What changed in this filing

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Item 1. Financial Statements

2020-07-30 compared with 2020-05-07 · 311 added, 247 removed, 542 unchanged (51% of the section changed)

5 unchanged sentences

Investment in hotel properties, net $ 6,021,473 $ 6,332,587

Hotel held for sale 56,874 —

Cash and cash equivalents 339,810 30,098

2 unchanged sentences

Prepaid expenses and other assets 55,241 59,474

Total assets $ 6,495,103 $ 6,498,555

LIABILITIES AND EQUITY

Accounts payable and accrued expenses

Debt $ 2,452,970 $ 2,229,220

Accounts payable, accrued expenses and other liabilities 247,094 260,166

Lease liabilities - operating leases 256,344 256,271

Deferred revenues 35,377 57,704

Accrued interest 3,492 4,694

Liabilities related to hotel held for sale 1,772 —

Distribution payable 9,308 58,564

2 unchanged sentences

Shareholders’ equity:

Preferred shares of beneficial interest, $.01 par value (liquidation preference $510,000 at March 31, 2020 and at December 31, 2019), 100,000,000 shares authorized;

20,400,000 shares issued and outstanding at March 31, 2020 and December 31, 2019

Preferred shares of beneficial interest, $ .01 par value (liquidation preference $ 510,000 at June 30, 2020 and at December 31, 2019), 100,000,000 shares authorized;

20,400,000 shares issued and outstanding at June 30, 2020 and December 31, 2019

Common shares of beneficial interest, $ .01 par value, 500,000,000 shares authorized;

130,563,226 shares issued and outstanding at March 31, 2020 and 130,484,956 shares issued and outstanding at December 31, 2019

130,564,060 shares issued and outstanding at June 30, 2020 and 130,484,956 shares issued and outstanding at December 31, 2019

Additional paid-in capital 4,077,497 4,069,410

3 unchanged sentences

Non-controlling interests 21,038 10,728

Total equity 3,488,746 3,631,936

Total liabilities and equity $ 6,495,103 $ 6,498,555

3 unchanged sentences

(In thousands, except share and per-share data)

For the three months ended March 31,

For the three months ended June 30, For the six months ended June 30,

2020 2019 2020 2019

Room $ 10,801 $ 306,291 $ 187,942 $ 555,277

Food and beverage 3,089 97,965 70,181 184,715

2 unchanged sentences

Hotel operating expenses:

Room 5,430 70,454 59,555 137,829

Food and beverage 3,707 66,934 55,566 130,291

10 unchanged sentences

Interest expense ( 24,091 ) ( 28,719 ) ( 47,682 ) ( 58,047 )

Other 303 7 327 16

Income (loss) before income taxes ( 134,479 ) 67,097 ( 103,155 ) 67,715

12 unchanged sentences

(In thousands, except share and per-share data)

For the three months ended March 31,

For the three months ended June 30, For the six months ended June 30,

2020 2019 2020 2019

Comprehensive Income:

9 unchanged sentences

(In thousands, except share data)

Preferred Shares

Common Shares

Additional Paid-In Capital

Accumulated Other Comprehensive Income (Loss)

Distributions in Excess of Retained Earnings

Total Shareholders' Equity

Non-Controlling Interests

Three Months Ended June 30, 2020

Preferred Shares Common Shares Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Distributions in Excess of Retained Earnings Total Shareholders' Equity Non-Controlling Interests Total Equity

Shares Amount Shares Amount

Balance at March 31, 2020 20,400,000 $ 204 130,563,226 $ 1,306 $ 4,075,727 $ ( 78,980 ) $ ( 391,950 ) $ 3,606,307 $ 21,459 $ 3,627,766

Issuance of shares, net of offering costs — — — — ( 9 ) — — ( 9 ) — ( 9 )

Share-based compensation — — 834 — 1,779 — — 1,779 — 1,779

Distributions on common shares/units — — — — — — ( 1,312 ) ( 1,312 ) ( 20 ) ( 1,332 )

Distributions on preferred shares — — — — — — ( 8,139 ) ( 8,139 ) — ( 8,139 )

Other comprehensive income (loss):

Unrealized gain (loss) on derivative instruments — — — — — ( 405 ) — ( 405 ) — ( 405 )

Net income (loss) — — — — — — ( 130,513 ) ( 130,513 ) ( 401 ) ( 130,914 )

Balance at June 30, 2020 20,400,000 $ 204 130,564,060 $ 1,306 $ 4,077,497 $ ( 79,385 ) $ ( 531,914 ) $ 3,467,708 $ 21,038 $ 3,488,746

Three Months Ended June 30, 2019

Shares Amount Shares Amount

Balance at March 31, 2019 20,400,000 $ 204 130,484,956 $ 1,305 $ 4,063,830 $ ( 7,709 ) $ ( 361,081 ) $ 3,696,549 $ 10,250 $ 3,706,799

Share-based compensation — — — — 1,842 — — 1,842 276 2,118

Distributions on common shares/units — — — — — — ( 49,768 ) ( 49,768 ) ( 165 ) ( 49,933 )

Distributions on preferred shares — — — — — — ( 8,139 ) ( 8,139 ) — ( 8,139 )

Other comprehensive income (loss):

Unrealized gain (loss) on derivative instruments — — — — — ( 21,089 ) — ( 21,089 ) — ( 21,089 )

Net income (loss) — — — — — — 60,373 60,373 145 60,518

Balance at June 30, 2019 20,400,000 $ 204 130,484,956 $ 1,305 $ 4,065,672 $ ( 28,798 ) $ ( 358,615 ) $ 3,679,768 $ 10,506 $ 3,690,274

Six Months Ended June 30, 2020

Shares Amount Shares Amount

Balance at December 31, 2019 20,400,000 $ 204 130,484,956 $ 1,305 $ 4,069,410 $ ( 24,715 ) $ ( 424,996 ) $ 3,621,208 $ 10,728 $ 3,631,936

8 unchanged sentences

Net income (loss) — — — — — — ( 88,564 ) ( 88,564 ) ( 282 ) ( 88,846 )

Balance at March 31, 2019

Balance at June 30, 2020 20,400,000 $ 204 130,564,060 $ 1,306 $ 4,077,497 $ ( 79,385 ) $ ( 531,914 ) $ 3,467,708 $ 21,038 $ 3,488,746

Six Months Ended June 30, 2019

Shares Amount Shares Amount

Balance at December 31, 2018 20,400,000 $ 204 130,311,289 $ 1,303 $ 4,065,804 $ 1,330 $ ( 308,806 ) $ 3,759,835 $ 10,095 $ 3,769,930

3 unchanged sentences

Share-based compensation — — 275,066 2 3,412 — — 3,414 552 3,966

Distribution on common shares/units

Distribution on preferred shares

Distributions on common shares/units — — — — — — ( 99,539 ) ( 99,539 ) ( 306 ) ( 99,845 )

Distributions on preferred shares — — — — — — ( 16,278 ) ( 16,278 ) — ( 16,278 )

Other comprehensive income (loss):

1 unchanged sentence

Net income (loss) — — — — — — 66,008 66,008 165 66,173

Balance at March 31, 2020

Balance at June 30, 2019 20,400,000 $ 204 130,484,956 $ 1,305 $ 4,065,672 $ ( 28,798 ) $ ( 358,615 ) $ 3,679,768 $ 10,506 $ 3,690,274

The accompanying notes are an integral part of these financial statements.

