Pebblebrook Hotel Trust

Previous wording

This report, together with other statements and information publicly disseminated by us, contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words "may", "will", "should", "potential", "could", "seek", "assume", "forecast", "believe", "expect", "intend", "anticipate", "estimate", "project" or similar expressions. Forward-looking statements in this report include, among others, statements about our business strategy, including acquisition and development strategies, industry trends, estimated revenues and expenses, estimated costs and durations of renovation or restoration projects, timing and extent of debt refinancings, estimated insurance recoveries, our ability to realize deferred tax assets and expected liquidity needs and sources (including capital expenditures and our ability to obtain financing or raise capital). You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond our control and which could materially affect actual results, performance or achievements. These factors include, but are not limited to, the following:

Current wording

This report, together with other statements and information publicly disseminated by us, contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words "may", "will", "should", "potential", "could", "seek", "assume", "forecast", "believe", "expect", "intend", "anticipate", "estimate", "project" or similar expressions. Forward-looking statements in this report include, among others, statements about our business strategy, including acquisition and disposition strategies, industry trends, estimated revenues and expenses, estimated costs and durations of renovation or restoration projects, timing and extent of debt refinancings, estimated insurance recoveries, our ability to realize deferred tax assets and expected liquidity needs and sources (including capital expenditures and our ability to obtain financing or raise capital). You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond our control and which could materially affect actual results, performance or achievements. These factors include, but are not limited to, the following:

Previous wording

During the six months ended June 30, 2024, we had the following transactions:

Current wording

During the nine months ended September 30, 2024, we had the following transactions and events:

Previous wording

•We repurchased 318,269 common shares for an aggregate purchase price of $5.0 million, or an average of $15.71 per share, under our existing common share repurchase program.

Current wording

•We repurchased 1,127,255 common shares for an aggregate purchase price of $15.0 million, or an average of $13.31 per share, under our existing common share repurchase program.

Previous wording

The following table represents the key same-property hotel operating statistics for our hotels for the three and six months ended June 30, 2024 and 2023:

Current wording

The following table represents the key same-property hotel operating statistics for our hotels for the three and nine months ended September 30, 2024 and 2023:

Previous wording

For the three and six months ended June 30, 2024 and 2023, the above table of hotel operating statistics includes information from all hotels owned as of June 30, 2024, except for LaPlaya Beach Resort & Club due to its closure following Hurricane Ian and Newport Harbor Island Resort due to its redevelopment.

Current wording

For the nine months ended September 30, 2024 and 2023, the above table of hotel operating statistics includes information from all hotels owned as of September 30, 2024, except for LaPlaya Beach Resort & Club due to its closure following Hurricane Ian and Newport Harbor Island Resort for the first and second quarters only due to its redevelopment.

Previous wording

The following table reconciles net income (loss) to FFO and FFO available to common share and unit holders for the three and six months ended June 30, 2024 and 2023 (in thousands):

Current wording

The following table reconciles net income (loss) to FFO and FFO available to common share and unit holders for the three and nine months ended September 30, 2024 and 2023 (in thousands):

Previous wording

The following table reconciles net income (loss) to EBITDA and EBITDAre for the three and six months ended June 30, 2024 and 2023 (in thousands):

Current wording

The following table reconciles net income (loss) to EBITDA and EBITDAre for the three and nine months ended September 30, 2024 and 2023 (in thousands):

Previous wording

At June 30, 2024 and 2023, we had 46 and 47, respectively, properties and leasehold interests. All properties owned during these periods have been included in our results of operations during the respective periods since their dates of acquisition or through their dates of disposition, as applicable. Based on when a property was acquired or disposed, operating results for certain properties are not comparable for the three and six months ended June 30, 2024 and 2023. The properties listed in the table below are hereinafter referred to as "non-comparable properties" for the periods indicated and all other properties are referred to as "comparable properties":

Current wording

At September 30, 2024 and 2023, we had 46 and 47, respectively, properties and leasehold interests. All properties owned during these periods have been included in our results of operations during the respective periods since their dates of acquisition or through their dates of disposition, as applicable. Based on when a property was acquired or disposed, operating results for certain properties are not comparable for the three and nine months ended September 30, 2024 and 2023. The properties listed in the table below are hereinafter referred to as "non-comparable properties" for the periods indicated and all other properties are referred to as "comparable properties":

Previous wording

Revenues —Total revenues increased by $12.8 million primarily due to increases at LaPlaya Beach Resort & Club, which was partially closed in 2023 due to Hurricane Ian, and at Margaritaville Hotel San Diego Gaslamp Quarter, which was under renovation in 2023. This increase was partially offset by a $5.8 million decrease due to the sales of our non-comparable properties in 2023.

