Raymond Martz - Chief Financial Officer Jon Bortz - Chairman and Chief Executive Officer.

Wes Golladay - RBC Capital Markets Shaun Kelley - Bank of America Rich Hightower - Evercore ISI Anthony Powell - Barclays Bill Crow - Raymond James David Loeb - Robert W. Baird.

Good day and welcome to the Pebblebrook Hotel Trust First Quarter 2016 Earnings Call. Today's call is being recorded. At this time, I would like to turn the call over to Mr. Raymond Martz, Chief Financial Officer. Please go ahead, sir..

Thank you, Anne. Good morning, everyone, and welcome to our first quarter 2016 earnings call and webcast. Joining me today is Jon Bortz, our Chairman and Chief Executive Officer. But before we start, a quick reminder that many of our comments today are considered forward-looking statements under federal security laws.

These statements are subject to numerous risks and uncertainties as described in our 10-K for 2015 and our other SEC filings, and future results could differ materially from those implied by our comments. Forward-looking statements that we make today are effective only as of today, April 28, 2016, and we undertake no duty to update them later.

You can find our SEC reports and our earnings release which contain reconciliations of the non-GAAP financial measures we use on our website at pebblebrookhotels.com. So we are pleased to report that 2016 is off to a good start for Pebblebrook. Our first quarter performance was better than we expected on all operating metrics.

Same-property RevPAR was up 8%, exceeding our outlook of 3% to 6%. Our RevPAR growth is driven by a combination of occupancy and rate growth, as occupancy increased 4.8% and ADR increased 3.1%.

Room revenue grew 9.9% due to the increase in the average room count as we were able to add 50 additional guest rooms through several renovation programs, as well as the extra day from Leap Year. Our outperformance in the quarter was led by our hotels in California.

West LA which includes our hotels in Hollywood, West Hollywood, Beverly Hills and Santa Monica was our strongest market during the quarter. It experienced a 21.1% RevPAR increase followed by our hotels in San Francisco, which generated a 19.5% RevPAR gain. San Diego was another leading market for us growing 7.1%.

Our softer markets during the quarter were many of our East Coast markets, including Boston, Manhattan, Washington DC, and Miami. Overall for the quarter, transient revenue, which makes up about 75% of our total portfolio room revenues, was up 10.9% compared with the prior year. Transient ADR rose 0.7% for the quarter.

Group revenues climbed 4.8% in the quarter as room nights were down 2.1%, but ADR increased a robust 7% enhanced by the Super Bowl in San Francisco. Because of these factors, monthly RevPAR for our portfolio increased 6.2% in January, 13.4% in February, and 5.2% in March.

As a reminder, our Q1 RevPAR and hotel EBITDA results are same-property for our ownership period and include all the hotels we owned as of March 31 except for the Prescott in San Francisco, since this hotel was closed for renovation since November 01 and did not reopen until the beginning of March as Hotel Zeppelin in San Francisco and Hotel Vintage Portland, which was closed for renovation during most of the first quarter in 2015 and therefore is not included in our same-property results for 2016 and 2015.

Our hotels generated $62 million of same-property hotel EBITDA for the quarter, which represents a 15.2% growth rate. Same-property hotel EBITDA margins improved an impressive 217 basis points.

Total hotel revenues grew 6.8%, while total hotel expenses were limited to a 3.6% increase despite a 4.8% increase in occupied room nights, which includes the extra days I mentioned as well as an extra day in the quarter.

This low growth rate in operating expenses reflects the progress we continue to make improving the operating efficiencies of our hotels, which we expect will continue throughout the year. Flow-through of total revenues to hotel EBITDA was a strong 61.9%.

Excluding the Manhattan Collection, our wholly-owned same-property EBITDA increased 15.9% and our flow-through to total revenues to hotel EBITDA was an even better 65.2%.

The hotel EBITDA percentage growth leaders in the quarter were Hotel Palomar Los Angeles Beverly Hills, Hotel Zephyr Fisherman’s Wharf, W Los Angeles West Beverly Hills, Sir Francis Drake, and Skamania Lodge. Notably, they are all on the West Coast.