2 unchanged sentences

(In thousands)

For the three months ended March 31,

For the six months ended June 30,

Operating activities:

5 unchanged sentences

(Gain) loss on sale of hotel properties ( 117,448 ) —

Impairment and other losses

Impairment loss 20,570 —

Deferred income taxes ( 14,309 ) 1,542

Non-cash ground rent 3,129 3,051

Other 92 4,735

Changes in assets and liabilities:

14 unchanged sentences

Repayments under revolving credit facilities ( 535,115 ) ( 226,893 )

Proceeds from debt 12,965 —

Repayments of debt ( 12,965 ) ( 181,219 )

11 unchanged sentences

Pebblebrook Hotel Trust (the "Company") was formed as a Maryland real estate investment trust in October 2009 to opportunistically acquire and invest in hotel properties located primarily in major United States cities, with an emphasis on major gateway coastal markets.

As of March 31, 2020 , the Company owned 54 hotels with a total of 13,352 guest rooms.

As of June 30, 2020, the Company owned 54 hotels with a total of 13,352 guest rooms.

The hotels are located in the following markets:

17 unchanged sentences

The Company is the sole general partner of the Operating Partnership.

At March 31, 2020 , the Company owned 99.7 % of the common limited partnership units issued by the Operating Partnership ("common units").

At June 30, 2020, the Company owned 99.7 % of the common limited partnership units issued by the Operating Partnership ("common units").

The remaining 0.3 % of the common units are owned by the other limited partners of the Operating Partnership.

3 unchanged sentences

PHL is consolidated into the Company’s financial statements.

COVID-19, Management’s Plans and Liquidity

COVID-19 Operations and Liquidity Update

In March 2020, the World Health Organization declared the novel coronavirus ("COVID-19") to be a global pandemic and the virus has continued to spread throughout the United States and the world.

As a result of this pandemic and subsequent government mandates and health official recommendations, hotel demand has been nearly eliminated.

Following the government mandates and health official recommendations, the Company temporarily suspended operations at 46 of its 54 hotels and resorts and dramatically reduced staffing and expenses at the eight hotels that remain operational.

Operations will remain suspended until state and local government restrictions and requirements are lifted and the Company can be confident that reopening the hotels will not jeopardize the health and safety of guests, employees and communities.

COVID-19 has had a negative impact on the Company's operations and financial results to date, and yet the full financial impact of the reduction in hotel demand caused by the pandemic and suspension of operations at the Company's hotels cannot be reasonably estimated at this time due to uncertainty as to its severity and duration.

The Company expects that the COVID-19 pandemic may ultimately have a significant impact on the Company's results of operations, financial position and cash flow in 2020.

As a result, in March 2020, the Company fully drew down on its $ 650.0 million unsecured revolving credit facility, reduced the quarterly cash dividend on its common shares to one penny for the first quarter of 2020 and likely the remainder of 2020, reduced planned capital expenditures, reduced the compensation of its executive officers, board of trustees and employees, and, working closely with its hotel operating partners, significantly reduced its hotels' operating expenses.

In an effort to protect the health and safety of the Company's employees, the Company adopted an optional remote-work policy and other physical distancing policies at its corporate office and it does not anticipate these policies to have any adverse impact on its ability to continue to operate its business.

As a result of this pandemic and subsequent government mandates and health official recommendations, hotel demand was nearly eliminated.

Following the government mandates and health official recommendations, the Company temporarily suspended operations at a majority of its hotels and resorts and dramatically reduced staffing and expenses at the hotels that remained operational.

Travel restrictions have slowly eased in a few markets and leisure demand began to recover late in the second quarter.

As of June 30, 2020, 16 of the Company's hotels, listed below, were open, while the operations at the remaining 38 hotels were still temporarily suspended.

Property Location

L'Auberge Del Mar Del Mar, CA

Hotel Palomar Los Angeles Beverly Hills Los Angeles, CA

Le Parc Suite Hotel West Hollywood, CA

Montrose West Hollywood West Hollywood, CA

Embassy Suites San Diego Bay - Downtown San Diego, CA

Paradise Point Resort & Spa San Diego, CA

San Diego Mission Bay Resort San Diego, CA

The Westin San Diego Gaslamp Quarter San Diego, CA

Hotel Spero San Francisco, CA

Hotel Zetta San Francisco San Francisco, CA

Chaminade Resort & Spa Santa Cruz, CA

Southernmost Beach Resort Key West, FL

The Marker Key West Key West, FL

LaPlaya Beach Resort and Club Naples, FL

The Liberty, A Luxury Collection Hotel, Boston Boston, MA

Skamania Lodge Stevenson, WA

COVID-19 has had a significant negative impact on the Company's operations and financial results to date and the Company expects that the COVID-19 pandemic will continue to have a significant negative impact on the Company's results of operations, financial position and cash flow for the remainder of 2020 and into 2021.

The Company cannot estimate when travel demand will recover.

As a result of this uncertainty, in March 2020, the Company fully drew down on its $ 650.0 million unsecured revolving credit facility, reduced the quarterly cash dividend on its common shares to one penny for the first and second quarters of 2020 and likely the remainder of 2020, reduced planned capital expenditures, reduced the compensation of its executive officers, board of trustees and employees, and, working closely with its hotel operating partners, significantly reduced its hotels' operating expenses.

On June 29, 2020, the Company amended its existing credit facilities, term loan facilities and senior notes.

Among other things, the amendments extended the maturity of a significant portion of a $ 300.0 million term loan from November 2021 to November 2022, waived existing financial covenants through the end of the first quarter of 2021 and provided substantially less restrictive financial covenants through the end of the second quarter of 2022.

Refer to "Note 5.

Debt" for additional information regarding the amendments.

Based on these amendments and the expense and cash flow reductions, the Company believes that it will have sufficient liquidity to meet its obligations for the next twelve months.

The Company also adopted an optional remote-work policy and other physical distancing policies at its corporate office and the Company does not anticipate these policies to have any adverse impact on its ability to continue to operate its business.

Transitioning to a remote-work environment has not had a material adverse impact on the Company's financial reporting system, internal controls or disclosure controls and procedures.

As of March 31, 2020 , the Company maintained unrestricted cash of $ 727.4 million .

The Company has no scheduled debt maturities until the fourth quarter of 2021 and all of its debt is unsecured.

Management has evaluated the current business environment and its effect on the Company's results of operations, the actions the Company has taken and the other options available to the Company and has determined that the Company has sufficient liquidity in the event of a prolonged decline in hotel demand without additional equity or debt financing or property sales.

Although the Company was in compliance with all its debt covenants as of March 31, 2020 , management has determined it is probable the Company will violate certain financial covenants under its credit agreements within the next twelve months if covenant waivers are not obtained.

If the Company were to violate one or more financial covenants, the lenders could declare the Company in default and could accelerate the amounts due under a portion or all of the Company’s outstanding debt.