Current wording

Revenues —Total revenues increased by $8.7 million primarily due to increases at LaPlaya Beach Resort & Club, which was partially closed in 2023 due to Hurricane Ian, at Margaritaville Hotel San Diego Gaslamp Quarter, which was under renovation in 2023 and at The Westin Michigan Avenue Chicago. This increase was partially offset by a $4.7 million decrease due to the sales of our non-comparable properties in 2023.

Previous wording

Hotel operating expenses —Total hotel operating expenses increased by $1.6 million primarily due to LaPlaya Beach Resort & Club's and Margaritaville Hotel San Diego Gaslamp Quarter's increased operations, as well as an increase in staffing, wage rates and benefits at our comparable properties due to risen demand levels. This increase was partially offset by a $4.6 million decrease due to the sales of our non-comparable properties in 2023.

Current wording

Hotel operating expenses —Total hotel operating expenses increased by $7.3 million primarily due to increased operations at LaPlaya Beach Resort & Club, Margaritaville Hotel San Diego Gaslamp Quarter and The Westin Michigan Avenue Chicago, as well as an increase in staffing, wage rates and benefits at our comparable properties due to higher demand levels. This increase was partially offset by a $2.7 million decrease due to the sales of our non-comparable properties in 2023.

Previous wording

Real estate taxes, personal property taxes, property insurance and ground rent —Real estate taxes, personal property taxes, property insurance and ground rent decreased by $1.1 million primarily due to a $4.3 million decrease in real estate taxes due to lower tax assessments at several of our California properties, which partially settled multiple property tax years, offset by a $3.6 million increase in property insurance due to higher insurance premium assessments.

Current wording

Real estate taxes, personal property taxes, property insurance and ground rent —Real estate taxes, personal property taxes, property insurance and ground rent increased by $2.4 million primarily due to an increase in real estate tax assessments.

Previous wording

Interest expense — Interest expense decreased by $2.6 million due to interest being capitalized related to our Newport Harbor Island Resort renovation and our term loan pay-downs during the first quarter of 2024. This decrease was partially offset by higher interest rates on our unhedged debt.

Current wording

Interest expense — Interest expense decreased by $3.1 million due to pay-downs on our term loans during the first quarter of 2024 and our senior notes during the fourth quarter of 2023. This decrease was partially offset by higher interest rates on our unhedged debt.

Previous wording

Comparison of the six months ended June 30, 2024 to the six months ended June 30, 2023

Current wording

Comparison of the nine months ended September 30, 2024 to the nine months ended September 30, 2023

Previous wording

Revenues —Total revenues increased by $21.1 million primarily due to an increase at LaPlaya Beach Resort & Club, which was partially closed in 2023 due to Hurricane Ian, and at Margaritaville Hotel San Diego Gaslamp Quarter, which was under renovation in 2023. This increase was partially offset by an $17.3 million decrease due to the sales of our our non-comparable properties in 2023 as well as a decrease at Newport Harbor Island Resort due to its closure for redevelopment during the first quarter and part of the second quarter of 2024.

Current wording

Revenues —Total revenues increased by $29.8 million primarily due to an increase at LaPlaya Beach Resort & Club, which was partially closed in 2023 due to Hurricane Ian, at Margaritaville Hotel San Diego Gaslamp Quarter and Hilton San Diego Gaslamp Quarter, which were under renovation in 2023, and at The Westin Michigan Avenue Chicago. This increase was partially offset by a $22.0 million decrease due to the sales of our our non-comparable properties in 2023.

Previous wording

Hotel operating expenses —Total hotel operating expenses increased by $3.4 million primarily due to LaPlaya Beach Resort & Club's and Margaritaville Hotel San Diego Gaslamp Quarter's increased operations, as well as an increase in staffing, wage rates and benefits at our comparable properties due to risen demand levels. This increase was partially offset by a $13.9 million decrease due to the sales of our non-comparable properties in 2023 as well as a decrease at Newport Harbor Island Resort due to its closure for redevelopment during the first quarter and part of the second quarter of 2024.

Current wording

Hotel operating expenses —Total hotel operating expenses increased by $10.6 million primarily due to increased operations at LaPlaya Beach Resort & Club, Margaritaville Hotel San Diego Gaslamp Quarter, Hilton San Diego Gaslamp Quarter and The Westin Michigan Avenue Chicago, as well as an increase in staffing, wage rates and benefits at our comparable properties due to higher demand levels. This increase was partially offset by a $16.6 million decrease due to the sales of our non-comparable properties in 2023 as well as a decrease at Newport Harbor Island Resort due to its closure for redevelopment during the first quarter and part of the second quarter of 2024.