Moving down the income statement, adjusted EBITDA was $56.2 million, which was $4.4 million above the upper end of our outlook due to our better-than-expected RevPAR gains and margin improvements in the quarter, combined with lower-than-expected G&A expenses which are largely related to the timing of expenses such as the pre-opening and legal fees, which we forecast will be pushed into the second quarter and therefore are not a savings for the year.

Adjusted FFO was $40.6 million or $0.56 per share which exceeded the upper end of our outlook range by $0.09 as we also experienced interest expense savings and a larger tax benefit than expected on top of our hotel EBITDA and hotel operating margin outperformance.

Looking to the capital market side in March, we redeemed all $140 million of our Series A preferred equity shares and in early Aril, we repaid our $62.8 million, 6.3% mortgage secured by our Embassy Suite San Diego Bay Downtown. We intend to pay off our $22.7 million, 5.3% mortgage secured by our Hotel Modera Portland in early May.

Capital to redeem our preferred equity and to repay these mortgages came from our unsecured credit facility. The combined reduction in our annualized fixed charges from the preferred redemption and two mortgage paydowns is approximately $7 million to $8 million or $0.10 to $0.11 per share based on the current interest rate environment.

These savings were already built into our outlook when we provided it to you two months ago. Sticking with our balance sheet, at quarter-end, our debt-to-EBITDA ratio was 5.1 times and our fixed-charge ratio was 3 times.

Excluding the debt associated with the Manhattan Collection, our debt-to-EBITDA ratio was 4.8 times and our fixed-charge ratio is 3.1 times.

Our current leverage ratio is higher than our targeted long-term leverage ratio of about 4.5 times and higher than the 4 times we'd like to get down to by the end of this year, but we expect increased EBITDA and potential proceeds from property dispositions to be utilized to reduce our leverage ratio and the outstanding balance on our credit facility.

We currently have $264 million outstanding on our $450 million credit facility. After paying off the mortgage on our Hotel Modera next month, we will have no more debt maturities into 2017. And with that update, I would now like to turn the call over to Jon to provide more insight on the quarter as well as our outlook for the remainder of 2016.

Jon?.

Union Station Nashville, Monaco DC, and The Nines in Portland. We also were renovating our suites at the W Boston, and we had some residual renovation work at Westin Coral Gables. We estimate the negative impact to RevPAR from all of these renovations at 120 basis points in the quarter.

That compares to approximately 300 basis points of impact from renovations in last year's first quarter. Hotel Zeppelin was also under renovation, but since it didn't open until the first week of March, it's not included in same-property reported numbers.

It is, however, included in our overall numbers, where it had a negative EBITDA of $150,000 and a decline from last year's first quarter EBITDA of $1.1 million. Performance at the three properties that underwent major transformational renovations last year was outstanding in the first quarter.

At Hotel Zephyr Fisherman's Wharf, RevPAR climbed 91.6% in Q1 with ADR up 22.8% or $38 versus Q1 last year. At W LA, RevPAR grew 37.9% with room revenues increasing 60.5% due to the higher room count.

Vintage Portland's RevPAR is not comparable since the hotel was closed last year for a majority of the first quarter but compared to Q1 2014, RevPAR was up 34%.

If we look at EBITDA generated by these three properties, it increased a combined $4.4 million in Q1 over last year, well on our way to the $7 million plus we're forecasting to pick up this year.

While we were overly optimistic about the ramp-up for these three properties last year, they've so far outperformed our expectations this year and are gaining good traction. Finally, it's worthwhile to provide you a quick update on Hotel Zeppelin, which reopened ahead of schedule the first week of March.

Our song today, "Volunteers" by Jefferson Airplane, which was recorded in San Francisco in 1969 is representative of the revolutionary spirit for change in San Francisco that we pay homage to with the design of our new hotel. Recall that Zeppelin is a $35 million transformation of a former Prescott Hotel we acquired in mid-2014.