The Company is actively negotiating the terms for waivers with its lenders and the Company believes it will receive such waivers before any covenants are violated.

However, because any waivers would be granted at the sole discretion of the lenders, the Company has determined that there is substantial doubt about the Company’s ability to continue as a going concern for one

year after the date the financial statements are issued.

generally accepted accounting principles (“U.S.

GAAP”) requires that in making this determination, the Company could not consider future fundraising activities, whether through equity or debt offerings or dispositions of hotel properties, or the likelihood of obtaining covenant waivers, all of which are outside of the Company's control.

Management believes that obtaining the waivers currently being negotiated will remove the reason for the determination of substantial doubt, however, there can be no assurance that the Company will be able to obtain waivers on acceptable terms or at all.

Any covenant waiver may lead to increased costs, increased interest rates, additional restrictive covenants and other possible lender protections.

In addition to or in lieu of obtaining waivers as described above, the Company believes it could raise additional funds if needed through a combination of hotel dispositions or debt or equity financings.

The consolidated financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty.

Summary of Significant Accounting Policies

11 unchanged sentences

All significant intercompany balances and transactions have been eliminated in consolidation.

Certain reclassifications have been made to the prior period's financial statements to conform to the current year presentation.

Certain reclassifications have been made to the prior period's financial statements to conform to the current year presentation, including separate presentation of the Company's operating lease liabilities on the Company's consolidated balance sheets.

Use of Estimates

46 unchanged sentences

The Company recognizes revenue related to nonrefundable membership initiation fees and refundable membership initiation deposits over the expected life of an active membership.

For refundable membership initiation deposits, the difference

between the amount paid by the member and the present value of the refund obligation is deferred and recognized as other operating revenues on the consolidated statements of operations and comprehensive income over the expected life of an active membership.

For refundable membership initiation deposits, the difference between the amount paid by the member and the present value of the refund obligation is deferred and recognized as other operating revenues on the consolidated statements of operations and comprehensive income over the expected life of an active membership.

The present value of the refund obligation is recorded as a membership initiation deposit liability in the consolidated balance sheets and accretes over the nonrefundable term using the effective interest method using the Company's incremental borrowing rate.

30 unchanged sentences

In July 2018, the FASB also issued ASU 2018-11, Leases (Topic 842):

Targeted Improvements , to give companies another option for transition and to provide lessors with a practical expedient to reduce the cost and complexity of

implementing the new standard.

Targeted Improvements , to give companies another option for transition and to provide lessors with a practical expedient to reduce the cost and complexity of implementing the new standard.

The transition option allows companies to not apply the new leases standard in the comparative periods they present in their financial statements in the year of adoption.

11 unchanged sentences

Acquisition and Disposition of Hotel Properties

There were no acquisitions of hotel properties during the three months ended March 31, 2020 and 2019 .

There were no acquisitions of hotel properties during the three and six months ended June 30, 2020 and 2019.

The Company will report a disposed or held for sale hotel property or group of hotel properties in discontinued operations only if the disposal represents a strategic shift that has, or will have, a major effect on its operations and financial results.

All other disposed hotel properties will have their operating results reflected within continuing operations on the Company's consolidated statements of operations and comprehensive income for all periods presented.

During the three months ended March 31, 2020 , the Company sold two hotel properties in a single transaction for an aggregate sales price of $ 331.0 million .

As of June 30, 2020, the Company had entered into an agreement to sell the Union Station Hotel Nashville, Autograph Collection for $ 56.0 million.

This hotel was designated as held for sale as it met all of the Company's held for sale criteria.

Accordingly, the Company classified all of the assets and liabilities related to this hotel as assets and liabilities held for sale in the accompanying consolidated balance sheets and ceased depreciating the assets.

On July 29, 2020, the Company completed the sale of the Union Station Hotel Nashville, Autograph Collection.

During the six months ended June 30, 2020, the Company sold two hotel properties in a single transaction for an aggregate sales price of $ 331.0 million.

In connection with this transaction, the Company recorded an aggregate of $ 117.4 million net gain on sale, which is included in (gain) loss on sale of hotel properties, in the accompanying consolidated statements of operations and comprehensive income.

For the three months ended March 31, 2020 and 2019 , the accompanying consolidated statements of operations and comprehensive income included operating income (loss) of $ 4.3 million and $ 10.3 million , respectively, related to the hotel properties sold.

The following table sets forth information regarding the disposition transactions during the three months ended March 31, 2019 (in thousands):

Hotel Property Name

The Liaison Capitol Hill

Washington, D.C.

For the three and six months ended June 30, 2020, the accompanying consolidated statements of operations and comprehensive income included operating income (loss) of $ 0.1 million and $ 4.4 million, respectively, related to the hotel properties sold.

For the three and six months ended June 30, 2019, the accompanying consolidated statements of operations and comprehensive income included operating income (loss) of $ 13.9 million and $ 24.2 million, respectively, related to the hotel properties sold.

The following table sets forth information regarding the disposition transactions during the six months ended June 30, 2019 (in thousands):

Hotel Property Name Location Sale Date Sale Price

The Liaison Capitol Hill Washington, D.C.

February 14, 2019 $ 111,000

Hotel Palomar Washington DC

Washington, D.C.

Hotel Palomar Washington DC Washington, D.C.

February 22, 2019 141,450

Onyx Hotel Boston, MA May 29, 2019 58,255

Total $ 310,705

The Company recognized no gain or loss on these dispositions.

1 unchanged sentence

Investment in Hotel Properties

Investment in hotel properties as of March 31, 2020 and December 31, 2019 consisted of the following (in thousands):

Investment in hotel properties as of June 30, 2020 and December 31, 2019 consisted of the following (in thousands):

2020 December 31, 2019

Land $ 983,135 $ 1,042,198

Buildings and improvements 4,826,745 4,998,108

2 unchanged sentences

Construction in progress 37,244 35,637

$ 6,483,110 $ 6,732,637

Right-of-use asset, operating leases 324,158 335,272

4 unchanged sentences

As a result of the effects of the COVID-19 pandemic on our expected future operating cash flows, we determined certain impairment triggers had occurred and as a result, the Company assessed its investment in hotel properties for recoverability.

Based on the analysis performed, the Company recognized an impairment loss of $ 20.6 million related to a retail component of a hotel as a result of the fair value being lower than its carrying value.

Based on the analysis performed, for the six months ended June 30, 2020 the Company recognized an impairment loss of $ 20.6 million related to a retail component of a hotel as a result of the fair value being lower than its carrying value.

The impairment loss was determined using level 2 inputs under authoritative guidance for fair value measurements.

6 unchanged sentences

The right-of-use assets and liabilities are amortized to ground rent expense over the term of the underlying lease agreements.

As of March 31, 2020 , the Company's right-of-use assets of $ 333.6 million , which included favorable and unfavorable intangibles, are included in the investment in hotel properties and its related lease liabilities of $ 256.3 million are presented in accounts payable and accrued expenses in the Company's consolidated balance sheets.

