Chris Darling

Chris Darling of Green Street asked about Pebblebrook's CapEx outlook, specifically how the company balances a lower near-term run rate with the potential for deferred maintenance or loss of market share, both from a corporate financial perspective and in maximizing value for future dispositions.

Answer

Jon Bortz, CEO and Chairman of the Board, clarified that Pebblebrook is not deferring capital; they continuously invest in infrastructure (HVAC, elevators, roofs) and regularly maintain interiors, avoiding major deferred maintenance. He noted that their high-quality investments last longer and that customer reviews and competitive rankings confirm their properties are in excellent shape. Raymond Martz, Co-President and Chief Financial Officer, added that their targeted capital investments, especially in unbranded resorts, lead to higher ROI by focusing on customer-desired features and revenue-generating areas.

Chris Darling of Green Street asked about how Pebblebrook balances its lower near-term CapEx run rate with the potential for deferred maintenance or loss of market share, both from a corporate financial perspective and for maximizing future disposition value.

Answer

Jon Bortz, CEO and Chairman of the Board, clarified that Pebblebrook does not defer capital. He stated they continuously invest in infrastructure (HVAC, elevators, roofs, windows) and maintain interiors regularly, avoiding major renovations every 8-10 years. Raymond Martz, Co-President and CFO, added that without brand mandates for ROI-less capital, they can target investments for higher returns, especially in resorts, leading to increased revenues and EBITDA growth. They monitor customer reviews and competitive rankings to ensure properties remain in top shape and gain market share.

Chris Darling of Green Street Advisors asked about the flexibility to extend or buy out the Paradise Point ground lease and its influence on capital allocation, and also requested an update on the hotel transaction market.

Answer

Chairman & CEO Jon Bortz explained that ground lease extensions with the City of San Diego are typically tied to major capital investments to ensure an adequate return. Co-President & CIO Thomas Fisher addressed the transaction market, noting that after a slowdown, investor interest has renewed in the last 60 days due to functioning debt markets and better macro clarity, and he anticipates increased activity ahead.

Chris Darling requested a breakdown of the company's international travel exposure and current booking trends for that segment. He also asked about the outperformance of the Key West market, seeking to understand the drivers behind its positive RevPAR growth.

Answer

CEO Jon Bortz explained that international inbound data is uncertain but the impact is likely concentrated in urban markets on the East Coast and in Florida. Executive Raymond Martz noted a potential offset from reduced outbound U.S. travel. Regarding Key West, Bortz attributed the strong performance to two factors: gaining market share following significant capital investment in their resorts, and a successful strategy of securing more group business further in advance.

Chris Darling from Green Street asked about the potential use of proceeds from dispositions, particularly in the context of the upcoming convertible note maturity, and whether the company would consider selling assets in stronger markets.

Answer

Jon Bortz, Chairman and CEO, stated that proceeds would primarily be used for share repurchases, given the stock's discount to NAV, and to pay down debt to remain leverage-neutral. Raymond Martz, Executive, added that the 2026 convertible note is manageable due to the company's cash position, free cash flow, and unused credit line. Regarding sales, Tom Fisher, Co-President and CIO, noted that selling recently renovated, non-stabilized assets is challenging but would be considered if a buyer paid for the future upside.

Chris Darling noted that 59% of hotels have no new construction within a five-mile radius, a sequential decrease, and asked for insights into any idiosyncratic factors driving this change and a broad overview of the supply backdrop. He also inquired about the appetite among private buyers for portfolio deals versus one-off transactions in the current capital allocation environment.

Answer

CEO Justin Knight affirmed a positive outlook on the supply picture, noting that subtle adjustments in the reported percentage are due to portfolio changes, such as selling assets in lower supply markets. He emphasized a meaningful impediment to increased supply growth for the foreseeable future. Regarding capital allocation, he stated that the company continues to see more attractive pricing for individual assets, often from local owner-operators, and expects to continue transacting on individual assets in the near term.

Chris Darling from Green Street inquired about the slight sequential decrease in the percentage of hotels with no new construction within a five-mile radius, asking for idiosyncratic drivers and a broad overview of the supply backdrop. He also asked about the appetite among private buyers for portfolio deals versus one-off transactions in capital allocation.

