Pebblebrook Hotel Trust Credit Rating Double-Checked

Pebblebrook Hotel Trust (NYSE:PEB) is a Maryland-based hotel owner and operator founded in 2007. The company's credit rating will be double-checked in this article, along with its financial instruments. The article is co-authored by Strategic Yield.

Pebblebrook Hotel Trust (NYSE:PEB), a Maryland-based hotel owner and operator, has been in the spotlight for its credit rating and financial instruments. Founded in 2007, the company specializes in investments in luxury hotels and full-service resorts located in or near urban centers of major metropolitan areas and key entry points into the United States. With 46 hotels and resorts, 13 urban and resort markets, and a current market capitalization of close to $1.3 billion, PEB has a significant presence in the hospitality sector [1].

The company's credit rating is a critical factor for investors. PEB has a B credit rating from S&P and a Baa3 rating from Moody's. Moody's methodology assesses various factors such as gross assets, unencumbered assets, secured debt, total debt to total assets, net debt to EBITDA, fixed cost coverage, and market positioning [1]. Despite a robust asset coverage ratio of 216% and a gross rental yield of 16.30%, the company's overall credit rating is lower due to the competitive market positioning and sensitivity to economic downturns [1].

PEB's preferred stocks, currently trading below par, offer attractive yields of over 8%. However, none of these preferred stocks have a credit rating from major credit agencies. The call dates for some of the preferred stocks have passed, making them callable anytime [1]. The company's unsecured bond, rated B2 by Moody's, has an average yield of around 6.3% [1].

The consensus among analysts is that PEB should be reduced. Eight analysts covering the stock have a consensus recommendation of "Reduce," with three issuing a sell recommendation, four a hold recommendation, and one a buy recommendation. The average twelve-month price target among brokerages is $11.69 [2]. Major institutions such as Wedbush, Morgan Stanley, Truist Financial, Stifel Nicolaus, and Evercore ISI have set price objectives ranging from $9.00 to $16.50, with varying ratings from "underperform" to "buy" [2].

PEB's recent financial performance shows a positive trend. The company reported $0.16 EPS for the quarter, beating the consensus estimate of $0.13. Revenue was up 2.0% year-over-year, and the company announced a quarterly dividend of $0.01 per share [2]. However, the negative net margin and return on equity indicate challenges in profitability.

In conclusion, Pebblebrook Hotel Trust operates in a highly competitive environment with a lower credit rating due to market positioning and sensitivity to economic fluctuations. While the company's financial instruments offer attractive yields, the overall credit rating remains a concern for investors. The consensus among analysts is to reduce exposure to PEB, suggesting caution in the face of potential risks.

References:
[1] https://seekingalpha.com/article/4804490-double-checking-credit-rating-part-9-pebblebrook-hotel-trust
[2] https://www.marketbeat.com/instant-alerts/pebblebrook-hotel-trust-nysepeb-receives-consensus-rating-of-reduce-from-analysts-2025-07-21/