a year ago, climbing by 11.6 million. Los Angeles also recovered sharply from last year's fire-related disruptions, with Rep Park climbing 31.5% and Occam City growing more than 16 points to 74.6%. The improvement across LA properties was broad-based, helped by a stronger leisure demand, improving entertainment-related group and leisure activity, and the ramp-up of our recently renovated and rebranded Hyatt Centric, Delfino, and Santa Monica. LA's Q1 same-property EBITDA increase recaptured all of the EBITDA loss in the first quarter from last year's fires. While San Francisco and LA were standout markets, they were far from the whole story. Our urban portfolio posted rent-par growth of 14.3%, total rent-par growth of 12.9%, and EBITDA growth of 55.1%. San Diego urban hotels delivered rent-par growth of 8.7%, driven by a 900 basis point jump in occupancy, supported by healthy weekend leisure demand. Chicago also turned in a good quarter, with RepR increasing 5.6%. Washington, D.C. was our most challenged market in Q1, with RepR declining 24.1%, reflecting a very difficult inauguration comparison and continued weakness in government-related travel, though we have seen some recent improvements. Boston was another softer market, with Repar down 3%, reflecting lighter citywide calendar, two major winter storms, and a rooms renovation of Revere Hotel Boston Common. We expect bulk markets to improve in the second quarter, given the better event calendars. Our resorts also had a very strong quarter, with Repar rising 7.5%, total Repar increasing 6.7%, and EBITDA climbing 13.9%. Resort performance was driven by resilient leisure demand, healthy on-property spending, favorable holiday timing, and the continued ramp-up of our redeveloped assets. We also benefited from an earlier-than-normal spring break, which pulled more spring break travel into March from April. Several resorts delivered double-digit repart gains, including Newport Harbor Island Resort, La Playa Beach Resort and Club, Skamania Lodge, Paradise Point Resort and Spa, San Diego Mission Bay Resort, and Estancia La Jolla Hotel and Spa. Overall, first quarter demand was encouraging despite heightened geopolitical tensions and increased uncertainty around travel. Leisure demand remained strong, business transit continued to grow and recover, and group was stable. Consistent with broader travel and spending commentary, visibility has shortened somewhat since late March, but we have not seen any material change in booking trends to date. Premium leisure and business travel have remained healthy to date. Weekday repar increased 9.7% overall and 12% in our urban markets, while weekend repar increased 15% overall. Weekend leisure demand remains healthy, but the improvements in weekday demand is equally important as it reflects the continued recovery in business transient and group travel and creates more meaningful earnings power as urban occupancies rebuild. What also stood out this quarter was the quality of the revenue growth. Out of room revenues, again, grew up nicely, 7.6% overall. Food and beverage revenues increased 7.4%. Outlet revenues were up 10.2%. And banquets and catering revenues increased 4.8%. Guests were not only staying with us in greater numbers, but they were also spending more on property. and that is exactly the kind of revenue mix that supports increased profitability. On the expense side, our strategic operating initiatives, again, delivered this quarter. Total expenses rose by only 5.6%, while total revenues increased 10.2%. Food and beverage revenues rose 7.4%, while food and beverage expenses increased just 3.7%. Sales and marketing expenses, excluding franchise fees, grew only 3.9%. while energy costs actually declined 2.8%. And on a per occupied room basis, total expenses declined 2.8%, and total expenses for fixed costs declined 3.2%, demonstrating the favorable benefits of the operating leverage in our portfolio. We are generating more efficiencies from improved labor, productivity, and technology use, tighter cost controls, and continued benefits from property-level efforts to reduce energy and water consumption. Said more simply, as revenues improve, our portfolio is flowing more of that upside to the bottom line than it did a year or two ago. And a quick point on one-time items, because it is important to put this quarter into the proper context. The Super Bowl contributed about 215 basis points to the same property rep bar, and the recovery in Los Angeles contributed another 285 basis points. Offsetting those benefits, the two winter storms reduced REFAR by about 115 basis points, and the difficult inauguration comparison in Washington, D.C. reduced it by another 105 basis points. Even after adjusting for those items, same property REFAR still grew by roughly 9%, underscoring the overall strength of the quarter. This strong underlying performance translated into higher free cash flow and greater financial flexibility. On the capital side, we invested $11.9 million to our properties during the quarter, including guest room renovations at Chaminade Resort and Spa and Rivera Hotel Boston Common, both of which are now substantially complete. For the full year, we still expect capital investments of $65 to $75 million, which represents a much more normalized run rate and an important tailwind for higher discretionary free cash flow and greater flexibility for debt reduction and share repurchases. We also completed the April 1st rebranding of Mondrian Los Angeles into the Velourian Los Angeles Curator Collection by Hilton. We believe that strategic change has and will create value for the property. Rebranding as an independent franchise hotel within Curio leverages Hilton's distribution platform, pairs it with a strong entrepreneurial style operator in Pivot, and preserves the distinctive character of this iconic hotel. and we made this change at no cost as franchise-related key money funded the changeover. We appreciate the partnership with both Hilton and Pivot during this strategic transition, and we are excited to work together to drive improved performance at this important property in L.A. Moving to our balance sheet, our net debt-to-EBITDA ratio declined to 5.5 times from 5.9 times at the end of last year. We ended the quarter with $204.6 million of cash and restricted cash along with roughly $641 million of capacity on a revolving credit facility. Our weighted average interest rate remained a very attractive 4.1%, with approximately 98% of our debt effectively fixed and 98% unsecured. And since the start of the year, we've repurchased over 400,000 common shares at an average price of $12.11 per share. Higher EBITDA, improved debt metrics, and strong liquidity all moved in the right direction. Stepping back, the first quarter takeaway is clear. Despite heightened macro uncertainty and risk, the quarter demonstrated stronger demand across both urban and resort markets, healthy revenue quality, and disciplined expense control. At the same time, we're not assuming the balance of the year will be as visible as the first quarter. Recent events in the Middle East, higher fuel prices, more for the more, and broader economic uncertainty could pressure travel demand and booking patterns. However, based on our current booking trends and broader travel and spending commentary, the demand environment remains constructive, particularly for premium leisure and business travel. So while we feel really good about the first quarter and the underlying trend line, we remain appropriately cautious on the balance of the year. And with that, I'd like to turn the call over to John for more color in the quarter. The demand trends that we're seeing across the portfolio, the broader industry backdrop, and our outlook for the balance of 2026. John?