Pebblebrook Hotel Trust 10-K

Item 9A. Controls and Procedures. Disclosure Controls and Procedures Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) under the Exchange Act as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, these disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure. Management's Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Under the supervision and with the participation of our management, including our principal executive officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the original framework in Internal Control - Integrated Framework issued in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control - Integrated Framework , our management concluded that our internal control over financial reporting was effective as of December 31, 2021. We acquired Jekyll Island Club Resort on July 22, 2021, Margaritaville Hollywood Beach Resort on September 23, 2021 and Estancia La Jolla Hotel & Spa on December 1, 2021 and have excluded the hotel operations of these properties from our assessment of effectiveness of internal control over financial reporting as of December 31, 2021. Total assets and revenues for these hotels of $7.8 million and $35.5 million, respectively, for the year ended December 31, 2021 have been excluded from our assessment. KPMG LLP, an independent registered public accounting firm, has audited our consolidated financial statements included in this Annual Report on Form 10-K and, as part of its audit, has issued its report, included herein on page F-4, on the effectiveness of our internal control over financial reporting. There was no change to our internal control over financial reporting during the fourth quarter ended December 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. None. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. 48 PART III Item 10. Trustees, Executive Officers and Corporate Governance. The information required by this item is incorporated by reference to the Company's Proxy Statement for the 2022 Annual Meeting of Shareholders. Item 11. Executive Compensation. The information required by this item is incorporated by reference to the Company's Proxy Statement for the 2022 Annual Meeting of Shareholders. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters. The information required by this item is incorporated by reference to the Company's Proxy Statement for the 2022 Annual Meeting of Shareholders. Item 13. Certain Relationships and Related Transactions, and Trustee Independence. The information required by this item is incorporated by reference to the Company's Proxy Statement for the 2022 Annual Meeting of Shareholders. Item 14. Principal Accountant Fees and Services. Our independent registered public accounting firm is KPMG LLP , McLean, VA , Auditor Firm ID: 185 . The information required by this item is incorporated by reference to the Company's Proxy Statement for the 2022 Annual Meeting of Shareholders. 49 PART IV Item 15. Exhibits and Financial Statement Schedules. (a) The following documents are filed as part of this report: 1. Financial Statements Included herein on pages F-1 through F-35. 2. Financial Statement Schedules The following financial statement schedule is included herein on pages F-36 through F-39. Schedule III--Real Estate and Accumulated Depreciation All other schedules for which provision is made in Regulation S-X are either not required to be included herein under the related instructions or are inapplicable or the related information is included in the footnotes to the applicable financial statement and, therefore, have been omitted from this Item 15. 3. Exhibits The following exhibits are filed or furnished, as the case may be, as part of this Annual Report on Form 10-K: 50 Exhibit Number Description of Exhibit 3.1 Declaration of Trust, as amended and supplemented through July 23, 2021, of Pebblebrook Hotel Trust (incorporated by reference to Exhibit 3.1 to Pebblebrook Hotel Trust’s Quarterly Report on Form 10-Q filed with the SEC on July 29, 2021 (File No. 001-34571)). 3.2 Amended and Restated Bylaws of Pebblebrook Hotel Trust (incorporated by reference to Exhibit 3.2 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on November 14, 2016 (File No. 001‑34571)). 3.3 First Amendment to Amended and Restated Bylaws of Pebblebrook Hotel Trust (incorporated by reference to Exhibit 3.2 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on July 21, 2017 (File No. 001‑34571)). 