Jun. 14 at 10:22 PM
let me explain why
$PEB is doomed
- Reported
$204 mil of AFFO in 2024 but that don't include LA problems. LA is biggest market at ~10% -- fires clipped 25% of revs in Q1 and riots will extend it. Plus new hotel minimum wage increase is like 50% up. They'll lose 10-20% of AFFO
- the refi of the convert debt from 1.75% to 6.75% in 2026 that's ~500bp on
$750 mil or
$40 mil of more interest expense
- divvy is
$0.04/sh in 2024 but will jump to
$0.40/sh when net operating losses burn off in 2025
So
$204 mill of AFFO is like
$160-180 mill after LA hit, then you have convert reset of another
$40 mill hit, so that's now like
$120 mil. that's like a massive drop in AFFO for a stock at 5x.
Then the dividend will suck
$40-50 mill from that lower FFO whcih means
$PEB has
$80 mil to spend on fixing up their hotels which is about 30% of what they have been spendin Unmaintained hotels will start spiraling down
this is the next
$AHT death trap