Customer reviews have so far been fantastic and while it’s estimated to be a drag on 2016 performance, it’s off to a great start and we’re very pleased by the way the renovation turned out. Now let me turn to a quick update on our outlook for 2016. We remain, we believe, appropriately cautious about 2016 for both the industry and Pebblebrook.

Our forecast for the industry remains 3% to 5% for the year, which suggests improved performance following the first quarter’s 2.7% growth. For our portfolio, we're also maintaining our RevPAR outlook for the year despite our better-than-expected first-quarter performance. In both cases, we continue to lack any great visibility or predictable trends.

And we'd like to avoid last year's scenario when we increased our outlook off our better-than-expected Q1 results, thinking we were still being conservative, only to be forced to substantially lower our outlook later in the year as trends unexpectedly worsened. Certainly, sentiment about the economy has improved since our call in late February.

And in general, economic statistics have been better, though they continue to be pretty choppy. The dollar has weakened off its highs, which is a helpful direction for improving international inbound travel. Employment gains continue to be very healthy, which is good for leisure travel. And interest rates remain very low.

Yet global growth forecasts keep coming down in spite of the benefits of a recovery in commodity prices and greater optimism about China and other emerging market economies.

The most negative of the signals we've been seeing remains the lack of corporate profit growth, which is clearly having a negative impact on business transient travel in particular. Given these economic and industry-specific factors, we still don't buy into the impending recession scenario as the likely outcome.

We believe the recovery will continue but remain bumpy, as it has been for the last six years, with fear, anxiety, and a lack of confidence seemingly popping up from time to time. For Q2, we're forecasting our same-property RevPAR to increase between 1% and 3.5%.

Our same-property hotel EBITDA range for Q2 is $81.5 million to $85 million, with same-property EBITDA margins flat to down 50 basis points, due primarily to the weak revenue growth.

In Q2, we expect performance that will be weaker than the industry in New York, Miami, Philadelphia, and Washington, DC, and better-than-industry performance is likely in West LA, Portland, Buckhead, and Nashville. All other assumptions for our outlook remain unchanged, both for Q2 and full year 2016.

Our pace remains very encouraging, and it's representative of both generally favorable citywide calendars in most of our markets, as well as the fruits of our efforts to improve our property teams and our strategies and tactics to maximize revenues and profits throughout our portfolio.

Overall, group room nights are up 9% for the balance of the year, meaning Q2 through Q4, with ADR currently 5.3% higher and total group revenues ahead of same time last year by 14.8%. Quarters 2 and 3 are both up, while our concern quarter, Q4, continues to be down year over year. Transient pace for the remainder of the year is also up significantly.

Transient room nights are ahead by 3%, ADR is up 3.4%, and transient revenues are higher by 6.4%. Combined, group and transient rooms are up 5.9% for the balance of the year, with ADR 4.1% higher and total revenues ahead by 10.3%.

Our pace remains encouraging, though it's been short-term bookings and in-the-quarter, for-the-quarter bookings that remain a challenge. And of course, business travel tends to book short term, which keeps us cautious.

Finally, I wanted to remind everyone that we continue our focused efforts to execute our strategic plan to create value for our shareholders by working to sell upwards of $1 billion of a select number of hotels, including our interest in the Manhattan Collection, and utilizing net proceeds to reduce debt, distribute capital gains, and potentially repurchase up to $150 million of our stock.

We don't have anything yet to report, but we believe private market activity and values remain attractive and supportive of our intentions. That completes our prepared remarks. So, operator, we'd be happy to take questions now..

Thank you very much. [Operator Instructions] We’ll take our first question from Wes Golladay with RBC Capital Markets..

Sticking with that last point, when is the earliest you could sell New York and for the street to hear something about that, if you were to sell it?.

Hey, Wes, Good morning. So, we’ve talked a little bit about this before, but it's a good question and a helpful reminder, just to manage people's expectations. So as we've indicated, we don't even have a right to sell our interest until the process can start at the end of July.

