Pebblebrook Hotel Trust (PEB): A Bull Case Theory

We came across a bullish thesis on Pebblebrook Hotel Trust on Investing501 Newsletter’s Substack by Investing 501. In this article, we will summarize the bulls’ thesis on PEB. Pebblebrook Hotel Trust’s share was trading at $10.14 as of August 19^th. PEB’s trailing and forward P/E were 11.29 and 24.57 respectively according to Yahoo Finance.

Pebblebrook Hotel Trust (PEB) owns a portfolio of premier urban and resort hotels across top U.S. markets, yet its shares trade at a steep 40–55% discount to NAV, levels typically reserved for distressed businesses. Despite this disconnect, the company’s preferred securities present the stronger risk-reward opportunity, offering 8%+ yields backed by valuable, “irreplaceable” assets. These preferreds have maintained uninterrupted dividends, even during COVID-19, underscoring the resilience of Pebblebrook’s cash flows.

The company has repositioned its portfolio since 2019, selling lower-quality urban hotels and expanding into leisure-focused resorts, raising leisure EBITDA mix from 17% to 45% and strengthening cash flow durability. Capital management has been disciplined, with over $480 million raised through preferred equity issuances at attractive rates, refinancing higher-cost securities, and opportunistic buybacks below par. Today, annual preferred payments of $47 million are well covered by projected $200 million in free cash flow, providing ample margin of safety.

With $267 million in cash, $642 million in revolver capacity, and a large unencumbered hotel base, Pebblebrook is well-positioned to refinance its $750 million convertible notes due in 2026. While refinancing will increase interest expense, the company’s liquidity and proven capital markets access mitigate risks to preferred distributions.

The portfolio’s concentration in high-barrier coastal and resort markets like Key West and Santa Monica, combined with scarcity value and replacement cost advantages, underpins asset strength. Although bears highlight structural headwinds in urban hotels, high leverage, and California exposure, preferred investors do not require a NAV rerating to earn attractive returns. Instead, reliable income, strong asset backing, and potential price appreciation make PEB’s preferreds a compelling investment.

Previously we covered a bullish thesis on Park Hotels & Resorts Inc. (PK) by Value Investigator in May 2025, which highlighted its undervalued premium hotel portfolio, strong FFO yields, and disciplined capital allocation. The stock has appreciated by 11% since our coverage as fundamentals strengthened. The thesis still stands given supply constraints and demographic tailwinds. Investing501 shares a similar perspective on Pebblebrook Hotel Trust (PEB) but emphasizes the superior risk/reward in its preferred securities.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None.