Answer

CEO Justin Knight reiterated a positive outlook on the supply picture, attributing the subtle adjustment in the new construction percentage to portfolio shifts (selling assets in lower supply markets, increasing concentration). He believes construction costs and profitability continue to impede increased supply growth. Regarding capital allocation, he noted that probing the market shows more attractive pricing for individual assets, with portfolio premiums requiring universal industry improvement, and expects continued focus on individual asset transactions for the near term.

Chris Darling from Green Street inquired about expected revenue synergies from the Las Vegas development deal, specifically from having a larger footprint next to the convention center. He also asked for a broader perspective on the company's market selection strategy for acquisitions and dispositions over the past few years, including driving factors like supply, densification, and operator presence.

Answer

Justin Knight, Chief Executive Officer, confirmed expected revenue synergies in Las Vegas, particularly from a sales perspective, by offering a versatile product with three brands to accommodate larger groups and enhance the overall stay experience, alongside operational efficiencies. He elaborated on the market selection strategy, emphasizing creating a balanced portfolio with diverse demand segment exposure for stability. The company leans into business-friendly markets with positive demand trends supported by demographics and business relocation, citing Nashville (strong demand despite supply growth), Las Vegas (growing market with significant investment), and Anchorage (top RevPAR market). Key considerations include achievable margins, efficient asset maintenance, and portfolio age, with current market conditions allowing for attractive cap rates on less strategic assets, enhancing performance and funding share repurchases.

Chris Darling asked about potential revenue synergies for the Las Vegas development deal, given its proximity to the convention center and larger footprint. He also inquired about the driving factors behind market selection for transaction activity, including supply, densification, and demand trends.

Answer

CEO Justin Knight confirmed expectations for revenue synergies in Las Vegas, citing thoughtful brand selection for a versatile product that can house larger groups, enhancing sales and operational efficiencies. He explained that market selection is guided by creating a stable portfolio with diverse demand segments, leaning into business-friendly markets with positive demand and demographic trends (e.g., Nashville, Las Vegas, Anchorage). He also considers margins, portfolio age, and efficient asset maintenance, noting that current market conditions allow for attractive cap rates on less strategic assets, enhancing performance and enabling redeployment of proceeds into stock to improve the cost of capital.

Chris Darling from Green Street Advisors, LLC asked how the Nashville Motto hotel purchase contract fits into the capital allocation strategy of selling assets to buy back shares and how the acquisition would be financed. He also inquired about Nashville's submarket performance relative to the hotel's underwriting.

Answer

CEO Justin Knight explained that the Nashville acquisition is a separate strategic decision, funded with balance sheet capacity and structured as a 1031 exchange for tax purposes. He stated the company remains confident in the long-term prospects of the Nashville market and that the hotel's cost basis provides a cushion relative to recent market transactions, even with anticipated near-term supply absorption.

Chris Darling asked for the 2025 outlook on wage and benefit growth, inquired about the near-term new supply pipeline, and requested an update on the Las Vegas development parcel.

Answer

CFO Liz Perkins projected wage growth between 3.5% and 4%, with offsets from reduced contract labor. CEO Justin Knight stated there are no indicators of a near-term shift in supply, as high construction costs remain a major impediment. Regarding Las Vegas, he confirmed they are working with a developer and reiterated their intention is not to build on-balance sheet, but to acquire the asset upon completion in 2-3 years.

Chris Darling from Green Street requested an update on the company's land parcel in Las Vegas, including potential development plans and financing structure. He also asked about the pipeline for future takeout development deals.

Answer

CEO Justin Knight stated they are actively exploring opportunities for the Las Vegas land, are in discussions with brands and developers, and hope to make an announcement soon. He reiterated a strong preference for fixed-price contracts with third-party developers over on-balance-sheet construction. Knight noted that the pipeline for new development deals is limited due to high costs, making existing assets the primary focus for acquisitions.