We do, however, have a partner who we believe is working to find a partner to replace us. And, of course, as we indicated, we've hired investment advisers to find a partner to buy us out. If that was to occur, it's likely that that wouldn't happen until much later in the year, really likely more fourth quarter-like.

And a part of the reason for that is that there is CMBS debt on the majority of the portfolio, and any assumption process would take likely at least 60 to 90 days. So we wouldn't announce anything until any buyer was hard, and that would likely be dependent upon the assumption of the debt.

So, again, it's likely it couldn't possibly be any time earlier than late in the year.

If selling our interest is not what works out and we move to start the process for selling all of the individual properties, 100% of them, which we could start the process in July, because of the way the notification and our partners' rights work, we couldn't possibly have a transaction until the first half of 2017.

So people shouldn't be sitting on the edges of their seats, waiting for the sale of our interest in New York. But folks should know that we're working very hard on it, and we're highly motivated to try to find an attractive solution for the shareholders..

Okay, thank you. I appreciate the details..

We’ll go next to Shaun Kelley with Bank of America..

Hi, good morning guys. Jon or Ray, I guess the first question is on the margins for Q2. Clearly, it's a lot harder to drive margin growth with the RevPAR forecasts that you've provided, but traditionally you guys have done pretty well on managing your operating expenses.

So the question is, is there anything else going on? I think, Ray, you mentioned maybe something about timing of G&A? Is that partially what's holding back the margins? Or could you help us just think about that a little bit more?.

No, nothing with G&A. It's just a function of where the hotels - remember, last year we had some impact of renovations, so that impacted our RevPAR by about 67 or so basis points. And this year, the second-quarter impact's a little bit less. So we'll have to cover comps there. But it's just the environment.

What we're seeing now, as we noted on April, is it's been an okay month, but maybe not as strong as the impact with the Easter shift because we had Passover in April. So we think maybe May and June will be a little bit stronger with some demand again pulling to the second quarter.

But I wouldn't necessarily look at any big read of anything unusual going on in the margins. Just with this kind of revenue growth and RevPAR growth we're forecasting, and just very basic fixed expenses increasing, that's how the margins will flow out..

We did have a positive property tax true-up at the Argonaut last year in the second quarter, I believe, that helped us a little bit, Shaun, that effectively reverses this year. So there will be a larger increase in property taxes on the second-quarter numbers as a result of that..

Okay, thanks. And then just my second question would be on, San Francisco's a crucial market for you guys. And we've picked up in a couple of local papers some discussion around some changes in residential laws that may lead to a little bit more hotel construction. Granted, this is off of a very, very low base.

But is that something you could talk about or your thoughts on that? And do you think that there's any real supply actually going up in San Francisco any time soon?.

Yes, it's a very difficult town to build hotels in. It's a very difficult town to build anything in. Hotels are probably more challenging than anything because of the two different processes that you have to go through in San Francisco.

So, I mean, there are, I guess there are probably six or eight hotels that folks have announced that they want to develop, including the first one or two that have been announced for 60 or 80 story buildings as part of residential and office, so mixed-use towers like we've seen in New York.

But all of this takes a long time, and we don't expect really anything in the next - anything beyond 1%, 1.5%, at most 2% in this market for the next three to four years..

Great. Thank you very much..

We’ll go next to Rich Hightower with Evercore ISI..

Hi good morning guys..

Good morning Rich..

Good morning Rich..

I just want to dig into the guidance a little bit more. So, I think we all appreciate that there is a distinct lack of visibility in the business, at least as it relates to the more urban, transient, upper-upscale hotel segments, which more or less characterize Pebblebrook's portfolio.

I guess my question here is at what point in the year, given the outstanding performance in the first quarter, at what point in the year do you think that you would have enough visibility to change guidance one way or the other? Just maybe not based on trends, but based on just the math of how it works?.

Well, that's a hypothetical, but there's only, on a multiple-choice basis, there's only a few choices, right? So second quarter, third quarter, or we can just report and have it all in the fourth quarter if there's anything to report. So it really depends upon what we're seeing and what the numbers are.