3.4 Second Amended and Restated Agreement of Limited Partnership of Pebblebrook Hotel, L.P., dated as of December 13, 2013 (incorporated by reference to Exhibit 3.1 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on December 17, 2013 (File No. 001-34571)). 3.5 First Amendment to the Second Amended and Restated Agreement of Limited Partnership of Pebblebrook Hotel, L.P., dated as of September 30, 2014 (incorporated by reference to Exhibit 3.4 to Pebblebrook Hotel Trust’s Annual Report on Form 10‑K filed with the SEC on February 17, 2015 (File No. 001‑34571)). 3. 6 Second Amendment to the Second Amended and Restated Agreement of Limited Partnership of Pebblebrook Hotel, L.P., dated as of June 8, 2016 (incorporated by reference to Exhibit 3.5 to Pebblebrook Hotel Trust’s Current Report on Form 8‑K filed with the SEC on June 8, 2016 (File No. 001‑34571)). 3.7 Third Amendment to the Second Amended and Restated Agreement of Limited Partnership of Pebblebrook Hotel, L.P., dated as of November 30, 2018 (incorporated by reference to Exhibit 3.3 to Pebblebrook Hotel Trust’s Current Report on Form 8‑K filed with the SEC on December 3, 2018 (File No. 001‑34571)). 3.8 Fourth Amendment to the Second Amended and Restated Agreement of Limited Partnership of Pebblebrook Hotel, L.P., dated as of May 12, 2021 (incorporated by reference to Exhibit 3.2 to Pebblebrook Hotel Trust’s Current Report on Form 8‑K filed with the SEC on May 12, 2021 (File No. 001‑34571)). 4.1† Description of the Registrant's Securities. 4.2 Indenture, dated December 15, 2020, between the Company and The Bank of New York Mellon Trust Company, N.A. (incorporated by reference to Exhibit 4.1 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on December 16, 2020 (File No. 001-34571)). 4.3 First Supplemental Indenture, dated December 15, 2020, between the Company and The Bank of New York Mellon Trust Company, N.A. (incorporated by reference to Exhibit 4.2 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on December 16, 2020 (File No. 001-34571)). 10.1* Pebblebrook Hotel Trust 2009 Equity Incentive Plan, as amended and restated effective July 10, 2012 (incorporated by reference to Exhibit 10.1 to Pebblebrook Hotel Trust's Quarterly Report on Form 10-Q filed with the SEC on August 2, 2012 (File No. 001-34571)). 10.2* Amendment No. 1 to the Pebblebrook Hotel Trust 2009 Equity Incentive Plan, as amended and restated effective July 10, 2012, effective July 7, 2016 (incorporated by reference to Exhibit 10.1 to Pebblebrook Hotel Trust’s Quarterly Report on Form 10‑Q filed with the SEC on July 25, 2016 (File No. 001‑34571)). 10.3* Amendment No. 2 to the Pebblebrook Hotel Trust 2009 Equity Incentive Plan, as amended and restated effective July 10, 2012, effective February 15, 2017 (incorporated by reference to Exhibit 10.1 to Pebblebrook Hotel Trust’s Current Report on Form 8-K filed with the SEC on February 22, 2017 (File No. 001‑34571)). 10. 4 * Amendment No. 3 to the Pebblebrook Hotel Trust 2009 Equity Incentive Plan, as amended and restated effective July 10, 2012, effective May 19, 2021 (incorporated by reference to Exhibit 10.1 to Pebblebrook Hotel Trust’s Current Report on Form 8-K filed with the SEC on May 21, 2021 (File No. 001‑34571)). 10. 5 * Change in Control Severance Agreement between Pebblebrook Hotel Trust and Jon E. Bortz (incorporated by reference to Exhibit 10.2 to Pebblebrook Hotel Trust's Annual Report on Form 10-K filed with the SEC on March 24, 2010 (File No. 001-34571)). 10. 6 * Change in Control Severance Agreement between Pebblebrook Hotel Trust and Raymond D. Martz (incorporated by reference to Exhibit 10.3 to Pebblebrook Hotel Trust's Annual Report on Form 10-K filed with the SEC on March 24, 2010 (File No. 001-34571)). 10. 7 * Change in Control Severance Agreement between Pebblebrook Hotel Trust and Thomas C. Fisher (incorporated by reference to Exhibit 10.4 to Pebblebrook Hotel Trust's Annual Report on Form 10-K filed with the SEC on March 24, 2010 (File No. 001-34571)). 10. 8 * Form of Indemnification Agreement between Pebblebrook Hotel Trust and its officers and trustees (incorporated by reference to Exhibit 10.4 of Amendment No. 1 to Pebblebrook Hotel Trust's Registration Statement on Form S-11/A filed with the SEC on November 10, 2009 (File No. 333-162412)). 10. 9 * Form of Share Award Agreement for trustees (incorporated by reference to Exhibit 10.6 of Amendment No. 2 to Pebblebrook Hotel Trust's Registration Statement on Form S-11/A filed with the SEC on November 25, 2009 (File No. 333-162412)). 