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Item 5. Market for Registrant’s Common Equity

2022-02-22 compared with 2021-02-23 · 10 added, 112 removed, 40 unchanged (75% of the section changed)

5 unchanged sentences

However, because the vast majority of our common shares are held by brokers and other institutions on behalf of shareholders, we believe that there are considerably more beneficial holders of our common shares than record holders.

The following graph provides a comparison of the cumulative total return on our common shares from December 31, 2015, to the NYSE closing price per share on December 31, 2020, with the cumulative total return on the Russell 2000 Index (the “Russell 2000 Index”) and the FTSE National Association of Real Estate Investment Trusts Equity REITs Index (the “FTSE NAREIT Equity Index”) for the same period.

Total return values were calculated assuming a $100 investment on December 31, 2015 with reinvestment of all dividends in (i) our common shares, (ii) the Russell 2000 Index and (iii) the FTSE NAREIT Equity Index.

The following graph provides a comparison of the cumulative total return on our common shares from December 31, 2016, to the NYSE closing price per share on December 31, 2021, with the cumulative total return on the Russell 2000 Index (the “Russell 2000”) and the FTSE Nareit Equity REITs Index (the “FTSE Nareit Equity REITs”) for the same period.

Total return values were calculated assuming a $100 investment on December 31, 2016 with reinvestment of all dividends in (i) our common shares, (ii) the Russell 2000 and (iii) the FTSE Nareit Equity REITs.

The total return values do not include any dividends declared, but not paid, during the period.

The actual returns shown on the graph above are as follows:

Name Value of Initial

Investment at

2015 Value of

Investment at

2016 Value of

Investment at

2017 Value of

Investment at

2018 Value of

Investment at

2019 Value of

Investment at

Value of Initial Investment at December 31,

Name 2016 2017 2018 2019 2020 2021

Pebblebrook Hotel Trust $ 100.00 $ 130.72 $ 103.92 $ 103.81 $ 73.02 $ 87.03

Russell 2000 Index $ 100.00 $ 121.28 $ 139.02 $ 123.69 $ 155.21 $ 186.15

FTSE NAREIT Equity Index $ 100.00 $ 108.87 $ 118.31 $ 113.50 $ 146.01 $ 138.60

Russell 2000 $ 100.00 $ 114.63 $ 101.99 $ 127.98 $ 153.49 $ 176.18

FTSE Nareit Equity REITs $ 100.00 $ 108.67 $ 104.25 $ 134.12 $ 127.31 $ 179.85

Distributions

Distributions to the extent of our current and accumulated earnings and profits for federal income tax purposes generally will be taxable to a shareholder as ordinary income.

Distributions in excess of current and accumulated earnings and profits generally will be treated as a nontaxable reduction of the shareholder's basis in such shareholder's shares, to the extent thereof, and thereafter as taxable capital gain.

Distributions that are treated as a reduction of the shareholder's basis in its shares will have the effect of increasing the amount of gain, or reducing the amount of loss, recognized upon the sale of the shareholder's shares.

Distributions in excess of current and accumulated earnings and profits generally will be treated as a nontaxable reduction of the shareholder's basis in their shares, to the extent thereof, and thereafter as a taxable capital gain.

Distributions that are treated as a reduction of the shareholder's basis in their shares will increase the amount of gain, or reduce the amount of loss, recognized upon the sale of their shares.

The declaration of distributions by our company is in the sole discretion of our board of trustees and depends on our actual cash flow, financial condition, capital expenditure requirements for our hotels, the annual distributions requirements under the REIT provisions of the Code and such other factors as our board of trustees deems relevant.

1 unchanged sentence

federal income tax purposes.