Chris Darling noted that the same-store hospitality portfolio's RevPAR index share is at its highest point and asked for the specific figure, as well as the company's confidence in taking further share over time and if there's a natural upper bound to pushing price relative to their concept.

Answer

Colin Reed, Executive Chairman, explained their strategy of building a sustainable business through world-class physical products, high service levels, and enhancing the "fun side" of the stay, which continuously gains market share. Patrick Chaffin, Chief Operating Officer, reported a Q4 average RevPAR index of 143% (a 1,200 basis point improvement year-over-year) and a full-year index of 127% (a 610 basis point increase year-over-year). Mark Fioravanti, President and Chief Executive Officer, stated there is no upper bound as they continuously evolve the product and value proposition, taking share from competitors who are not investing.

Chris Darling inquired about the RevPAR index share for the same-store hospitality portfolio, which was at its highest point, asking for the specific figure and the company's confidence in taking further share, and if there's a natural upper bound.

Answer

Patrick Chaffin, Chief Operating Officer, stated the Q4 same-store RevPAR index was 143% (a 1,200 basis point improvement year-over-year) and the full-year was 127% (a 610 basis point improvement year-over-year, and 410 basis points versus 2023). Colin Reed, Executive Chairman, discussed pillars for sustainability including world-class physical product, high service levels, and enhancing the 'fun side' of the stay. Mark Fioravanti, President and Chief Executive Officer, asserted there's no upper bound due to continuous product evolution and value proposition changes.

Chris Darling from Green Street Advisors, LLC followed up on the Opry Entertainment Group (OEG), asking about progress in building its standalone corporate infrastructure and the potential impact of Atairos exercising its purchase option on a spin-off timeline.

Answer

President & CEO Mark Fioravanti stated they have no insight into the decision by Atairos and emphasized that the timing of any potential spin-off is not driven by compliance needs but by what will create the most shareholder value. EVP & COO Patrick Chaffin detailed recent progress in building out the OEG team, including hiring a new COO and CMO and adding capabilities in pricing and food & beverage.

Chris Darling asked about performance expectations for Gaylord National in 2025, its reliance on the DC market amid potential government-related risks, and how the company can manage expenses with an expected lower out-of-room spend from its group mix.

Answer

EVP and COO Patrick Chaffin stated that Gaylord National has minimal exposure to government business in 2025 and is pivoting to secure more association business to mitigate market challenges. Regarding expenses, he, along with Chairman and CEO Colin Reed and EVP and CFO Mark Fioravanti, explained that the mix shift was already factored into guidance and that the company has numerous levers to manage costs and protect margins, citing a strong track record of doing so.

Chris Darling sought deeper insight into the expense outlook for the year, specifically regarding the expected 5% wage and benefit growth, labor availability, and visibility into other major expense line items.

Answer

Executive Vice President and CFO Sourav Ghosh stated that total expense growth is projected at 3.3%, aligning with total revenue growth for flat margins. He confirmed a 5% increase in wage rates (down from over 6% in 2025) and noted that overall expenses would benefit from productivity enhancements and an expected decrease in insurance costs due to no weather-related events in 2025. Sourav also reported no challenges with labor availability, attributing it to the effectiveness of brand-managed hotels in talent acquisition and retention.

Chris Darling from Green Street asked for a deeper dive into the expense outlook for the year, specifically regarding the 5% wage and benefit growth, labor availability, and visibility on other major expense line items.

Answer

Sourav Ghosh, Executive Vice President and Chief Financial Officer, Host Hotels & Resorts, explained that while wage rates are expected to increase by 5%, overall expense growth is projected at 3.3% due to productivity enhancements and lower insurance costs. He noted no challenges with labor availability, attributing it to the effectiveness of brand-managed hotels in talent acquisition and retention.

Chris Darling requested elaboration on Host's positive setup for 2026, focusing on 'lower-hanging items' across the portfolio such as Maui, The Don CeSar, and Turtle Bay, and other bright spots, with potential quantification.