10.10* Form of LTIP Unit Vesting Agreement (incorporated by reference to Exhibit 10.2 to Pebblebrook Hotel Trust's Quarterly Report on Form 10-Q filed with the SEC on April 26, 2012 (File No. 001-34571)). 10. 11 * Form of Performance Unit Retention Award Agreement (incorporated by reference to Exhibit 10.2 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on December 17, 2013 (File No. 001-34571)). 10. 1 2 Fourth Amended and Restated Credit Agreement, dated as of October 13, 2017, among Pebblebrook Hotel, L.P., as the borrower, Pebblebrook Hotel Trust, as the parent REIT and a guarantor, certain subsidiaries of the borrower, as guarantors, Bank of America, N.A., as administrative agent, swing line lender and L/C issuer, and the other lenders party thereto (incorporated by reference to Exhibit 10.22 to Pebblebrook Hotel Trust's Annual Report on Form 10-K filed with the SEC on February 22, 2018 (File No. 001-34571)). 10. 1 3 First Amendment to Fourth Amended and Restated Credit Agreement, dated as of October 13, 2017, among Pebblebrook Hotel, L.P., as the borrower, Pebblebrook Hotel Trust, as the parent REIT and a guarantor, certain subsidiaries of the borrower, as guarantors, Bank of America, N.A., as administrative agent, swing line lender and L/C issuer, and the other lenders party thereto, dated as of June 29, 2020 (incorporated by reference to Exhibit 10.6 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on July 2, 2020 (File No. 001-34571)). 51 10. 1 4 Second Amendment to Fourth Amended and Restated Credit Agreement, dated as of October 13, 2017, among Pebblebrook Hotel, L.P., as the borrower, Pebblebrook Hotel Trust, as the parent REIT and a guarantor, certain subsidiaries of the borrower, as guarantors, Bank of America, N.A., as administrative agent, swing line lender and L/C issuer, and the other lenders party thereto, dated as of June 29, 2020 (incorporated by reference to Exhibit 10.1 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on July 2, 2020 (File No. 001-34571)). 10. 1 5 Third Amendment to Fourth Amended and Restated Credit Agreement, dated as of October 13, 2017, among Pebblebrook Hotel, L.P., as the borrower, Pebblebrook Hotel Trust, as the parent REIT and a guarantor, certain subsidiaries of the borrower, as guarantors, Bank of America, N.A., as administrative agent, swing line lender and L/C issuer, and the other lenders party thereto, entered into as of December 10, 2020 (incorporated by reference to Exhibit 10.1 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on December 16, 2020 (File No. 001-34571)). 10. 16 Fourth Amendment to Fourth Amended and Restated Credit Agreement, dated as of October 13, 2017, among Pebblebrook Hotel, L.P., as the borrower, Pebblebrook Hotel Trust, as the parent REIT and a guarantor, certain subsidiaries of the borrower, as guarantors, Bank of America, N.A., as administrative agent, swing line lender and L/C issuer, and the other lenders party thereto, dated as of February 18, 2021 (incorporated by reference to Exhibit 10.1 to Pebblebrook Hotel Trust's Quarterly Report on Form 10-Q filed with the SEC on April 29, 2021 (File No. 001-34571)). 10. 17 Fifth Amendment to Fourth Amended and Restated Credit Agreement, dated as of October 13, 2017, among Pebblebrook Hotel, L.P., as the borrower, Pebblebrook Hotel Trust, as the parent REIT and a guarantor, certain subsidiaries of the borrower, as guarantors, Bank of America, N.A., as administrative agent, swing line lender and L/C issuer, and the other lenders party thereto, dated as of December 9, 2021 (incorporated by reference to Exhibit 10.1 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on December 14, 2021 (File No. 001-34571)). 10. 18 Sixth Amendment to Fourth Amended and Restated Credit Agreement, dated as of October 13, 2017, among Pebblebrook Hotel, L.P., as the borrower, Pebblebrook Hotel Trust, as the parent REIT and a guarantor, certain subsidiaries of the borrower, as guarantors, Bank of America, N.A., as administrative agent, swing line lender and L/C issuer, and the other lenders party thereto, entered into as of December 9, 2021 (incorporated by reference to Exhibit 10.2 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on December 14, 2021 (File No. 001-34571)). 10. 19 Amended and Restated Credit Agreement, dated as of October 13, 2017, among Pebblebrook Hotel, L.P., as the borrower, Pebblebrook Hotel Trust, as the parent REIT and a guarantor, certain subsidiaries of the borrower, as guarantors, PNC Bank, National Association, as administrative agent, and the other lenders party thereto (incorporated by reference to Exhibit 10.25 to Pebblebrook Hotel Trust's Annual Report on Form 10-K filed with the SEC on February 22, 2018 (File No. 001-34571)). 