For income tax purposes, distributions paid per share were characterized as follows:

2020 2019 2018

Amount % Amount % Amount %

Common Shares:

Ordinary non-qualified income $ — — % $ 0.5609 30.03 % $ 1.2040 77.57 %

Qualified dividend — — % 0.0069 0.37 % 0.3482 22.43 %

Capital gain 0.0100 33.33 % 1.3000 69.60 % — — %

Return of capital 0.0200 66.67 % — — % — — %

Total $ 0.0300 100.00 % $ 1.8678 100.00 % $ 1.5522 100.00 %

Series C Preferred Shares:

Ordinary non-qualified income $ — — % $ 0.6100 30.03 % $ 1.2605 77.57 %

Qualified dividend — — % 0.0075 0.37 % 0.3645 22.43 %

Capital gain 0.4063 33.34 % 1.4138 69.60 % — — %

Return of capital 0.8125 66.66 % — — % — — %

Total $ 1.2188 100.00 % $ 2.0313 100.00 % $ 1.6250 100.00 %

Series D Preferred Shares:

Ordinary non-qualified income $ — — % $ 0.5982 30.03 % $ 1.2363 77.57 %

Qualified dividend — — % 0.0074 0.37 % 0.3575 22.43 %

Capital gain 0.3984 33.33 % 1.3866 69.60 % — — %

Return of capital 0.7969 66.67 % — — % — — %

Total $ 1.1953 100.00 % $ 1.9922 100.00 % $ 1.5938 100.00 %

Series E Preferred Shares:

Ordinary non-qualified income $ — — % $ 0.5982 30.03 % $ — — %

Qualified dividend — — % 0.0074 0.37 % — — %

Capital gain 0.3984 33.33 % 1.3866 69.60 % — — %

Return of capital 0.7969 66.67 % — — % — — %

Total $ 1.1953 100.00 % $ 1.9922 100.00 % $ — — %

Series F Preferred Shares:

Ordinary non-qualified income $ — — % $ 0.5912 30.03 % $ — — %

Qualified dividend — — % 0.0073 0.37 % — — %

Capital gain 0.3938 33.34 % 1.3703 69.60 % — — %

Return of capital 0.7875 66.66 % — — % — — %

Total $ 1.1813 100.00 % $ 1.9688 100.00 % $ — — %

(1) Issued upon completion of our merger with LaSalle on November 30, 2018.

Of the common distribution declared on December 15, 2017 and paid on January 12, 2018, $0.3800 was treated as a 2018 distribution for tax purposes.

The preferred share distributions declared on December 15, 2017 and paid on January 12, 2018, were treated as 2018 distributions for tax purposes.

Of the common distributions declared on November 19, 2018 and December 14, 2018 and both paid on January 15, 2019, $0.3478 was treated as a 2019 distribution for tax purposes.

The preferred share distributions declared on December 14, 2018 and paid on January 15, 2019, $0.4063 of Series C, $0.3984 of Series D, $0.3984 of Series E, and $0.3938 of Series F were treated as 2019 distributions for tax purposes.

Of the common distribution declared on December 16, 2019 and paid on January 15, 2020, $0.3800 was treated as a 2019 distribution for tax purposes.

The preferred share distributions declared on December 16, 2019 and paid on January 15, 2020 were treated as 2019 distributions for tax purposes.

Of the common distribution declared on December 15, 2020 and paid on January 15, 2021, $0.0100 will be treated as a 2021 distribution for tax purposes.

The preferred share distributions declared on December 15, 2020 and paid on January 15, 2021 will be treated as 2021 distributions for tax purposes.

Securities Authorized for Issuance Under Equity Compensation Plan

The following table sets forth information regarding securities authorized for issuance under our equity compensation plan, our 2009 Equity Incentive Plan, as amended and restated, as of December 31, 2021.

See Note 8 to the accompanying consolidated financial statements for additional information regarding our 2009 Equity Incentive Plan.

See Note 8, Share-Based Compensation Plan, to our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K for additional information regarding our 2009 Equity Incentive Plan.

Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans

18 unchanged sentences

As of December 31, 2021, $56.6 million of common shares remained available for repurchase under this program.

The credit agreements governing our existing indebtedness prohibit us from repurchasing common shares until we have certified compliance with certain financial covenants through June 30, 2022.

