Pebblebrook Hotels Trust Sells a New Preferred
By: Tim McPartland,
The latest new preferred stock offering from a lodging REIT comes to us from Pebblebrook Hotel Trust (NYSE:PEB). So now we have had recent offering from Hersha Hospitality (NYSE:HT), 2 issues from Sunstone Hotel Investors (NYSE:SHO), and lastly from LaSalle Hotel Properties (NYSE:LHO).
As most of you likely know we are not fans of these issues, because lodging REITs can be severely damaged in an economic downturn. The new issue from PEB comes with a coupon of 6.375%-simply not high enough for the longer term risk this issue present. Note that we do not think there are economic threats to the lodging REITs at this moment, but there will be when the next recession hits (and no one know when this will occur). On the other hand this is the world we live in–lower and lower interest rates and coupons fall, even on junky companies, when the direction is down.
This new issue has all the typical preferred stocks terms–redeemable in 5 years, cumulative and the duration is perpetual.
This issue is now trading on the OTC Grey market under ticker PBBKP and is trading in the $25.15 area. Our Grey Market primer is here.