As of June 30, 2020, the Company's lease liabilities consisted of operating lease liabilities of $ 256.3 million and financing lease liabilities of $ 46.0 million.

As of December 31, 2019, the Company's lease liabilities consisted of operating lease liabilities of $ 256.3 million and financing lease liabilities of $ 45.6 million.

The financing lease liabilities are included in accounts payable, accrued expenses and other liabilities on the Company's consolidated balance sheets.

The adoption of this standard had minimal impact on the Company's consolidated statements of operations and comprehensive income.

The Company's debt consisted of the following as of March 31, 2020 and December 31, 2019 (dollars in thousands):

On June 29, 2020, the Company amended its credit agreements and related documents governing the unsecured revolving credit facilities, term loan agreements and senior notes which:

• waived existing financial covenants through the end of the first quarter of 2021 and provided substantially less restrictive covenants through the end of the second quarter of 2022 ("waiver period");

• extended the maturity of $ 242.6 million of the Company’s Sixth Term Loan 2021 tranche of $ 300.0 million from November 2021 to November 2022;

• fixed the spread at the highest threshold through the end of the waiver period;

• increased the LIBOR floor from 0 % to 0.25 % for any debt not designated by the Company as being covered by an interest rate swap;

• requires assets to be pledged as security, in the future, under certain circumstances;

• preserved the Company's ability to pay quarterly preferred equity dividend payments and a $ 0.01 per share quarterly common dividend (or higher if required to maintain REIT status) during the waiver period so long as the Company is in compliance with all loan agreements;

• provided the Company flexibility to complete new acquisitions and other investments during the waiver period;

• permit the Company to complete up to $ 90.0 million of capital improvements and redevelopment projects through the end of the waiver period;

• provide limitations during the waiver period on common share repurchases and certain required prepayments following capital issuances or property dispositions.

On June 30, 2020, after the Company voluntarily repaid approximately $ 253.2 million of borrowings under the $ 650.0 million unsecured revolving credit facility, the principal amount outstanding under that facility was $ 390.0 million.

The Company's debt consisted of the following as of June 30, 2020 and December 31, 2019 (dollars in thousands):

Balance Outstanding as of

Interest Rate

Maturity Date

March 31, 2020

December 31, 2019

Interest Rate Maturity Date June 30, 2020 December 31, 2019

Revolving credit facilities

Senior unsecured credit facility

PHL unsecured credit facility

Senior unsecured credit facility Floating (1)

January 2022 $ 390,000 $ 165,000

PHL unsecured credit facility Floating (2)

Janurary 2022 — —

Total revolving credit facilities $ 390,000 $ 165,000

Unsecured term loans

First Term Loan

Second Term Loan

Fourth Term Loan

First Term Loan Floating (3)

January 2023 300,000 300,000

Second Term Loan Floating (3)

April 2022 65,000 65,000

Fourth Term Loan Floating (3)

October 2024 110,000 110,000

Sixth Term Loan

Tranche 2021 Floating (3)

November 2021 57,400 300,000

Tranche 2021 Extended Floating (3)

November 2022 242,600 —

Tranche 2022 Floating (3)

November 2022 400,000 400,000

Tranche 2023 Floating (3)

November 2023 400,000 400,000

Tranche 2024 Floating (3)

January 2024 400,000 400,000

Total Sixth Term Loan 1,500,000 1,500,000

3 unchanged sentences

Senior unsecured notes

Series A Notes

December 2023

Series B Notes

December 2025

Series A Notes 4.70 % December 2023 60,000 60,000

Series B Notes 4.93 % December 2025 40,000 40,000

Total senior unsecured notes at stated value 100,000 100,000

1 unchanged sentence

Total senior unsecured notes $ 99,537 $ 99,563

Total debt $ 2,452,970 $ 2,229,220

________________________

2 unchanged sentences

(3) Borrowings under the term loan facilities bear interest at floating rates equal to, at the Company's option, either (i) LIBOR plus an applicable margin or (ii) a Base Rate plus an applicable margin.

As of March 31, 2020 , $ 1.6 billion of the borrowings under the term loan facilities bore an effective weighted-average fixed interest rate of 3.56 % , after taking into account interest rate swap agreements, and $ 345.0 million bore a weighted-average floating interest rate of 2.55 % .

As of June 30, 2020, $ 1.6 billion of the borrowings under the term loan facilities bore an effective weighted-average fixed interest rate of 4.21 %, after taking into account interest rate swap agreements, and $ 345.0 million bore a weighted-average floating interest rate of 2.46 %.

As of December 31, 2019, $ 1.6 billion of the borrowings under the term loan facilities bore a weighted-average fixed interest rate of 3.43 %, after taking into account interest rate swap agreements, and $ 345.0 million bore a weighted-average floating interest rate of 3.32 %.

1 unchanged sentence

The Company has a $ 650.0 million senior unsecured revolving credit facility maturing in January 2022, with options to extend the maturity date to January 2023, pursuant to certain terms and conditions and payment of an extension fee.

In March 2020, as part of our plans to enhance liquidity due to the impact of COVID-19, we fully drew down the remaining availability on this revolving credit facility.

As of March 31, 2020 , the Company had $ 643.2 million of outstanding borrowings, $ 6.8 million of outstanding letters of credit and no borrowing capacity remaining on its senior unsecured credit facility.

As of June 30, 2020, the Company had $ 390.0 million of outstanding borrowings, $ 6.8 million of outstanding letters of credit and borrowing capacity of $ 253.2 million remaining on its senior unsecured credit facility.

Interest is paid on the periodic advances under the senior unsecured revolving credit facility at varying rates, based upon either LIBOR or the alternate base rate, plus an additional margin amount.

1 unchanged sentence

Borrowings on the revolving credit facility bear interest at LIBOR plus 1.45 % to 2.25 %, depending on the Company’s leverage ratio.

As a result of the amended credit agreements and related documentation described above, the spread on the borrowings is fixed at 2.25 % during the waiver period.

Additionally, the Company is required to pay an unused commitment fee at an annual rate of 0.20 % or 0.30 % of the unused portion of the revolving credit facility, depending on the amount of borrowings outstanding.

3 unchanged sentences

Borrowings on the PHL Credit Facility bear interest at LIBOR plus 1.45 % to 2.25 %, depending on the Company's leverage ratio.

The PHL Credit Facility is subject to debt covenants substantially similar to the covenants under the Company's credit agreement that governs the Company's senior unsecured revolving credit facility.

As of March 31, 2020 , the Company had no borrowings under the PHL Credit Facility and had $ 25.0 million borrowing capacity remaining under the PHL Credit Facility.

As a result of the amendments described above, the spread of the borrowings is fixed at 2.25 % during the waiver period.The PHL Credit Facility is subject to debt covenants substantially similar to the covenants under the Company's credit agreement that governs the Company's senior unsecured revolving credit facility.

As of June 30, 2020, the Company had no borrowings under the PHL Credit Facility and had $ 25.0 million borrowing capacity remaining under the PHL Credit Facility.

Under the terms of the credit agreement for the unsecured revolving credit facility, one or more standby letters of credit, up to a maximum aggregate outstanding balance of $ 30.0 million, may be issued on behalf of the Company by the lenders under the unsecured revolving credit facility.

