What changed in this filing

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Item 1. Business

2022-02-22 compared with 2021-02-23 · 54 added, 36 removed, 100 unchanged (47% of the section changed)

Pebblebrook Hotel Trust is an internally managed hotel investment company, organized in October 2009 to opportunistically acquire and invest in hotel properties located primarily in major U.S.

Pebblebrook Hotel Trust is an internally managed hotel investment company, formed as a Maryland real estate investment trust in October 2009 to opportunistically acquire and invest in hotel properties located primarily in major U.S.

cities, with an emphasis on the major gateway coastal markets.

As of December 31, 2021, the Company owned 53 hotels with a total of 13,247 guest rooms.

Substantially all of the Company’s assets are held by, and all of the operations are conducted through, Pebblebrook Hotel, L.P.

Substantially all of the Company’s assets are held by, and all of the Company's operations are conducted through, Pebblebrook Hotel, L.P.

(our “Operating Partnership”).

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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.

(collectively with its subsidiaries, “PHL”), which in turn engage third-party eligible independent contractors to manage the hotels.

Therefore, the Operating Partnership and its subsidiaries lease the hotel properties to subsidiaries of Pebblebrook Hotel Lessee, Inc.

(collectively with its subsidiaries, "PHL"), our taxable REIT subsidiary ("TRS"), which in turn engage third-party eligible independent contractors to manage the hotels.

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.

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

As a result of this pandemic and subsequent government mandates, health official recommendations, corporate policy changes and individuals' responses, hotel demand dramatically declined.

Demand has since improved as a result of an increase in vaccinations and corresponding lifting of governmental restrictions and recommendations.

See further discussion in Item 7.

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

Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II of this Annual Report on Form 10-K.

Business Objectives and Strategies

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

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.

cities with an emphasis on major gateway coastal markets.

Our hotel properties are located in Boston, Massachusetts;

Chicago, Illinois;

Hollywood, Florida;

Jekyll Island, Georgia;

Key West, Florida;

Miami (Coral Gables), Florida;

Los Angeles, California (Beverly Hills, Santa Monica, and West Hollywood);

Naples, Florida;

Philadelphia, Pennsylvania;

Portland, Oregon;

San Diego, California;

San Francisco, California;

Santa Cruz, California;

Seattle, Washington;

Stevenson, Washington;

and Washington, D.C.

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

In addition, we also opportunistically target investments in resort properties located near our primary urban target markets, as well as in select destination resort markets such as south Florida and southern California.

In addition, we also opportunistically target investments in resort properties located near our primary urban target markets and select destination resort markets such as southern Florida and southern California.

We focus on both branded and independent full-service hotels in the “upper-upscale” segment of the lodging industry.

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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.

Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II of this Annual Report on Form 10-K, 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.

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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.

In addition, we believe that flexible management contracts facilitate the sale of hotels, and we may seek to sell hotels opportunistically if we believe sales proceeds may be used to repay debt or invested in other hotel properties that offer more attractive risk-adjusted returns.

In addition, we believe that flexible management contracts facilitate the sale of hotels, and we may seek to sell hotels opportunistically if we believe sales proceeds may be used to repay debt or invest in other hotel properties that offer more attractive risk-adjusted returns.

We may engage in full or partial redevelopment, renovation and repositioning of certain properties, as we seek to maximize the financial performance of our hotels.

In addition, we may acquire properties that require significant capital improvement, renovation or refurbishment.

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 also may acquire hotel and resort properties that we believe would benefit from significant redevelopment or expansion, including, for example, adding guest 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 the returns will be attractive or if we can foreclose on or acquire ownership of the property in the near-term.

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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.

In 2020, we and five industry-leading hotel operators jointly launched 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.

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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, 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.

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

We anticipate using net proceeds from equity and debt offerings and property sales 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.

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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.

Competition in the markets in which our hotels operate includes competition from existing, newly renovated and newly developed hotels in the relevant segments.

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.

Competition in our hotels' markets includes competition from existing, newly renovated and newly developed hotels in the relevant segments.

Competition can adversely affect our hotels' occupancy, ADR and room revenue per available room ("RevPAR"), and thus our financial results.

We may be required 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 customer mix at the hotels.

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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.

In 2021 revenue increased each quarter as hotels reopened and restrictions were eased.

We expect that our portfolio will return to more normal historical seasonality trends in 2022.

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

Under these laws, courts and government agencies have the authority to require us, as owner of a contaminated property, to clean up the property, even if we did not know of or were not responsible for the contamination.

Under these laws, courts and government agencies have the authority to require us, as an owner of a contaminated property, to clean up the property, even if we did not know of or were not responsible for the contamination.

These laws also apply to persons who owned a property at the time it became contaminated, and therefore it is possible we could incur these costs even after we sell a property.