I mean, historically, we've always been very comfortable basing our outlook upon what we've been seeing. And we're seeing a much cloudier playing field at this point. And it just depends on the math.

I mean, I can't give you any specific, unfortunately, I can't give you a specific response to which quarter because, you know, last year, we ended up taking our numbers down.

So, I do think everybody should take seriously our caution about the rest of the year, the lack of visibility, and the fact that we haven't seen an improvement in any trends at this point. So believe me, I'd love for our beat to end up being a beat for the year, but we're serious about absorbing it in the last three quarters of the year right now..

Okay, understand. And then maybe let me segue that into a question about the asset sale process. There does seem to be a big divide today between what the public markets are valuing these portfolios at and what many companies, including Pebblebrook, say the private market is still valuing them at, which seems to be significantly higher in some cases.

Are you seeing, based perhaps on indicative pricing or any feedback from the buyer pool, that the buyers are incorporating some of those assumptions about a lack of visibility or a possible recession scenario or just the way they're underwriting portfolios versus what may have happened six months ago, three months ago, even?.

It totally depends on the buyer, Rich. We've talked in the past that there are lots of different kinds of buyers there with different objectives. And clearly, those folks who are purely near-term, intermediate-term financial buyers look at the world. Some are concerned; some are positive.

Obviously, if you're concerned, you're not going to be competitive from a pricing perspective, assuming you build that concern into your underwriting. If you're not concerned, you don't.

And there are lots of buyers who are strategic buyers who are looking for capital preservation, who have a need to get into a particular market, that want a particular type of property, buyers who have high net worth who are collecting real estate. It's diversification for them, again not IRR buyers.

So it really depends upon who the buyer is, and it depends, obviously, on what you're selling and doesn't meet the criteria of those different buyers..

Okay, that's helpful, Jon. Thanks..

We’ll go next to Anthony Powell with Barclays..

Hi, good morning guys. Just a question on maybe the Q2 guidance, given that’s a bit closer and your March RevPAR was up 5.2%, but your RevPAR guidance for Q2 implies deceleration.

Could you get in more detail on what you're seeing in each month in Q2 and how things have maybe changed close in?.

Sure. So it looks right now, and we don't tally things up by day or week, so we can't give you a month-to-date April RevPAR comparison, maybe, that some other companies can provide. We don't have that data. We don't spend time asking our properties to provide it. But it looks like April for us is in the zero to plus 1% range in terms of RevPAR growth.

It's been on the radar all year as a weak group pace and weak transient pace month. And so when you think about that for us, you think about what you've been seeing in the industry numbers for April. April, if it's benefiting from the Easter shift, it just means it would have been even worse than what April's turning out to be.

So, I mean, we think April's, again, probably for the industry, in that 2% to 3% range. We do think May is likely to be better, based upon citywide calendars, based upon our own pace. It looks to us, again for us, that May will be the best month in the quarter. And June will still be good and better than April.

Is that helpful, Anthony?.

That is very helpful. Thanks. And in New York, you pushed occupancy rates pretty high.

Is that sustainable in the more peak periods in the spring and summer? And how are you asset managing those properties generally?.

Yes, the high occupancy levels are sustainable. It's the growth in occupancy that's not achievable..

Right, right..

So, yeah, I mean, it's going to have to be – to get positive growth in New York, it's going to have to be ADR growth for a good part of the rest of the year. We'll probably still pick up some occupancy over last year, but ADR is going to be where we need to have success in order to get to positive RevPAR in New York..

Right, thanks a lot. That's it for me..

We will go next to Bill Crow with Raymond James..

Good morning, guys. Jon, you've talked before about how important it is that the hotel management team has confidence in order to push rates and you've contrasted San Francisco and New York in that discussion.

Can you talk about how the confidence level is in markets, various markets?.

Sure. I mean, it varies.

I would say if we look at markets like New York, like Philly, like DC, I think confidence is challenged in general to push rates, because what – I mean, it's based upon the feedback, if you will, of what happens, that if you push rates beyond a relatively small amount in those markets, the feedback you get is a decline in your pace of bookings.