On July 27, 2017, we announced that our board of trustees authorized a new share repurchase program of up to $100.0 million of our outstanding common shares.

2 unchanged sentences

This $100.0 million share repurchase program will commence upon the completion of the $150.0 million share repurchase program.

Selected Financial Data.

The following table includes selected historical financial information which has been derived from the audited consolidated financial statements.

The following information should be read in conjunction with “Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations” and “Item 8.

Consolidated Financial Statements and Supplementary Data” and all of the financial statements and notes included elsewhere in this Annual Report on Form 10-K.

For the year ended December 31,

2020 2019 2018 2017 2016

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

Room $ 287,439 $ 1,103,947 $ 565,107 $ 532,288 $ 568,867

Food and beverage 95,892 370,584 199,089 182,737 191,857

Other operating 59,557 137,682 64,482 54,292 55,697

Total revenues 442,888 1,612,213 828,678 769,317 816,421

Hotel operating expenses:

Room 91,771 275,855 143,171 134,068 137,312

Food and beverage 77,698 260,278 136,845 123,213 126,957

Other direct and indirect 209,957 438,035 231,818 210,692 219,655

Total hotel operating expenses 379,426 974,168 511,834 467,973 483,924

Depreciation and amortization 224,560 234,880 108,475 102,290 102,439

Real estate taxes, personal property taxes, property insurance and ground rent 114,333 125,013 54,191 48,500 50,488

General and administrative 45,158 34,047 20,945 20,062 24,712

Transaction costs 10,544 8,679 75,049 71 193

Impairment loss 74,556 — — 1,049 12,148

(Gain) loss on sale of hotel properties (117,401) (2,819) 2,147 (14,877) (40,690)

(Gain) loss and other operating expenses 4,421 8,903 (10,935) 8,869 3,200

Total operating expenses 735,597 1,382,871 761,706 633,937 636,414

Operating income (loss) (292,709) 229,342 66,972 135,380 180,007

Interest expense (104,098) (108,474) (53,923) (37,299) (43,615)

Other 517 29 2,078 2,362 2,278

Equity in earnings (loss) of joint venture — — — — (64,842)

Income (loss) before income taxes (396,290) 120,897 15,127 100,443 73,828

Income tax (expense) benefit 3,697 (5,172) (1,742) (181) 134

Net income (loss) (392,593) 115,725 13,385 100,262 73,962

Net income (loss) attributable to non-controlling interests (864) 283 (8) 374 258

Net income (loss) attributable to the Company (391,729) 115,442 13,393 99,888 73,704

Distributions to preferred shareholders (32,556) (32,556) (17,466) (16,094) (19,662)

Issuance costs of redeemed preferred shares — — — — (7,090)

Net income (loss) attributable to common shareholders $ (424,285) $ 82,886 $ (4,073) $ 83,794 $ 46,952

Net income (loss) per share available to common shareholders, basic $ (3.25) $ 0.63 $ (0.06) $ 1.20 $ 0.65

Net income (loss) per share available to common shareholders, diluted $ (3.25) $ 0.63 $ (0.06) $ 1.19 $ 0.64

Weighted-average number of common shares, basic 130,610,015 130,471,670 74,286,307 69,591,973 71,901,499

Weighted-average number of common shares, diluted 130,610,015 130,718,306 74,286,307 69,984,837 72,373,242

As of December 31,

2020 2019 2018 2017 2016

(In thousands)

Balance Sheet Data:

Investment in hotel properties, net $ 5,882,022 $ 6,332,587 $ 6,534,193 $ 2,456,450 $ 2,672,654

Ground lease asset — — 199,745 29,037 29,627

Cash and cash equivalents 124,274 30,098 83,366 25,410 33,410

Total assets 6,076,366 6,498,555 6,978,348 2,590,868 2,809,259

Debt 2,280,471 2,229,220 2,746,898 885,237 996,251

Total shareholders' equity 3,257,337 3,621,208 3,759,835 1,498,901 1,605,684

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 5. Market for Registrant’s Common Equity