1 unchanged sentence

Any outstanding standby letters of credit reduce the available borrowings on the senior unsecured revolving credit facility by a corresponding amount.

Standby letters of credit of $ 6.8 million and $ 2.8 million were outstanding as of March 31, 2020 and December 31, 2019 , respectively.

As of March 31, 2020 , the Company was in compliance with the debt covenants of the credit agreements that govern the unsecured revolving credit facilities.

See additional discussion on the impact of the COVID-19 pandemic on debt covenants in Note 1.

Standby letters of credit of $ 6.8 million and $ 2.8 million were outstanding as of June 30, 2020 and December 31, 2019, respectively.

As of June 30, 2020, the Company was in compliance with all debt covenants of the credit agreements that govern the unsecured revolving credit facilities.

Unsecured Term Loan Facilities

2 unchanged sentences

Each of the term loan facilities is subject to debt covenants substantially similar to the covenants under the credit agreement that governs the revolving credit facility.

As of March 31, 2020 , the Company was in compliance with all debt covenants of its term loan facilities.

As of June 30, 2020, the Company was in compliance with all debt covenants of its term loan facilities.

The Company entered into interest rate swap agreements to fix the LIBOR rate on a portion of these unsecured term loan facilities, see Derivative and Hedging Activities below.

2 unchanged sentences

The debt covenants of the Series A Notes and the Series B Notes are substantially similar to those of the Company's senior unsecured revolving credit facility.

As of March 31, 2020 , the Company was in compliance with all such debt covenants.

As of June 30, 2020, the Company was in compliance with all such debt covenants.

Interest Expense

The components of the Company's interest expense consisted of the following (in thousands):

For the three months ended March 31,

For the three months ended June 30, For the six months ended June 30,

2020 2019 2020 2019

Unsecured revolving credit facilities $ 3,364 $ 624 $ 5,669 $ 2,024

3 unchanged sentences

Amortization of deferred financing fees 1,190 2,413 2,380 3,901

Other 1,855 2,508 3,601 5,259

Total interest expense $ 24,091 $ 28,719 $ 47,682 $ 58,047

The Company estimates the fair value of its fixed rate debt by discounting the future cash flows of each instrument at estimated market rates, taking into consideration general market conditions and maturity of the debt with similar credit terms and is classified within Level 2 of the fair value hierarchy.

The estimated fair value of the Company’s fixed rate debt (unsecured senior notes and mortgage loans) as of March 31, 2020 and December 31, 2019 was $ 106.2 million and $ 101.2 million , respectively.

The estimated fair value of the Company’s fixed rate debt (unsecured senior notes and mortgage loans) as of June 30, 2020 and December 31, 2019 was $ 106.9 million and $ 101.2 million, respectively.

Derivative and Hedging Activities

2 unchanged sentences

All unrealized gains and losses on these hedging instruments are reported in accumulated other comprehensive income (loss) and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.

The Company's interest rate swaps at March 31, 2020 and December 31, 2019 consisted of the following (dollars in thousands):

The Company's interest rate swaps at June 30, 2020 and December 31, 2019 consisted of the following (dollars in thousands):

Notional Value as of

Interest Rate

March 31, 2020

December 31, 2019

Swap - cash flow

December 2020

Swap - cash flow

December 2020

Swap - cash flow

November 2023

Swap - cash flow

November 2023

Swap - cash flow

November 2023

Swap - cash flow

November 2023

Swap - cash flow

Hedge Type Interest Rate Maturity June 30, 2020 December 31, 2019

Swap - cash flow 1.63 % January 2020 $ — $ 50,000

Swap - cash flow 1.63 % January 2020 — 50,000

Swap - cash flow 2.46 % January 2020 — 50,000

Swap - cash flow 1.66 % January 2020 — 50,000

Swap - cash flow 2.12 % December 2020 100,000 100,000

Swap - cash flow 1.74 % January 2021 75,000 75,000

Swap - cash flow 1.75 % January 2021 50,000 50,000

Swap - cash flow 1.53 % January 2021 37,500 37,500

Swap - cash flow 1.46 % (1) January 2021 100,000 100,000

Swap - cash flow 1.47 % (1) January 2021 47,500 47,500

Swap - cash flow 2.60 % October 2021 55,000 55,000

Swap - cash flow 1.78 % (1) January 2022 100,000 100,000

Swap - cash flow 1.78 % (1) January 2022 50,000 50,000

Swap - cash flow 1.79 % (1) January 2022 30,000 30,000

Swap - cash flow 1.68 % April 2022 25,000 25,000

Swap - cash flow 1.64 % April 2022 25,000 25,000

Swap - cash flow 1.99 % November 2023 85,000 85,000

Swap - cash flow 1.99 % November 2023 50,000 50,000

Swap - cash flow 1.99 % November 2023 30,000 30,000

Swap - cash flow 2.60 % January 2024 75,000 —

Swap - cash flow 2.60 % January 2024 50,000 —

Swap - cash flow 2.60 % January 2024 25,000 —

Swap - cash flow 2.60 % January 2024 75,000 —

Total $ 1,630,000 $ 1,630,000

________________________

(1) Swaps assumed in connection with the merger with LaSalle Hotel Properties on November 30, 2018.

In addition, as of March 31, 2020 and December 31, 2019 , the Company had interest rates swaps for aggregate notional amounts of $ 290.0 million and $ 590.0 million , respectively, which will become effective in the future as current swaps mature.

In addition, as of June 30, 2020 and December 31, 2019, the Company had interest rates swaps for aggregate notional amounts of $ 290.0 million and $ 590.0 million, respectively, which will become effective in the future as current swaps mature.

The Company records all derivative instruments at fair value in the accompanying consolidated balance sheets.

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The Company believes it minimizes the credit risk by transacting with major creditworthy financial institutions.

As of March 31, 2020 , the Company's derivative instruments were in liability positions, with aggregate liability fair values of $ 72.7 million in the accompanying consolidated balance sheets.

For the three months ended March 31, 2020 and 2019 , there was $( 54.3 ) million and $( 9.0 ) million in unrealized (loss) gain, respectively, recorded in accumulated other comprehensive income (loss).

For the three months ended March 31, 2020 and 2019 , the Company reclassified $ 1.8 million and $( 2.5 ) million , respectively, from accumulated other comprehensive income (loss) to interest expense.

As of June 30, 2020, the Company's derivative instruments were in liability positions, with aggregate liability fair values of $ 74.5 million which are included in accounts payable, accrued expenses and other liabilities in the accompanying consolidated balance sheets.

For the three and six months ended June 30, 2020, there was $( 0.4 ) million and $( 54.7 ) million in unrealized (loss) gain, respectively, recorded in accumulated other comprehensive income (loss).

For the three and six months ended June 30, 2019, there was $( 21.1 ) million and $( 30.1 ) million in unrealized (loss) gain, respectively, recorded in accumulated other comprehensive income (loss).

For the three and six months ended June 30, 2020, the Company reclassified $ 6.2 million and $ 8.0 million, respectively, from accumulated other comprehensive income (loss) to interest expense.