And so I know people like to look at a market and say it's just psychology in New York, because we're running at 86%. But we've described in the past that it's more than that. I mean, there are some structural issues in New York.

We've discussed the cancellation policies, the loyalty program reimbursements that have created certain challenges for revenue management in the market. And again, New York is a market where you can buy occupancy. You can attract demand into the city with lower rates from outlying suburbs and even other cities when it comes to travel.

So that's occurring in markets like New York. If we go to places like the West Coast, we see not only more confidence, but again, the feedback is generally more positive, meaning pushing pricing when there's strong demand.

Despite some structural issues, you're able to get positive feedback, meaning your pace of bookings doesn't change materially, doesn't decline materially. So today, that would be markets like San Francisco; that would be markets like West LA.

Interestingly, we didn't really have that same situation in West LA last year, but it seems the overall levels of demand have improved this year.

And as we've talked, the removal of the 700-room Hyatt in Century City in a market that's running 82% overall, and that's not that large of a market, can have a big impact on that feedback, if you will, when you raise pricing.

And so it has been very favorable this year, and we believe would have been even without Porter Ranch, which clearly added significantly to the whole market. You get outside of those, it really depends upon the time of year and what the compression is from citywide business.

We get very good pricing power with citywide compression, and then in the summertime in San Diego. We get much better pricing power in season in Seattle, though clearly, the really weak Canadian dollar has been problematic in attracting weekend leisure customers in particular into Seattle so far this year.

Miami is definitely seeing weaker demand, weaker psychology, because the feedback is, again, challenged, where increasing your pricing is more of a challenge because you don't have the compression of demand because of the weakness in inbound international travel, particularly from South America..

Thanks. I appreciate that. I know you're guarded on what you say on the dispositions, but just a couple of probes in that area.

First of all, the billion-dollar potential volume of sales, that is your share of the JV, correct? So that would be, I don't know, $400 million or $500 million, whatever that number is and then a number of additional hotels that you would look to potentially sell.

Am I calculating that correctly?.

Yes..

So could you tell us how many hotels, other than the JV hotels, might be out on the market today?.

It's a select number, and I don't want to give you anything specific, and it's going to change anyway. As we indicated, I mean, this is a process. We didn't take everything out at one time. We've been moving in a very disciplined way to get our information together, go through the process, hire an adviser.

And we have a different process, even for some of the assets that we have. Some are being more broadly marketed; some are being very narrowly focused on logical buyers for properties that folks would find extremely attractive.

So it's not a large number, Bill, but we don't have – our properties tend not to be that large, so to get to $500 million-plus, obviously, you can do the math and figure out what it likely is..

And Jon, is it too early to give us a clue about what the reception is to the assets that are out there?.

Yes, as we talked about in the last call, first of all, if anything changes in terms of our likelihood of executing on our plan, we'll let you know. I mean, we said in the release that we haven't seen any change in values or in the markets and the buyer pool since we announced the program in February. So that's very encouraging, obviously.

And when we have deals that transact, we'll announce them and you'll be able to see whether what we've been saying has been successfully executed or not..

Okay, that's it for me. Thank you..

We will go next to David Loeb with Robert W. Baird..

Hey, Jon, I'd like to come back to the demand side for a minute. You talked about the group pace. The group spend seems like it's still pretty strong.

What do you think is driving this conundrum, where we're seeing pretty strong group spend coming out of corporations, but transient looking a bit weaker?.

Yeah, that's a really good question, and we've been around the block. I haven't seen this before at this point in a cycle. It's very unusual. I do think it's probably the profits recession. Companies aren't feeling that great. They're under a lot of pressure from shareholders, including activists.

And because they're not getting revenue growth right now, or revenue growth in U.S. dollars, they're trying to improve their profits through cost-cutting. And one of the areas, obviously, you can cut costs in the short term is travel.

And so I think what's interesting is on the group side, because there's still competition for people, group continues – they continue to have their group meetings.