In addition to the costs of cleanup, environmental contamination can affect the value of a property and, therefore, an owner's ability to borrow using the property as collateral or to sell the property.

Under the environmental laws, courts and government agencies also have the authority to require that a person who sent waste to a waste disposal facility, such as a landfill or an incinerator, pay for the clean-up of that facility if it becomes contaminated and threatens human health or the environment.

In addition to the cleanup costs, environmental contamination can affect the value of a property and, therefore, an owner's ability to borrow using the property as collateral or to sell the property.

Under environmental laws, courts and government agencies also have the authority to require that a person who sent waste to a waste disposal facility, such as a landfill or an incinerator, pay for the clean-up of that facility if it becomes contaminated and threatens human health or the environment.

Furthermore, various court decisions have established that third parties may recover damages for injury caused by property contamination.

For instance, a person exposed to asbestos while staying in a hotel may seek to recover damages if he or she suffers injury from the asbestos.

For instance, a person exposed to asbestos while staying in a hotel may seek to recover damages if they suffer injury from the asbestos.

Lastly, some of these environmental laws restrict the use of a property or place conditions on various activities.

An example would be laws that require a business using chemicals (such as swimming pool chemicals at a hotel property) to manage them carefully and to notify local officials that the chemicals are being used.

An example would be laws requiring a business using chemicals (such as swimming pool chemicals at a hotel property) to manage them carefully and notify local officials that the chemicals are being used.

We could be responsible for any of the costs discussed above.

The costs to clean up a contaminated property, to defend against a claim, or to comply with environmental laws could be material and could adversely affect the funds available for distribution to our shareholders.

Prior to closing a property acquisition, we obtain Phase I environmental site assessments, or ESAs, in order to attempt to identify potential environmental concerns at the properties.

These assessments are carried out in accordance with an appropriate level of due diligence and generally include a physical site inspection, a review of relevant federal, state and local environmental and health agency database records, one or more interviews with appropriate site-related personnel, review of the property's chain of title and review of historic aerial photographs and other information on past uses of the property.

Prior to closing a property acquisition, we obtain Phase I environmental site assessments ("ESAs"), in order to attempt to identify potential environmental concerns at the properties.

These assessments are carried out in accordance with an appropriate level of due diligence and generally include a physical site inspection, a review of relevant federal, state and local environmental and health agency database records, one or more interviews with appropriate site-related personnel, review of the property's chain of title and review of historical aerial photographs and other information on past uses of the property.

We may also conduct limited subsurface investigations and test for substances of concern where the results of the Phase I ESAs or other information indicates possible contamination or where our consultants recommend such procedures.

However, these Phase I ESAs or other investigations may not reveal all environmental costs that might have a material adverse effect on our business, assets, results of operations or liquidity and may not identify all potential environmental liabilities.

We believe that our hotels are in compliance, in all material respects, with all federal, state and local environmental ordinances and regulations regarding hazardous or toxic substances and other environmental matters, the violation of which could have a material adverse effect on us.

We believe that our hotels comply, in all material respects, with all federal, state and local environmental ordinances and regulations regarding hazardous or toxic substances and other environmental matters, the violation of which could have a material adverse effect on us.

We have not received written notice from any governmental authority of any material noncompliance, liability or claim relating to hazardous or toxic substances or other environmental matters in connection with any of our properties.

Our properties must comply with Title III of the Americans with Disabilities Act (the "ADA") to the extent that such properties are “public accommodations” as defined by the ADA.

The ADA may require removal of structural barriers to access

by persons with disabilities in certain public areas of our properties where such removal is readily achievable.

The ADA may require the removal of structural barriers to access by persons with disabilities in certain public areas of our properties where such removal is readily achievable.

We believe that our properties are in substantial compliance with the ADA and that we will not be required to make substantial capital expenditures to address the requirements of the ADA.

However, noncompliance with the ADA could result in litigation, retrofit costs and imposition of fines or an award of damages to private litigants.

Additionally, properties which we may acquire may not be in compliance with the requirements of the ADA, and we endeavor to identify such noncompliance prior to our acquisition.

The obligation to make readily achievable accommodations is an ongoing one, and we will continue to assess our properties and to make alterations as appropriate in this respect.

Additionally, properties that we may acquire may not comply with the requirements of the ADA, and we endeavor to identify such noncompliance prior to our acquisition.

The obligation to make readily achievable accommodations is an ongoing one, and we will continue to assess our properties and make alterations as appropriate in this respect.

We have elected to be taxed as a REIT under Sections 856 through 860 of the Code.

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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.

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.

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

Inclusion, representation and diversity matter to us.

We are 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.

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 are deeply committed to our community, through volunteering, donations, and sourcing locally, when available.

We currently employ 56 full-time employees.

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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