For the three and six months ended June 30, 2019, the Company reclassified $( 2.3 ) million and $( 4.8 ) million, respectively, from accumulated other comprehensive income (loss) to interest expense.

The Company expects approximately $ 30.3 million will be reclassified from accumulated other comprehensive income (loss) to interest expense in the next 12 months.

The Company presents revenue on a disaggregated basis in the accompanying consolidated statements of operations and comprehensive income.

The following table presents revenues by geographic location for the three months ended March 31, 2020 and 2019 (in thousands):

For the three months ended March 31,

The following table presents revenues by geographic location for the three and six months ended June 30, 2020 and 2019 (in thousands):

For the three months ended June 30, For the six months ended June 30,

2020 2019 2020 2019

San Francisco, CA $ 2,963 $ 79,853 $ 63,003 $ 163,096

San Diego, CA 5,815 62,851 47,494 120,139

Southern FL 6,744 29,501 41,935 69,031

Boston, MA 1,965 81,842 37,907 129,374

Los Angeles, CA 1,501 54,682 36,289 102,046

Other(1) 389 35,496 20,700 63,337

Portland, OR 1,086 28,585 16,734 47,288

Chicago, IL 2,000 25,324 12,273 36,423

Washington, D.C.

94 35,828 11,003 63,756

Seattle, WA 35 8,121 4,361 14,762

$ 22,592 $ 442,083 $ 291,699 $ 809,252

(1) Other includes:

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Payments from customers are primarily made when services are provided.

Due to the short-term nature of the Company's contracts and the almost simultaneous receipt of payment, almost all of the contract liability balance at the beginning of the year is expected to be recognized as revenue over the following 12 months.

Due to the short-term nature of the Company's contracts and the almost simultaneous receipt of payment, almost all of the contract liability balance at the beginning of the period is expected to be recognized as revenue over the following 12 months.

Common Shares

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Upon repurchase by the Company, common shares cease to be outstanding and become authorized but unissued common shares.

For the three months ended March 31, 2020 , the Company had no repurchases under this program and as of March 31, 2020 , $ 56.6 million of common shares remained available for repurchase under this program.

For the six months ended June 30, 2020, the Company had no repurchases under this program and as of June 30, 2020, $ 56.6 million of common shares remained available for repurchase under this program.

On July 27, 2017, the Company announced that the Board of Trustees authorized a new share repurchase program of up to $ 100.0 million of the Company's outstanding common shares.

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Common Dividends

The Company declared the following dividends on common shares/units for the three months ended March 31, 2020 :

For the Quarter

March 31, 2020

April 15, 2020

The Company declared the following dividends on common shares/units for the six months ended June 30, 2020:

Share/Unit For the Quarter

Ended Record Date Payable Date

$ 0.01 March 31, 2020 March 31, 2020 April 15, 2020

$ 0.01 June 30, 2020 June 30, 2020 July 15, 2020

Preferred Shares

The Company is authorized to issue up to 100,000,000 preferred shares of beneficial interest, $ 0.01 par value per share (“preferred shares”).

The following Preferred Shares were outstanding as of March 31, 2020 and December 31, 2019 :

As of March 31,

As of December 31,

The following Preferred Shares were outstanding as of June 30, 2020 and December 31, 2019:

As of June 30, As of December 31,

Security Type 2020 2019

6.50 % Series C

5,000,000 5,000,000

6.375 % Series D

5,000,000 5,000,000

6.375 % Series E

4,400,000 4,400,000

6.30 % Series F

6,000,000 6,000,000

20,400,000 20,400,000

The Series C Preferred Shares, Series D Preferred Shares, Series E Preferred Shares and Series F Preferred Shares (collectively, the “Preferred Shares”) rank senior to the common shares and on parity with each other with respect to payment of distributions.

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Preferred Dividends

The Company declared the following dividends on preferred shares for the three months ended March 31, 2020 :

Security Type

For the Quarter

The Company declared the following dividends on preferred shares for the six months ended June 30, 2020:

Security Type Dividend per

Share/Unit For the Quarter

Ended Record Date Payable Date

6.50 % Series C

March 31, 2020

April 15, 2020

$ 0.41 March 31, 2020 March 31, 2020 April 15, 2020

6.50 % Series C

$ 0.41 June 30, 2020 June 30, 2020 July 15, 2020

6.375 % Series D

March 31, 2020

April 15, 2020

$ 0.40 March 31, 2020 March 31, 2020 April 15, 2020

6.375 % Series D

$ 0.40 June 30, 2020 June 30, 2020 July 15, 2020

6.375 % Series E

March 31, 2020

April 15, 2020

$ 0.40 March 31, 2020 March 31, 2020 April 15, 2020

6.375 % Series E

$ 0.40 June 30, 2020 June 30, 2020 July 15, 2020

6.30 % Series F

March 31, 2020

April 15, 2020

$ 0.39 March 31, 2020 March 31, 2020 April 15, 2020

6.30 % Series F

$ 0.39 June 30, 2020 June 30, 2020 July 15, 2020

Non-controlling Interest of Common Units in Operating Partnership

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The number of shares issuable upon exercise of the redemption rights will be adjusted upon the occurrence of share splits, mergers, consolidations or similar pro-rata share transactions, which otherwise would have the effect of diluting the ownership interests of the Operating Partnership's limited partners or the Company's shareholders.

As of March 31, 2020 , the Operating Partnership had two classes of long-term incentive partnership units ("LTIP") units, LTIP Class A units and LTIP Class B units.

As of June 30, 2020, the Operating Partnership had two classes of long-term incentive partnership units ("LTIP") units, LTIP Class A units and LTIP Class B units.

All of the outstanding LTIP units are held by officers of the Company.

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In March 2020, the Company cancelled this grant and as a result accelerated and recognized the full expense of $ 10.5 million.

As of March 31, 2020 and December 31, 2019 , the Operating Partnership had 236,351 LTIP units outstanding.

As of March 31, 2020 , all of such LTIP units outstanding have vested.

As of June 30, 2020 and December 31, 2019, the Operating Partnership had 236,351 LTIP units outstanding.

As of June 30, 2020, all of such LTIP units outstanding have vested.

Vested LTIP units may be converted to common units of the Operating Partnership, which in turn can be redeemed for common shares or cash as described above.

On November 30, 2018, in connection with the merger with LaSalle Hotel Properties ("LaSalle"), the Company issued 133,605 OP units in the Operating Partnership to third-party limited partners of LaSalle's operating partnership.

As of March 31, 2020 and December 31, 2019 , the Operating Partnership had 133,605 and 133,605 OP units held by third parties, respectively, excluding LTIP units.

As of June 30, 2020 and December 31, 2019, the Operating Partnership had 133,605 OP units held by third parties, excluding LTIP units.

Share-Based Compensation Plan

4 unchanged sentences

All share awards are subject to full or partial accelerated vesting upon a change in control and upon death or disability or certain other employment termination events as set forth in the award agreements.

As of March 31, 2020 , there were 883,725 common shares available for issuance under the Plan, assuming performance-based equity awards vest at target.

As of June 30, 2020, there were 883,725 common shares available for issuance under the Plan, assuming performance-based equity awards vest at target.