Previous wording

Depreciation and amortization —Depreciation and amortization expense decreased by $1.8 million primarily due to the sales of our non-comparable properties in 2023. This decrease was partially offset by an increase at LaPlaya Beach Resort & Club.

Current wording

Depreciation and amortization —Depreciation and amortization expense decreased by $7.5 million primarily due to the sales of our non-comparable properties in 2023 and Newport Harbor Island Resort's useful life reduction of its furniture, fixtures and equipment in 2023 due to its scheduled renovation in November 2023. This decrease was partially offset by an increase at LaPlaya Beach Resort & Club.

Previous wording

Real estate taxes, personal property taxes, property insurance and ground rent —Real estate taxes, personal property taxes, property insurance and ground rent decreased by $4.6 million primarily due to a $5.8 million decrease in real estate taxes due to lower tax assessments at several of our California properties, which partially settled multiple property tax years, offset by a $1.7 million increase in property insurance due to higher insurance premium assessments.

Current wording

Real estate taxes, personal property taxes, property insurance and ground rent —Real estate taxes, personal property taxes, property insurance and ground rent increased by $1.3 million primarily due to a $3.7 million increase in property insurance due to higher insurance premiums, partially offset by a $2.1 million decrease in real estate taxes due to lower tax assessments.

Previous wording

General and administrative —General and administrative expenses increased by $2.9 million primarily due to an increase in employee compensation expense. General and administrative expenses consist of employee compensation costs, legal and professional fees, insurance and other expenses.

Current wording

General and administrative —General and administrative expenses increased by $3.2 million primarily due to an increase in employee compensation expense. General and administrative expenses consist of employee compensation costs, legal and professional fees, insurance and other expenses.

Previous wording

Other operating expenses — Other operating expenses decreased by $2.9 million primarily due to a decrease in payroll and claims administration costs at LaPlaya Beach Resort & Club.

Current wording

Other operating expenses — Other operating expenses decreased by $5.8 million primarily due to a decrease in hurricane related payroll costs and claims administration costs at LaPlaya Beach Resort & Club.

Previous wording

Interest expense — Interest expense decreased by $1.6 million due to interest being capitalized related to our Newport Harbor Island Resort renovation and our term loan pay-downs during the first quarter of 2024. This decrease was partially offset by higher interest rates on our unhedged debt.

Current wording

Interest expense — Interest expense decreased by $5.7 million due to interest being capitalized related to our Newport Harbor Island Resort renovation and due to pay-downs on our term loans during the first quarter of 2024 and our senior notes during the fourth quarter of 2023. This decrease was partially offset by higher interest rates on our unhedged debt.

Previous wording

Our primary sources of liquidity are cash provided by our operations, borrowings under our credit facilities, net proceeds from equity and debt offerings, and net proceeds from property sales. Our primary cash requirements in the short term (i.e., those requiring cash on or before June 30, 2025) will be to fund property lease obligations, interest and current principal on debt, capital improvements, dividends on common and preferred shares, and working capital of our property operations. We believe our cash and cash equivalents, restricted cash and the amount available on our senior unsecured revolving credit facility, which totaled $747.5 million as of June 30, 2024, along with cash generated from ongoing operations will be sufficient to satisfy our short-term cash requirements. As of June 30, 2024, we had no off-balance sheet arrangements.

Current wording

Our primary sources of liquidity are cash provided by our operations, borrowings under our credit facilities, net proceeds from equity and debt offerings, and net proceeds from property sales. Our primary cash requirements in the short term (i.e., those requiring cash on or before September 30, 2025) will be to fund property lease obligations, interest and current principal on debt, capital improvements, dividends on common and preferred shares, and working capital of our property operations. We believe our cash and cash equivalents, restricted cash and the amount available on our senior unsecured revolving credit facility, which totaled $780.6 million as of September 30, 2024, along with cash generated from ongoing operations will be sufficient to satisfy our short-term cash requirements. As of September 30, 2024, we had no off-balance sheet arrangements.

Previous wording

We have the option to extend certain of our current debt maturities with the payment of extension fees. Assuming we exercise all extension options available in our debt agreements, we expect that future principal and interest payments associated with our debt obligations outstanding as of June 30, 2024 will be $2.5 billion through their maturity, with $45.5 million of principal and $100.8 million of interest payable on or before June 30, 2025. We intend to pay amounts due with available cash, borrowings under our revolving credit facility, proceeds from property sales and/or to refinance amounts due with long-term debt.