But when it comes to trying to produce better performance at the bottom line, if they can enforce policies and make sure folks stay in the programs, and you take three people instead of five people to meetings or conferences, you can save a little bit of money.

And I'm sure that's among a long list of cost-cutting initiatives that a lot of these companies like the banks and financial services companies have undertaken.

And until we see, we believe, until we see a turnaround in the top line revenue growth and profits for a broader number of industries and companies, it shouldn't be surprising to think that businesses are still going to be cautious about transient travel.

But the other side of your comment is still interesting because we have continued to see good spend around group.

And again, I do think it comes back to that that's part of trying to create this loyalty, because there still is competition for people in most industries, and you need to spend the money to make them happy, but restricting travel, that doesn't necessarily make people unhappy..

Okay, I'll take your word for that..

Well, for someone who doesn't like to travel, I'm sure you appreciate that..

Yes, travel's not that much fun, but a lot of people do seem to like it.

As you look at the group pace and timing of group and timing of transient travel, how important is the Passover shift?.

Well, I think it is important, and I think it's been this growing sensitivity, particularly to the Jewish holidays, that's happened over the last 10 years, where businesses have been very sensitive about not booking group meetings that might conflict with the Jewish holiday.

I mean, interestingly, Passover started Friday night, so clearly, it would have an impact on Friday. But it had an impact all the way to Wednesday which, again, maybe isn't all that surprising, depending upon how long a meeting might be and where it needs to be restricted. So I think the good news was Easter moved to March.

The bad news was Easter and Passover didn't overlap this year, and we got a negative impact from both of them..

Okay, great, thank you..

We will take a follow-up from Rich Hightower with Evercore ISI..

Hi, guys. Thanks for taking the question. Just a quick modeling question. Are you guys able to run through the quarterly cadence of the alternating renovation headwinds and tailwinds over the course of the year? I know that there's some movement back and forth just with different projects going on this year as well..

Yes.

Do you have the estimated displacement or renovation impact by quarter?.

Yes, so, Rich, if you look at the second quarter of the four quarters of the year that would be the least impactful. We estimate about 10 basis points of RevPAR impact in the second quarter, and that's primarily Coral Gables and Monaco DC.

Monaco DC room renovation's done, but we're working on the public restaurant areas there and the courtyard, so that will be a little disruptive..

That actually will have more impact on revenues and F&B profits than it does on the room side..

That's partly why we only have 10 basis points there. Third quarter will be more impactful. That's about 120 basis points of RevPAR impact. That will be Union Station Nashville, also LaPlaya Naples, also Westin Coral Gables, and then the tail end of the Monaco DC restaurant enhancements there.

And in the fourth quarter, that tails down to about 90 basis points of impact, and that's really the kickoff of the Mondrian Los Angeles renovation and then the Palomar Beverly Hills rooms renovation, our renovation there..

And Revere..

And Revere at the very tail end..

So that's very helpful, Ray.

So those are on a net basis, so it's a net negative in every quarter? Because on the flip side, you've got renovation tailwinds from a year ago?.

Yes, that's just this year's impact. I don't know if we have last year handy by quarter.

Do you have that, Gabi, or --?.

If you don't, it's okay. We can do it offline. I just thought that would be helpful..

We have it here..

Okay..

Yes, so second quarter as we mentioned earlier, 67 basis points was 2015’s 2Q impact on renovations. Q3 was about 18 to 20 basis points and then Q4 was about 83 basis points..

About..

That's perfect. That's very precise. All right, thank you, guys, very helpful..

Rest assured that the math might be precise, but the actual numbers probably aren't that precise..

Understand..

These are estimates..

And with no further questions in the queue, I would like to turn the call back over to Jon Bortz with any additional or closing remarks..

Thanks, Anne. Thank you all for participating. If you get a chance to get out to San Francisco, let us know. We think you ought to see Hotel Zeppelin. It truly is a unique asset in the marketplace. Thanks again for joining us, and we look forward to updating you again in 90 days..

This does conclude today's conference. We thank you for your participation. You may now disconnect..