Service Condition Share Awards

1 unchanged sentence

These shares generally vest over three to five years based on continued service or employment.

The following table provides a summary of service condition restricted share activity as of March 31, 2020 :

Weighted-Average

The following table provides a summary of service condition restricted share activity as of June 30, 2020:

Shares Weighted-Average

Unvested at December 31, 2019 149,179 $ 33.37

Unvested at March 31, 2020

Granted 332,920 $ 25.53

Vested ( 72,824 ) $ 33.13

Cancelled ( 217,083 ) $ 25.53

Unvested at June 30, 2020 192,192 $ 28.73

The fair value of each of these service condition restricted share awards is determined based on the closing price of the Company’s common shares on the grant date and compensation expense is recognized on a straight-line basis over the vesting period.

In March 2020, the Company cancelled the February 2020 retention grant and as a result accelerated and recognized an

expense of $ 5.5 million .

For the three months ended March 31, 2020 and 2019 , the Company recognized approximately $ 6.1 million and $ 0.5 million respectively, of share-based compensation expense related to these service condition restricted shares in the accompanying consolidated statements of operations and comprehensive income.

As of March 31, 2020 , there was $ 5.1 million of total unrecognized share-based compensation expense related to unvested restricted shares.

In March 2020, the Company cancelled the February 2020 retention grant and as a result accelerated and recognized an expense of $ 5.5 million.

For the three and six months ended June 30, 2020, the Company recognized approximately $ 0.7 million and $ 6.8 million, respectively, of share-based compensation expense related to these service condition restricted shares in the accompanying consolidated statements of operations and comprehensive income.

For the three and six months ended June 30, 2019, the Company recognized approximately $ 0.6 million and $ 1.1 million respectively, of share-based compensation expense related to these service condition restricted shares in the accompanying consolidated statements of operations and comprehensive income.

As of June 30, 2020, there was $ 4.4 million of total unrecognized share-based compensation expense related to unvested restricted shares.

The unrecognized share-based compensation expense is expected to be recognized over the weighted-average remaining vesting period of 2.0 years.

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These awards will vest, if at all, in 2023.

The actual number of common shares that ultimately vest will be from 0 % to 200 % of the target award and will be determined in 2023 based on the performance criteria defined in the award agreements for the period of performance from January 1, 2020 through December 31, 2022.

The actual number of common shares that

ultimately vest will be from 0 % to 200 % of the target award and will be determined in 2023 based on the performance criteria defined in the award agreements for the period of performance from January 1, 2020 through December 31, 2022.

The grant date fair value of the performance awards, with market conditions, were determined using a Monte Carlo simulation method with the following assumptions:

Performance Award Grant Date

Percentage of Total Award

Grant Date Fair Value by Component ($ in millions)

Interest Rate

Dividend Yield

Performance Award Grant Date Percentage of Total Award Grant Date Fair Value by Component ($ in millions) Volatility Interest Rate Dividend Yield

December 13, 2013

Relative Total Shareholder Return 50.00 % $ 4.7 29.00 % 0.34 % - 2.25 %

0.34% - 2.25%

Absolute Total Shareholder Return 50.00 % $ 2.9 29.00 % 0.34 % - 2.25 %

0.34% - 2.25%

February 11, 2015

23 unchanged sentences

In the table above, the Relative Total Shareholder Return and Absolute Total Shareholder Return components are market conditions as defined by ASC 718.

The EBITDA Comparison component is a performance condition as defined by ASC 718, and, therefore, compensation expense related to this component will be reassessed at each reporting date based on the Company's estimate of the probable level of achievement, and the accrual of compensation expense will be adjusted as appropriate.

The EBITDA Comparison component is a performance condition as defined by ASC 718, and, therefore, compensation expense related to this component will be reassessed at each reporting date based on the

Company's estimate of the probable level of achievement, and the accrual of compensation expense will be adjusted as appropriate.

Dividends on unvested performance-based equity awards accrue over the vesting period and will be paid on the actual number of shares that vest at the end of the applicable period.

The Company recognizes compensation expense on a straight-

line basis through the vesting date.

As of March 31, 2020 , there was approximately $ 8.3 million of unrecognized compensation expense related to these performance-based equity awards which will be recognized over the weighted-average remaining vesting period of 2.2 years .

For the three months ended March 31, 2020 and 2019 , the Company recognized $ 0.9 million and $ 1.1 million , respectively, in expense related to these awards.

The Company recognizes compensation expense on a straight-line basis through the vesting date.

As of June 30, 2020, there was approximately $ 7.1 million of unrecognized compensation expense related to these performance-based equity awards which will be recognized over the weighted-average remaining vesting period of 2.0 years.

For the three and six months ended June 30, 2020, the Company recognized $ 1.1 million and $ 2.0 million, respectively, in expense related to these awards.

For the three and six months ended June 30, 2019, the Company recognized $ 1.2 million and $ 2.3 million, respectively, in expense related to these awards.

Long-Term Incentive Partnership Units

3 unchanged sentences

Vested LTIP units may be converted by the holder, at any time, into an equal number of common Operating Partnership units and thereafter will possess all of the rights and interests of a common Operating Partnership unit, including the right to redeem the common Operating Partnership unit for a common share in the Company or cash, at the option of the Operating Partnership.

As of March 31, 2020 , the Operating Partnership had two classes of LTIP units, LTIP Class A units and LTIP Class B units.

As of June 30, 2020, the Operating Partnership had two classes of LTIP units, LTIP Class A units and LTIP Class B units.

All of the outstanding LTIP units are held by officers of the Company.

6 unchanged sentences

In March 2020, the Company cancelled this grant and as a result accelerated and recognized the full expense of $ 10.5 million.

As of March 31, 2020 , the Company had 236,351 LTIP units outstanding.

As of March 31, 2020 , all of such LTIP units outstanding have vested.

For the three months ended March 31, 2020 and 2019 , the Company recognized $ 10.6 million and $ 0.3 million , respectively, in expense related to these LTIP units.

As of March 31, 2020 , there was no unrecognized share-based compensation expense related to LTIP units.

As of June 30, 2020, the Company had 236,351 LTIP units outstanding.

As of June 30, 2020, all of such LTIP units outstanding have vested.

For the three and six months ended June 30, 2020, the Company recognized zero and $ 10.6 million, respectively, in expense related to these LTIP units.

For the three and six months ended June 30, 2019, the Company recognized $ 0.3 million and $ 0.6 million, respectively, in expense related to these LTIP units.

As of June 30, 2020, there was no unrecognized share-based compensation expense related to LTIP units.

The aggregate expense related to the LTIP unit grants is presented as non-controlling interest in the Company’s accompanying consolidated balance sheets.

The Company's TRSs, PHL and LHL, are subject to federal and state corporate income taxes at statutory tax rates.

The Company has estimated its TRSs' income tax expense (benefit) for the three months ended March 31, 2020 using an estimated combined federal and state effective tax rate of 26.0 % .

PHL is subject to federal and state corporate income taxes at statutory tax rates.