Current wording

We have the option to extend certain of our current debt maturities with the payment of extension fees. Assuming we exercise all extension options available in our debt agreements and after adjusting for the aforementioned term loan extension and repayments, we expect that future principal and interest payments associated with our remaining debt obligations outstanding as of September 30, 2024 will be $2.7 billion through their maturity, with $2.2 million of principal and $85.3 million of interest payable on or before September 30, 2025. We intend to pay amounts due with available cash, borrowings under our revolving credit facility, proceeds from property sales and/or to refinance amounts due with long-term debt.

Previous wording

Future fixed minimum payments associated with our hotel, ground and finance leases total $1.8 billion as of June 30, 2024, with $22.8 million payable on or before June 30, 2025.

Current wording

Future fixed minimum payments associated with our hotel, ground and finance leases total $1.8 billion as of September 30, 2024, with $22.9 million payable on or before September 30, 2025.

Previous wording

As of June 30, 2024, we had $3.2 million of outstanding purchase commitments, all of which will be paid on or before June 30, 2025. These purchase commitments represent outstanding purchase orders and contracts that have been executed for capital and renovation projects at our properties. See Capital Investments for discussion on planned capital investments.

Current wording

As of September 30, 2024, we had $4.9 million of outstanding purchase commitments, all of which will be paid on or before September 30, 2025. These purchase commitments represent outstanding purchase orders and contracts that have been executed for capital and renovation projects at our properties. See Capital Investments for discussion on planned capital investments.

Previous wording

Operating Activities. Our net cash provided by operating activities was $129.7 million for the six months ended June 30, 2024, and $120.2 million for the six months ended June 30, 2023. Fluctuations in our net cash provided by (used in) operating activities are primarily the result of changes in hotel revenues, operating cash requirements and corporate expenses.

Current wording

Operating Activities. Our net cash provided by operating activities was $205.8 million for the nine months ended September 30, 2024, and $202.3 million for the nine months ended September 30, 2023. Fluctuations in our net cash provided by (used in) operating activities are primarily the result of changes in hotel revenues, operating cash requirements and corporate expenses.

Previous wording

Investing Activities. Our net cash provided by (used in) investing activities was $(61.7) million for the six months ended June 30, 2024, and $135.3 million for the six months ended June 30, 2023. Fluctuations in our net cash provided by (used in) investing activities are primarily the result of acquisition and disposition activities, as well as capital improvements and additions to our properties.

Current wording

Investing Activities. Our net cash provided by (used in) investing activities was $(79.9) million for the nine months ended September 30, 2024, and $96.3 million for the nine months ended September 30, 2023. Fluctuations in our net cash provided by (used in) investing activities are primarily the result of acquisition and disposition activities, as well as capital improvements and additions to our properties.

Previous wording

•During the six months ended June 30, 2024, we invested $82.7 million in improvements to our hotel properties and received $21.5 million in property insurance proceeds.

Current wording

•During the nine months ended September 30, 2024, we invested $100.9 million in improvements to our hotel properties and received $21.7 million in property insurance proceeds.

Previous wording

•During the six months ended June 30, 2023, we invested $97.7 million in improvements to our hotel properties; received $224.4 million from the sales of four hotel properties and one retail component of a hotel property; and received $11.4 million in property insurance proceeds.

Current wording

•During the nine months ended September 30, 2023, we invested $140.1 million in improvements to our hotel properties, received $224.4 million from the sales of four hotel properties and one retail component of a hotel property and received $14.4 million in property insurance proceeds.

Previous wording

Financing Activities. Our net cash used in financing activities was $150.4 million for the six months ended June 30, 2024, and $121.5 million for the six months ended June 30, 2023. Fluctuations in our net cash provided by (used in) financing activities are primarily the result of our issuance and repurchase of debt and equity securities and distributions paid on our preferred and common shares.

Current wording

Financing Activities. Our net cash used in financing activities was $175.3 million for the nine months ended September 30, 2024, and $159.2 million for the nine months ended September 30, 2023. Fluctuations in our net cash provided by (used in) financing activities are primarily the result of our issuance and repurchase of debt and equity securities and distributions paid on our preferred and common shares.