10.2 0 First Amendment to Amended and Restated Credit Agreement, dated as of October 13, 2017, among Pebblebrook Hotel, L.P., as the borrower, Pebblebrook Hotel Trust, as the parent REIT and a guarantor, certain subsidiaries of the borrower, as guarantors, U.S. Bank National Association, as administrative agent, and the other lenders party thereto, dated as of June 29, 2020 (incorporated by reference to Exhibit 10.2 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on July 2, 2020 (File No. 001-34571)). 10.2 1 Second Amendment to Amended and Restated Credit Agreement, dated as of October 13, 2017, among Pebblebrook Hotel, L.P., as the borrower, Pebblebrook Hotel Trust, as the parent REIT and a guarantor, certain subsidiaries of the borrower, as guarantors, U.S. Bank National Association, as administrative agent, and the other lenders party thereto, entered into as of December 10, 2020 (incorporated by reference to Exhibit 10.2 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on December 16, 2020 (File No. 001-34571)). 10. 22 Third Amendment to Amended and Restated Credit Agreement, dated as of October 13, 2017, among Pebblebrook Hotel, L.P., as the borrower, Pebblebrook Hotel Trust, as the parent REIT and a guarantor, certain subsidiaries of the borrower, as guarantors, U.S. Bank National Association, as administrative agent, and the other lenders party thereto, dated as of February 18, 2021 (incorporated by reference to Exhibit 10.2 to Pebblebrook Hotel Trust's Quarterly Report on Form 10-Q filed with the SEC on April 29, 2021 (File No. 001-34571)). 10. 23 Fourth Amendment to Amended and Restated Credit Agreement, dated as of October 13, 2017, among Pebblebrook Hotel, L.P., as the borrower, Pebblebrook Hotel Trust, as the parent REIT and a guarantor, certain subsidiaries of the borrower, as guarantors, U.S. Bank National Association, as administrative agent, and the other lenders party thereto, entered into as of December 9, 2021 (incorporated by reference to Exhibit 10.3 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on December 14, 2021 (File No. 001-34571)). 10.2 4 Credit Agreement, dated as of October 13, 2017, among Pebblebrook Hotel, L.P., as the borrower, Pebblebrook Hotel Trust, as the parent REIT and a guarantor, certain subsidiaries of the borrower, as guarantors, Capital One, National Association, as administrative agent, and the other lenders party thereto (incorporated by reference to Exhibit 10.24 to Pebblebrook Hotel Trust's Annual Report on Form 10-K filed with the SEC on February 22, 2018 (File No. 001-34571)). 10. 25 First Amendment to Credit Agreement, dated as of October 13, 2017, among Pebblebrook Hotel, L.P., as the borrower, Pebblebrook Hotel Trust, as the parent REIT and a guarantor, certain subsidiaries of the borrower, as guarantors, Capital One, National Association, as administrative agent, and the other lenders party thereto, dated as of June 29, 2020 (incorporated by reference to Exhibit 10.3 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on July 2, 2020 (File No. 001‑34571)). 10. 26 Second Amendment to Credit Agreement, dated as of October 13, 2017, among Pebblebrook Hotel, L.P., as the borrower, Pebblebrook Hotel Trust, as the parent REIT and a guarantor, certain subsidiaries of the borrower, as guarantors, Capital One, National Association, as administrative agent, and the other lenders party thereto, entered into as of December 10, 2020 (incorporated by reference to Exhibit 10.3 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on December 16, 2020 (File No. 001-34571)). 10. 27 Third Amendment to Credit Agreement, dated as of October 13, 2017, among Pebblebrook Hotel, L.P., as the borrower, Pebblebrook Hotel Trust, as the parent REIT and a guarantor, certain subsidiaries of the borrower, as guarantors, Capital One, National Association, as administrative agent, and the other lenders party thereto, dated as of February 18, 2021 (incorporated by reference to Exhibit 10.3 to Pebblebrook Hotel Trust's Quarterly Report on Form 10-Q filed with the SEC on April 29, 2021 (File No. 001-34571)). 10. 