Answer

President and CEO Jim Risoleo highlighted strong 2026 total group revenue pace in key markets: San Francisco (up over 20%, with group rate up 10% and room nights up 3%, citywide up 7% following a 54% increase in 2025, plus a Super Bowl next year), Washington D.C. (up 13%), and Nashville (up 26%). He also mentioned 10 markets benefiting from the World Cup. Risoleo emphasized Host's strong geographic diversification (no market contributes more than 8% of EBITDA), the quality of its assets, and the affluent customer's continued prioritization of premium experiences, all contributing to confidence for 2026.

Chris Darling requested elaboration on Host Hotels & Resorts' positive setup for 2026, specifically focusing on 'lower-hanging items' across the portfolio like Maui, The Don CeSar, and Turtle Bay, and other bright spots, with potential quantification.

Answer

Jim Risoleo, President and CEO, highlighted strong 2026 total group revenue pace in several key markets. He noted San Francisco's significant recovery, with 2026 total group revenue pace up over 20%, group rate up 10%, and group room nights up 3%, alongside a 7% increase in citywide group room night pace for 2026. He also mentioned the positive impact of the upcoming Super Bowl in San Francisco and the World Cup in 10 Host markets. Washington D.C. (13% total group revenue pace up) and Nashville (26% total group revenue pace up) were cited as other strong performers. Risoleo emphasized the importance of group business (36% of the portfolio) and the overall 5% total group revenue pace for 2026, attributing confidence to the quality of assets, geographic diversification, and the affluent customer's continued spending on premium experiences.

Chris Darling of Green Street Advisors asked for commentary on the sustained strength of the high-end luxury hotel segment compared to the broader industry and how this trend informs Host's portfolio strategy.

Answer

President & CEO James Risoleo attributed the outperformance to a multi-year strategic shift towards luxury resorts, which historically have higher long-term RevPAR growth. He noted that the affluent consumer continues to prioritize and spend on experiences, validating the company's portfolio positioning. He contrasted this with negative RevPAR growth in the economy segment, reinforcing his confidence in Host's strategy.

Chris Darling of Green Street Advisors, LLC commented on the persistent strength of the high-end luxury hotel segment and asked for perspective on its durability and how it informs Host's portfolio strategy.

Answer

President & CEO James Risoleo attributed Host's outperformance to its strategic pivot towards luxury and upper-upscale resorts, which began in 2017. He emphasized that this segment benefits from stronger long-term RevPAR growth and an affluent consumer base that continues to prioritize and spend on experiences without rate resistance. He affirmed the company is pleased with its current portfolio positioning for the long term.

Chris Darling inquired about the risk to the CapEx budget from potential tariffs and how the current environment affects planning for future capital projects.

Answer

President and CEO James Risoleo stated that it is too early to determine the impact of tariff policy, and the company is maintaining its current CapEx guidance. He mentioned that Host has diverse suppliers and has developed 'off ramps' for projects if necessary, but does not anticipate using them. The company is proceeding with its planned Hyatt Transformational Capital Program.

Chris Darling from Green Street inquired about current labor availability and the tools Host's operators can use to mitigate potential labor-related challenges.

Answer

President and CEO James Risoleo expressed no concern over labor availability, crediting their partnerships with premier operators like Marriott and Hyatt. He also highlighted the emerging use of AI to enhance productivity. EVP and CFO Sourav Ghosh added that their managers utilize sophisticated scheduling and forecasting tools to optimize labor standards and drive productivity.

Chris Darling inquired about the Orlando condo development, asking for the underwritten sales proceeds relative to the budget, and whether similar densification opportunities exist elsewhere in the portfolio.

Answer

President and CEO James Risoleo confirmed the project is on budget and was underwritten to a mid-to-high teens cash-on-cash return, though he did not provide specific sales figures. He identified The Ritz-Carlton O'ahu, Turtle Bay as a significant future densification opportunity, citing its 49-acre entitled parcel for residential development.

Chris Darling of Green Street Advisors asked how DiamondRock balances the arbitrage opportunity of asset sales against the potential efficiency concerns of becoming a smaller-cap REIT.