The Company has estimated its income tax expense (benefit) of PHL for the six months ended June 30, 2020 using an estimated combined federal and state blended tax rate of 26.0 %.

The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates.

In the normal course of business, the Company is subject to examination by federal, state and local jurisdictions, where applicable.

As of March 31, 2020 and December 31, 2019 , the statute of limitations remains open for all major jurisdictions for tax years dating back to 2015.

As of June 30, 2020 and December 31, 2019, the statute of limitations remains open for all major jurisdictions for tax years dating back to 2015.

Earnings Per Share

The following is a reconciliation of basic and diluted earnings per common share (in thousands, except share and per-share data):

For the three months ended March 31,

For the three months ended June 30, For the six months ended June 30,

2020 2019 2020 2019

Net income (loss) attributable to common shareholders $ ( 138,652 ) $ 52,234 $ ( 104,842 ) $ 49,730

7 unchanged sentences

Net income (loss) per share available to common shareholders — diluted $ ( 1.06 ) $ 0.40 $ ( 0.80 ) $ 0.38

For the three months ended March 31, 2020 and 2019 , 203,152 and 179,476 , respectively, of unvested service condition restricted shares and performance-based equity awards were excluded from diluted weighted-average common shares, as their effect would have been anti-dilutive.

For the three and six months ended June 30, 2020, 558,769 of unvested service condition restricted shares and performance-based equity awards were excluded from diluted weighted-average common shares, as their effect would have been anti-dilutive.

For the three and six months ended June 30, 2019, 163,100 and 37,137 , respectively, of unvested service condition restricted shares and performance-based equity awards were excluded from diluted weighted-average common shares, as their effect would have been anti-dilutive.

The LTIP and OP units held by the non-controlling interest holders have been excluded from the denominator of the diluted earnings per share as there would be no effect on the amounts since the limited partners' share of income (loss) would also be added or subtracted to derive net income (loss) available to common shareholders.

10 unchanged sentences

The incentive management fee is generally calculated as a percentage of hotel operating income after the Company has received a priority return on its investment in the hotel.

For the three months ended March 31, 2020 and 2019 , com bined base and incentive management fees were $ 6.9 million and $ 9.5 million , respectively.

For the three and six months ended June 30, 2020, com bined base and incentive management fees were $( 0.4 ) million and $ 6.5 million, respectively.

For the three and six months ended June 30, 2019, com bined base and incentive management fees were $ 13.3 million and $ 22.8 million, respectively.

Base and incentive management fees are included in other direct and indirect expenses in the Company's accompanying consolidated statements of operations and comprehensive income.

2 unchanged sentences

Restricted Cash

At March 31, 2020 and December 31, 2019 , the Company had $ 19.4 million and $ 26.8 million , respectively, in restricted cash, which consisted of reserves for replacement of furniture and fixtures or reserves to pay for real estate taxes or property insurance under certain hotel management agreements or loan agreements.

At June 30, 2020 and December 31, 2019, the Company had $ 13.0 million and $ 26.8 million, respectively, in restricted cash, which consisted of reserves for replacement of furniture and fixtures or reserves to pay for real estate taxes or property insurance under certain hotel management agreements or loan agreements.

Ground and Hotel Leases

As of March 31, 2020 , the following hotels were subject to leases as follows:

Lease Properties

Lease Expiration Date

Hotel Monaco Washington DC

Operating lease

November 2059

Argonaut Hotel

Operating lease

December 2059

Hotel Zelos San Francisco

Operating lease

Hotel Zephyr Fisherman's Wharf

Operating lease

February 2062

Hotel Palomar Los Angeles Beverly Hills

Operating lease

Union Station Hotel Nashville, Autograph Collection

Operating lease

December 2105

Southernmost Beach Resort

Operating lease

Hyatt Regency Boston Harbor

Operating lease

San Diego Mission Bay Resort

Operating lease

Paradise Point Resort & Spa

Operating lease

Viceroy Santa Monica Hotel

Operating lease

September 2065

The Westin Copley Place, Boston

Operating lease

December 2077

The Liberty, A Luxury Collection Hotel, Boston

Operating lease

Hotel Zeppelin San Francisco

Operating and capital lease

Harbor Court Hotel San Francisco

Capital lease

The Roger New York

Capital lease

December 2044

As of June 30, 2020, the following hotels were subject to leases as follows:

Lease Properties Lease Type Lease Expiration Date

Hotel Monaco Washington DC Operating lease November 2059

Argonaut Hotel Operating lease December 2059

Hotel Zelos San Francisco Operating lease June 2097

Hotel Zephyr Fisherman's Wharf Operating lease February 2062

Hotel Palomar Los Angeles Beverly Hills Operating lease January 2107 (1)

Union Station Hotel Nashville, Autograph Collection Operating lease December 2105

Southernmost Beach Resort Operating lease April 2029

Hyatt Regency Boston Harbor Operating lease April 2077

San Diego Mission Bay Resort Operating lease July 2068

Paradise Point Resort & Spa Operating lease May 2050

Hotel Vitale Operating lease March 2056 (2)

Viceroy Santa Monica Hotel Operating lease September 2065

The Westin Copley Place, Boston Operating lease December 2077 (3)

The Liberty, A Luxury Collection Hotel, Boston Operating lease May 2080

Hotel Zeppelin San Francisco Operating and capital lease June 2059 (4)

Harbor Court Hotel San Francisco Capital lease August 2052

The Roger New York Capital lease December 2044

(1) The expiration date assumes the exercise of all 19 five-year extension options.

6 unchanged sentences

The Company records expense on a straight-line basis for leases that provide for minimum rental payments that increase in pre-established amounts over the remaining terms of the leases.

For the three months ended March 31, 2020 and 2019 , ground rent expense was $ 6.3 million and $ 7.6 million , respectively.

For the three months ended March 31, 2020 , fixed ground rent expense was $ 4.3 million and variable ground rent expense was $ 2.0 million .

For the three months ended March 31, 2019 , fixed ground rent expense was $ 4.3 million and variable ground rent expense was $ 3.3 million .

Ground rent expense is included in real estate taxes, personal property taxes, property insurance and ground rent in the Company's accompanying consolidated statements of operations and comprehensive income.

The components of ground rent expense for the three and six months ended June 30, 2020 and 2019 are as follows (in thousands):

For the three months ended June 30, For the six months ended June 30,

2020 2019 2020 2019

Fixed ground rent $ 4,304 $ 4,255 $ 8,593 $ 8,524

Variable ground rent 696 3,531 2,744 6,883

Total ground lease rent $ 5,000 $ 7,786 $ 11,337 $ 15,407

In January 2019, the Company acquired the ground lease underlying the land of the Solamar Hotel for $ 6.9 million.

3 unchanged sentences

Supplemental Information to Statements of Cash Flows

For the three months ended March 31,

For the six months ended June 30,

(in thousands)

1 unchanged sentence

Interest capitalized $ 1,247 $ —

Income taxes paid (refunded)

Income taxes paid $ 865 $ 1,461

Non-Cash Investing and Financing Activities:

5 unchanged sentences

Purchase of ground lease $ — $ 16,444

Write-off of deferred financing financing costs $ — $ 1,281

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements