What changed in this filing

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Item 1. Business

2021-02-23 compared with 2020-02-20 · 44 added, 22 removed, 92 unchanged (42% of the section changed)

7 unchanged sentences

The remaining 0.2% of the common units are owned by the other limited partners of the Operating Partnership.

For the Company to qualify as a REIT under the Code, it cannot operate the hotels it owns.

For the Company to maintain its qualification as a REIT under the Code, it cannot operate the hotels it owns.

Therefore, the Operating Partnership and its subsidiaries lease the hotel properties to our taxable REIT subsidiary ("TRS") lessees, including subsidiaries of Pebblebrook Hotel Lessee, Inc.

1 unchanged sentence

PHL is consolidated into the Company’s financial statements.

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 was dramatically reduced.

See further discussion in Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations.

Business Objectives and Strategies

1 unchanged sentence

We invest in hotel properties located primarily within major U.S.

cities, including Atlanta, Boston, Chicago, Key West, Los Angeles, Miami, Nashville, Naples, New York, Philadelphia, Portland, Santa Monica, San Diego, San Francisco, Seattle and Washington, D.C., with an emphasis on major gateway urban markets.

cities, including Boston, Chicago, Key West, Los Angeles, Miami, Naples, New York, Philadelphia, Portland, Santa Monica, San Diego, San Francisco, Seattle and Washington, D.C., with an emphasis on major gateway urban markets.

We believe these markets have barriers-to-entry and provide diverse sources of meeting and room night demand generators.

12 unchanged sentences

• strong demand growth characteristics supported by favorable demographic indicators.

We believe that upper-upscale, full-service hotels and resorts and upscale, select-service hotels located in major U.S.

urban, convention and drive-to and destination resort markets are likely to generate the most favorable returns on investment in the lodging industry over the long-term.

However, short-term increases in supply above historical averages in certain markets may temporarily affect these long-term favorable returns.

Nationally, new hotel supply growth has increased from its historically low levels and is generally in-line with demand growth.

Industry occupancy levels are expected to remain flat over the near

Supply growth has increased in certain of our markets which has limited our hotels' ability to increase room rates.

Despite uncertainty related to international trade wars, international travel restrictions and political factors, economic fundamentals are stable and employment levels remain strong.

We believe that portfolio diversification will allow us to benefit from growth in various customer segments, including business transient, leisure transient and group and convention room-night demand, as well as mitigate the negative impact from increases in hotel room supply.

We believe that upper-upscale, full-service hotels and resorts and upscale, hotels located in major U.S.

urban, convention and drive-to and destination resort markets are likely to generate some of the most favorable risk-adjusted returns in the lodging industry over the long-term.

As discussed in Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations, the COVID-19 pandemic has materially disrupted hotel occupancy and daily rates, particularly in urban markets in which we have invested.

Despite the dramatic decline in demand, revenue and operating income as a result of COVID-19 as well as uncertainty related to international travel restrictions and political factors, we believe that successful vaccination distribution and effective therapeutics throughout the U.S.

and the world should gradually allow for a steady return to normalcy.

We believe that new hotel supply growth, following the delivery of current supply construction, will decline from the expected growth rate prior to the pandemic.

We generally seek to enter into flexible management contracts, when possible, with third-party hotel management companies for the operation of our hotels that provide us with the ability to replace operators and/or reposition properties, to the extent that we determine to do so and align our operators with our objective of maximizing our return on investment.

3 unchanged sentences

We also may acquire hotel and resort properties that we believe would benefit from significant redevelopment or expansion, including, for example, adding rooms, meeting facilities or other amenities.

We may consider acquiring outstanding debt secured by a hotel or resort property from lenders and investors if we believe we can foreclose on or acquire ownership of the property in the near-term.

In connection with our acquisitions, generally we do not intend to originate any debt financing or purchase any debt where we do not expect to gain ownership of the underlying property.

Additionally, we have co-invested, and may in the future co-invest, in hotels with third parties through partnerships, joint ventures or other entities, acquiring non-controlling interests in or sharing responsibility for a property, partnership, joint venture or other entity.

We may consider acquiring outstanding debt secured by a hotel or resort property from lenders and investors if we believe the returns will be attractive or if we can foreclose on or acquire ownership of the property in the near-term.

In connection with our acquisitions, generally we do not, but we may choose to opportunistically, originate or purchase any debt financing or preferred equity.

Additionally, we have co-invested, and may in the future co-invest, in hotels and debt with third parties through partnerships, joint ventures or other entities, acquiring non-controlling interests in or sharing responsibility for a property, partnership, joint venture or other entity.

Asset Management

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We work closely with our hotel operators to evaluate optimal market mix and pricing strategies, ensure quality staffing and appropriate management focus, implement best practices to minimize expenses and aggressively monitor and evaluate our hotels' operations and performance.

In 2020, we and six industry-leading hotel operators jointly announced the launch of Curator Hotel & Resort Collection, a collection of small brands and independent lifestyle hotels and resorts worldwide.

Curator's distinct owner-centric platform offers an alternative for independent lifestyle hotels seeking to strengthen their performance, providing its members with best-in-class agreements, services and technology, while allowing members to retain their unique identities.

We own a majority of the equity interests in Curator, which is consolidated in our consolidated financial statements.

Financing Strategies

Over time, we intend to finance our long-term growth with issuances of common and preferred equity securities and debt financings having staggered maturities.

Our debt includes senior unsecured credit facilities, term loans, unsecured notes, mortgage debt secured by our hotel properties or our leasehold interests on our hotel properties subject to ground leases and may include other unsecured debt in the future.

We anticipate using our senior unsecured revolving credit facilities, term loans, senior unsecured notes, common and preferred equity issuances, and mortgage debt financings to fund future acquisitions as well as for property redevelopments, return on investment initiatives and working capital requirements.

Our debt includes senior unsecured credit facilities, term loans, convertible debt and unsecured notes, and may in the future include mortgage debt secured by our hotel properties or other unsecured debt.

We anticipate using proceeds from our senior unsecured revolving credit facilities, term loans, convertible debt, senior unsecured notes, common and preferred equity issuances, and any mortgage debt financings to fund future acquisitions as well as for property redevelopments, return on investment initiatives and working capital requirements.

Subject to market conditions, we intend to repay amounts outstanding under our senior unsecured revolving credit facilities from time to time with proceeds from periodic common and preferred equity issuances, long-term debt financings, cash flows from operations and opportunistic or strategic dispositions.

5 unchanged sentences

The hotel industry is highly competitive.

Our hotels compete with other hotels, and alternative lodging marketplaces, for guests in our markets.

Our hotels compete with other hotels and alternative lodging, for guests in our markets.

Competitive factors include, among others, location, convenience, brand affiliation, room rates, range of services, facilities and guest amenities or accommodations offered and quality of guest service.

1 unchanged sentence

Competition can adversely affect the occupancy, ADR and room revenue per available room ("RevPAR") of our hotels, and thus our financial results, and may require us to provide additional amenities, incur additional costs or make capital improvements that we otherwise might not choose to make, which may adversely affect our profitability.

Demand in the lodging industry is affected by recurring seasonal patterns which are greatly influenced by overall economic cycles, geographic locations, weather and the customer mix at the hotels.

Generally, our hotels have lower revenue, operating income and cash flow in the first quarter and higher revenue, operating income and cash flow in the third quarter.

Demand in the lodging industry is affected by recurring seasonal patterns which are greatly influenced by overall economic cycles, geographic locations, weather and customer mix at the hotels.

Generally, our hotels have lower revenue, operating income and cash flow in the first quarter of each year and higher revenue, operating income and cash flow in the third quarter of each year.

The historical trend has been disrupted as a result of COVID-19.

For the year ended December 31, 2020, the first quarter of the year had higher revenue, operating income and cash flow as hotel demand declined substantially as a result of COVID-19 and the Company began to suspend hotel operations beginning in March 2020.

Our hotel properties are subject to various federal, state and local environmental laws.

25 unchanged sentences

A REIT is subject to numerous organizational and operational requirements, including requirements concerning the nature of our gross income and assets and specifying that we must distribute at least 90 percent of our REIT taxable income (determined without regard to the deduction for dividends paid and excluding net capital gains) each year.

We will be subject to federal income tax on our taxable income at regular corporate rates if we fail to qualify as a REIT for federal income tax purposes in any taxable year, or to the extent we distribute less than 100 percent of our REIT taxable income.

We will also not be permitted to qualify for treatment as a REIT for federal income tax purposes for four years following the year during which qualification is lost.

Even if we continue to qualify as a REIT for federal income tax purposes, we will be subject to certain state and local income, franchise and property taxes.

For us to qualify as a REIT under the Code, we cannot operate the hotels we own and acquire.

We will be subject to U.S.

federal income tax on our taxable income at regular corporate rates if we fail to qualify as a REIT for U.S.

federal income tax purposes in any taxable year, or to the extent we distribute less than 100 percent of our REIT taxable income.

We will also not be permitted to qualify for treatment as a REIT for U.S.

federal income tax purposes for four years following the year during which qualification is lost.

Even if we continue to qualify as a REIT for U.S.

federal income tax purposes, we will be subject to certain state and local income, franchise and property taxes.

For us to maintain our qualification as a REIT under the Code, we cannot operate the hotels we own and acquire.

Therefore, our Operating Partnership and its subsidiaries lease our hotel properties to our TRS lessees who in turn engage third-party eligible independent contractors to manage our hotels.

4 unchanged sentences

The 0.01% interest of the third-party partner is included in non-controlling interests in the consolidated balance sheets.

Human Capital

Our human capital management objectives are to attract, recruit, hire, develop and promote a highly talented, diverse workforce.

We maintain strong corporate governance standards.

We offer competitive compensation and benefits programs designed to create and maintain shareholder value and to not encourage excessive risk-taking.

Inclusion, representation and diversity matter to Pebblebrook.

Pebblebrook is committed to creating and maintaining a work environment of respect for all human beings regardless of race, gender identity, sexual orientation, accessibility needs, religion, political orientation, veteran status, and culture.

Creating a healthy environment for our employees is a top priority at Pebblebrook.

We provide employees with standing desks, ergonomic desk chairs, a desk wellness series, and complimentary fitness center memberships.

Pebblebrook is deeply committed to its community, through volunteering, donations, and sourcing locally, when available.

We currently employ 53 full-time employees.

6 unchanged sentences

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-K

Item 1. Business