Answer

CEO Jeffrey Donnelly acknowledged the consideration but emphasized that the primary focus is on doing what is right for shareholder value. He noted that other smaller REITs in the sector have strong valuations and that if the company became too small, other market forces could resolve the situation, implying it is not a primary deterrent to accretive dispositions.

Chris Darling of Green Street Advisors, LLC asked how management balances the arbitrage opportunity of asset sales against the potential efficiency concerns of becoming a smaller-cap REIT.

Answer

CEO Jeff Donnelly acknowledged the consideration but emphasized that the primary focus is on making the right decisions for shareholder value. He noted that other smaller REITs in the sector have strong valuations and that if the company became too small due to value-accretive actions, other market forces could resolve that situation, implying it's not a primary constraint on strategy.

Chris Darling from Green Street inquired about Q1 wage growth relative to expectations and the outlook for the year. He also asked for the rationale for balancing share repurchases against holding cash amid uncertainty.

Answer

Briony Quinn (Executive) reported Q1 wage growth of 1.5% was as expected, with a full-year forecast of 3-3.5%. CEO Jeff Donnelly explained that while liquidity is critical, the focus is on per-share earnings growth, and asset sale proceeds were used for both buybacks and managing debt repayment timing.

Chris Darling of Green Street inquired about the Orchard Inn repositioning, asking about the expected EBITDA disruption and the ADR lift required to meet underwriting. He also asked for commentary on current conditions and pricing in the hotel transaction market.

Answer

CEO Jeff Donnelly estimated a $0.5M EBITDA disruption in Q4 from the Orchard Inn project, which is within their normal annual range. He stated the goal is a $250 ADR lift, positioning the property between L'Auberge's standard rooms and suites. Regarding the transaction market, Donnelly described it as very thin with low volume, noting that while there is a desire to transact, many potential buyers are waiting for interest rates to fall to secure accretive financing.

Chris Darling from Green Street requested elaboration on the reported strength in Orlando, the property's outlook, and any updated plans for repositioning or densifying the asset.

Answer

CEO Bryan Giglia attributed the strong performance in Orlando to its improved location near the new Universal Park and a successful strategic shift to capture more transient business and new group segments. He highlighted a 'phenomenal' production year for future bookings at the property.

Chris Darling asked for clarification on the assumptions for the Maui recovery that are embedded in the low and high ends of the company's 2025 guidance range.

Answer

Bryan Giglia, Chief Executive Officer, clarified that the guidance assumes solid group business in Maui, approaching 2019 levels. The leisure recovery is expected to be gradual, with a potential lift in the second half of the year. Giglia noted that a faster-than-expected return of leisure travelers to the island would provide upside to the current forecast.

Chris Darling inquired about capital allocation priorities for the upcoming year, asking if the company expects to be a net acquirer or seller, and about the appetite for more high-risk, high-reward renovations.

Answer

CEO Bryan Giglia reiterated the company's balanced capital allocation strategy, which involves evaluating returns from internal renovations (teens), acquisitions (~10-11%), and share repurchases. He confirmed they will continue to seek value-add renovation opportunities while being mindful of the overall portfolio impact.

Chris Darling from Green Street Advisors asked how the potential for iGaming legalization impacts VICI's underwriting for new investments and whether the softer near-term backdrop in Las Vegas is affecting tenants' capital investment decisions.

Answer

President & COO John Payne explained that iGaming's potential impact is now a definite factor in underwriting, unlike when the company started. CEO Edward Pitoniak added that investors must be selective, particularly in regional gaming. Regarding Las Vegas, Payne stated the current softness is seen as a temporary blip and has not impacted tenants' long-term capital investment plans, pointing to ongoing projects on the Strip. Pitoniak also highlighted that long-term group bookings de-risk capital investment for operators.

Chris Darling asked about VICI's interest in the historic horse racing (HHR) segment and sought clarification on the sale of Pure Canadian Gaming's operations to a new partner, IGP.

Answer

An unnamed executive confirmed VICI's interest in investing in racetracks adding new forms of gaming, like HHR, with the right partners. President & COO John Payne expressed excitement about the new relationship with IGP, highlighting their capacity to grow. CEO Ed Pitoniak clarified that VICI did not sell anything; the previous operator sold its OpCo to IGP, which VICI views as a positive sign for the marketability of gaming operations.