28 Fourth Amendment to Credit Agreement, dated as of October 13, 2017, among Pebblebrook Hotel, L.P., as the borrower, Pebblebrook Hotel Trust, as the parent REIT and a guarantor, certain subsidiaries of the borrower, as guarantors, Capital One, National Association, as administrative agent, and the other lenders party thereto, entered into as of December 9, 2021 (incorporated by reference to Exhibit 10.4 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on December 14, 2021 (File No. 001-34571)). 10. 29 Note Purchase and Guarantee Agreement, dated November 12, 2015, by and among Pebblebrook Hotel Trust, Pebblebrook Hotel, L.P., Massachusetts Mutual Life Insurance Company, MassMutual Asia Limited, Allianz Life Insurance Company of North America and The Guardian Life Insurance Company of America (incorporated by reference to Exhibit 10.33 to Pebblebrook Hotel Trust’s Annual Report on Form 10-K filed with the SEC on February 22, 2016 (File No. 001-34571)). 52 10.3 0 First Amendment to Note Purchase Agreement, dated as of November 12, 2015, among Pebblebrook Hotel Trust, Pebblebrook Hotel, L.P., Massachusetts Mutual Life Insurance Company, MassMutual Asia Limited, Allianz Life Insurance Company of North America and The Guardian Life Insurance Company of America, dated as of October 13, 2017 (incorporated by reference to Exhibit 10.27 to Pebblebrook Hotel Trust's Annual Report on Form 10-K filed with the SEC on February 22, 2018 (File No. 001-34571)). 10.3 1 Second Amendment to Note Purchase Agreement, dated as of November 12, 2015, among Pebblebrook Hotel Trust, Pebblebrook Hotel, L.P., Massachusetts Mutual Life Insurance Company, MassMutual Asia Limited, Allianz Life Insurance Company of North America and The Guardian Life Insurance Company of America, dated as of June 29, 2020 (incorporated by reference to Exhibit 10.5 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on July 2, 2020 (File No. 001-34571)). 10.3 2 Third Amendment to Note Purchase Agreement, dated as of November 12, 2015, among Pebblebrook Hotel Trust, Pebblebrook Hotel, L.P., Massachusetts Mutual Life Insurance Company, MassMutual Asia Limited, Allianz Life Insurance Company of North America and The Guardian Life Insurance Company of America, dated as of December 10, 2020 (incorporated by reference to Exhibit 10.5 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on December 16, 2020 (File No. 001-34571)). 10. 33 Fourth Amendment to Note Purchase Agreement, dated as of November 12, 2015, among Pebblebrook Hotel Trust, Pebblebrook Hotel, L.P., Massachusetts Mutual Life Insurance Company, MassMutual Asia Limited, Allianz Life Insurance Company of North America and The Guardian Life Insurance Company of America, dated as of February 18, 2021 (incorporated by reference to Exhibit 10.4 to Pebblebrook Hotel Trust's Quarterly Report on Form 10-Q filed with the SEC on April 29, 2021 (File No. 001-34571)). 10. 34 Fifth Amendment to Note Purchase Agreement, dated as of November 12, 2015, among Pebblebrook Hotel Trust, Pebblebrook Hotel, L.P., Massachusetts Mutual Life Insurance Company, MassMutual Asia Limited, Allianz Life Insurance Company of North America and The Guardian Life Insurance Company of America, dated as of December 9, 2021 (incorporated by reference to Exhibit 10.6 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on December 14, 2021 (File No. 001-34571)). 10.3 5 * Form of Share Award Agreement (time-based vesting) for Executive Officers (incorporated by reference to Exhibit 10.1 to Pebblebrook Hotel Trust’s Current Report on Form 8-K filed with the SEC on February 16, 2018 (File No. 001-34571)). 10.3 6 * Form of Performance Unit Award Agreement for Executive Officers (incorporated by reference to (incorporated by reference to Exhibit 10.2 to Pebblebrook Hotel Trust’s Current Report on Form 8-K filed with the SEC on February 16, 2018 (File No. 001-34571)). 10. 37 * Form of LTIP Class B Unit Vesting Agreement – retention award (incorporated by reference to Exhibit 10.6 to Pebblebrook Hotel Trust's Quarterly Report on Form 10-Q filed with the SEC on April 29, 2021 (File No. 001-34571)). 10.38 Credit Agreement, dated as of October 31, 2018, among Pebblebrook Hotel L.P., as the borrower, Pebblebrook Hotel Trust, as the parent REIT and a guarantor, certain subsidiaries of the borrower, as guarantors, Bank of America, N.A., as administrative agent, and the other lenders party thereto (incorporated by reference to Exhibit 10.34 to Pebblebrook Hotel Trust’s Annual Report on Form 10-K filed with the SEC on March 1, 2019 (File No. 001-34571)). 