Previous wording

•During the six months ended June 30, 2024, we repaid $110.9 million in other debt; repurchased $6.9 million of common shares through our common share repurchase program and for tax withholding purposes in connection with vestings of share-based equity awards; paid $5.5 million in deferred financing costs and paid $26.0 million in preferred and common distributions.

Current wording

•During the nine months ended September 30, 2024, we repaid $111.4 million in other debt, repurchased $16.9 million of common shares through our common share repurchase program and for tax withholding purposes in connection with vestings of share-based equity awards, paid $6.4 million in deferred financing costs and paid $39.0 million in preferred and common distributions.

Previous wording

•During the six months ended June 30, 2023, we repurchased $92.8 million of common shares through our common share repurchase program and for tax withholding purposes in connection with vestings of share-based equity awards; and paid $26.8 million in preferred and common distributions.

Current wording

•During the nine months ended September 30, 2023, we repurchased $92.8 million of common shares through our common share repurchase program and for tax withholding purposes in connection with vestings of share-based equity awards; repaid $21.5 million of other debt, net of refinancing proceeds; and paid $40.2 million in preferred and common distributions.

Previous wording

For the six months ended June 30, 2024, we invested $82.7 million in capital investments (or $67.7 million in capital investments excluding LaPlaya Beach Resort & Club) to reposition and improve our properties, including the renovations of Newport Harbor Island Resort, Estancia La Jolla Hotel & Spa, Skamania Lodge, Southernmost Beach Resort and Jekyll Island Club Resort.

Current wording

For the nine months ended September 30, 2024, we invested $100.9 million in capital investments (or $81.7 million excluding the repair and remediation of LaPlaya Beach Resort & Club) to reposition and improve our properties, including the renovations of Newport Harbor Island Resort, Estancia La Jolla Hotel & Spa, Skamania Lodge, Southernmost Beach Resort and Jekyll Island Club Resort.

Previous wording

Depending on market conditions, and in some instances subject to approval from governmental authorities, we expect to invest a total of $85.0 million to $90.0 million in capital investments in 2024, which includes normal hotel capital refurbishments as well as redevelopment and repositioning projects at Newport Harbor Island Resort, Estancia La Jolla Hotel & Spa and Skamania Lodge, and excludes capital expenditures related to the repair and remediation of LaPlaya Beach Resort & Club.

Current wording

Depending on market conditions, and in some instances subject to approval from governmental authorities, we expect to invest a total of $90.0 million to $95.0 million in capital investments in 2024, which includes normal hotel capital refurbishments as well as redevelopment and repositioning projects at Newport Harbor Island Resort, Estancia La Jolla Hotel & Spa and Skamania Lodge, and excludes capital expenditures related to the repair and remediation of LaPlaya Beach Resort & Club.

Previous wording

During the six months ended June 30, 2024, we repurchased 318,269 common shares for an aggregate purchase price of $5.0 million, or an average of approximately $15.71 per share. As of June 30, 2024, $141.0 million of common shares remained available for repurchase under this program.

Current wording

During the nine months ended September 30, 2024, we repurchased 1,127,255 common shares for an aggregate purchase price of $15.0 million, or an average of approximately $13.31 per share. As of September 30, 2024, $131.0 million of common shares remained available for repurchase under this program.

Previous wording

On February 17, 2023, our Board of Trustees authorized a repurchase program of up to $100.0 million of preferred shares (the “Preferred Share Repurchase Program”). Under the terms of the program, we may repurchase up to an aggregate of $100.0 million of our 6.375% Series E Cumulative Redeemable Preferred Shares, 6.30% Series F Cumulative Redeemable Preferred Shares, 6.375% Series G Cumulative Redeemable Preferred Shares and 5.70% Series H Cumulative Redeemable Preferred Shares from time to time in transactions on the open market or by private agreement.

Current wording

On February 17, 2023, our Board of Trustees authorized a repurchase program of up to $100.0 million of preferred shares. Under the terms of the program, we may repurchase up to an aggregate of $100.0 million of our 6.375% Series E Cumulative Redeemable Preferred Shares, 6.30% Series F Cumulative Redeemable Preferred Shares, 6.375% Series G Cumulative Redeemable Preferred Shares and 5.70% Series H Cumulative Redeemable Preferred Shares from time to time in transactions on the open market or by private agreement.

Previous wording

During the six months ended June 30, 2024, no preferred shares were repurchased under this program. As of June 30, 2024, $84.2 million of preferred shares remained available for repurchase under this program.

Current wording

During the nine months ended September 30, 2024, no preferred shares were repurchased under this program. As of September 30, 2024, $84.2 million of preferred shares remained available for repurchase under this program.