Chris Darling from Green Street inquired about the potential for VICI to acquire gaming assets in off-strip Las Vegas locations, asking about the criteria for yield, coverage, and operator partnerships. He also asked if VICI is adopting a more conservative underwriting approach for regional gaming assets due to competitive pressures and slower growth.

Answer

President and COO John W. Payne confirmed that VICI has been actively exploring opportunities in the Las Vegas locals and downtown markets, focusing on operator quality, asset quality, and potential for growth. Regarding regional gaming, CEO Edward Pitoniak and Payne emphasized a disciplined approach, carefully analyzing market-specific risks of over-capacity and focusing on an operator's ability to compete profitably long-term.

Chris Darling of Green Street requested a deeper dive into the Group segment, asking about new booking trends and the specific performance in March and April. He also asked how Northern California's full-year 2024 EBITDA and margin compared to pre-COVID levels to assess the potential for upside.

Answer

EVP and CFO Sean Mahoney explained that full-year Group pace is at 102% of expectations, with recent cancellations in March/April being primarily isolated to the government segment. For Northern California, he stated that 2024 EBITDA was in the high 30s as a percentage of 2019 levels, indicating significant recovery potential. President and CEO Leslie D. Hale added that the San Francisco citywide calendar is up 70% year-over-year, providing a strong tailwind.

Chris Darling inquired if the 15% rate gap between business transient and group was consistent across the portfolio and asked for the 2025 outlook for the Bay Area.

Answer

President and CEO Leslie D. Hale confirmed the rate gap is broad-based, attributing it to the sequence of demand recovery. EVP and CFO Sean Mahoney added that dynamic pricing and direct booking trends are also factors. Hale projected above-midpoint RevPAR growth for the Bay Area, citing a 60% increase in citywide bookings and positive signs like returning corporate conferences.

Chris Darling inquired about Park's capital allocation strategy, specifically how the company balances pursuing incremental share repurchases against the need to bolster its liquidity position, given the uncertain economic outlook and upcoming debt maturities.

Answer

Chairman and CEO Thomas Baltimore described a balanced approach, emphasizing the company's strong liquidity of over $1.2 billion and a clear plan to address the 2025 debt maturity for Hilton Hawaiian Village. He stressed that while managing the balance sheet is critical, buying back stock at current discounted trading levels is among the best investment decisions the company can make.

Chris Darling inquired about the 2025 outlook for the New York market and the Hilton Midtown specifically, including margin expectations, and also asked for perspective on the transaction market's appetite for large-scale portfolio deals.

Answer

Chairman and CEO Thomas Baltimore expects low single-digit RevPAR growth for the Hilton Midtown in 2025, supported by 10% group pace and limited market supply growth. On transactions, he anticipates the market will improve in the second half of the year as the bid-ask spread narrows, but noted uncertainty remains due to inflation and policy changes.

Chris Darling inquired about what percentage of 2025 group revenue is typically on the books at this time and asked about any observed changes in the bid-ask spread for hotel assets in the transaction market.

Answer

CFO Sean Dell'Orto stated that approximately 70% of the current year's group revenue forecast is on the books for next year, which CEO Thomas Baltimore noted is consistent with prior years. On transactions, Baltimore said the bid-ask spread is narrowing and he expects the market to accelerate in 2025 as financing costs ease and private capital seeks deployment, while affirming Park is not a distressed seller.

Chris Darling from Green Street asked if traditional financing alternatives make tribal sale-leasebacks a more difficult proposition, potentially limiting GLPI to riskier projects. He also asked for an update on transaction pricing and bid-ask spreads in the commercial gaming market.

Answer

SVP & Chief Development Officer Steven Ladany countered that traditional tribal financing is often less favorable and shorter-term than commercial debt, making GLPI's long-term lease structure an attractive alternative that reduces refinancing risk. On the commercial M&A market, he noted that while discussions are increasing as credit markets improve, sellers' expectations on asset values may be overly optimistic, making it uncertain if more transactions will close.