10.39 First Amendment to Credit Agreement, dated as of October 31, 2018, among Pebblebrook Hotel L.P., as the borrower, Pebblebrook Hotel Trust, as the parent REIT and a guarantor, certain subsidiaries of the borrower, as guarantors, Bank of America, N.A., as administrative agent, and the other lenders party thereto, dated as of June 29, 2020 (incorporated by reference to Exhibit 10.4 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on July 2, 2020 (File No. 001-34571)). 10.40 Second Amendment to Credit Agreement, dated as of October 31, 2018, among Pebblebrook Hotel L.P., as the borrower, Pebblebrook Hotel Trust, as the parent REIT and a guarantor, certain subsidiaries of the borrower, as guarantors, Bank of America, N.A., as administrative agent, and the other lenders party thereto, entered into as of December 10, 2020 (incorporated by reference to Exhibit 10.4 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on December 16, 2020 (File No. 001-34571)). 10. 41 Third Amendment to Credit Agreement, dated as of October 31, 2018, among Pebblebrook Hotel L.P., as the borrower, Pebblebrook Hotel Trust, as the parent REIT and a guarantor, certain subsidiaries of the borrower, as guarantors, Bank of America, N.A., as administrative agent, and the other lenders party thereto, dated as of February 18, 2021 (incorporated by reference to Exhibit 10.5 to Pebblebrook Hotel Trust's Quarterly Report on Form 10-Q filed with the SEC on April 29, 2021 (File No. 001-34571)). 10. 42 Fourth Amendment to Credit Agreement, dated as of October 31, 2018, among Pebblebrook Hotel L.P., as the borrower, Pebblebrook Hotel Trust, as the parent REIT and a guarantor, certain subsidiaries of the borrower, as guarantors, Bank of America, N.A., as administrative agent, and the other lenders party thereto, entered into as of December 9, 2021 (incorporated by reference to Exhibit 10.5 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on December 14, 2021 (File No. 001-34571)). 10. 43 Loan Agreement, dated as of May 8, 2019, among JPMorgan Chase Bank, National Association, Deutsche Bank AG, New York Branch, and MVHF, LLC (incorporated by reference to Exhibit 10.1 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on September 29, 2021 (File No. 001-34571)). 21.1† List of Subsidiaries of Pebblebrook Hotel Trust. 23.1† Consent of KPMG LLP. 31.1† Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2† Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1†† Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2†† Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. (1) 101.SCH Inline XBRL Taxonomy Extension Schema Document (1) 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document (1) 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document (1) 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document (1) 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document (1) 53 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) (1) ______________________ * Management agreement or compensatory plan or arrangement † Filed herewith. †† Furnished herewith. (1) Submitted electronically herewith. Attached as Exhibit 101 to this report are the following documents formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations and Comprehensive Income; (iii) Consolidated Statements of Equity; (iv) Consolidated Statements of Cash Flows; (v) Notes to Consolidated Financial Statements; and (vi) Cover Page (in connection with Exhibit 104). 54 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PEBBLEBROOK HOTEL TRUST Date: February 22, 2022 /s/ J ON E. B ORTZ Jon E. Bortz Chairman, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Name Title Date /s/ JON E. BORTZ Chairman of the Board, President and Chief Executive Officer (principal executive officer) February 22, 2022 Jon E. Bortz /s/ RAYMOND D. MARTZ Executive Vice President, Chief Financial Officer, Treasurer and Secretary (principal financial officer and principal accounting officer) February 22, 2022 Raymond D. Martz /s/ CYDNEY C. DONNELL Trustee February 22, 2022 Cydney C. Donnell /s/ RON E. JACKSON Trustee February 22, 2022 Ron E. Jackson /s/ PHILLIP M. MILLER Trustee February 22, 2022 Phillip M. Miller /s/ MICHAEL J. SCHALL Trustee February 22, 2022 Michael J. Schall /s/ BONNY W. SIMI Trustee February 22, 2022 Bonny W. Simi /s/ EARL E. WEBB Trustee February 22, 2022 Earl E. Webb PEBBLEBROOK HOTEL TRUST INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page No. Reports of Independent Registered Public Accounting Firm F- 2 Consolidated Balance Sheets F- 5 Consolidated Statements of Operations and Comprehensive Income F- 6 Consolidated Statements of Equity F- 8 Consolidated Statements of Cash Flows F- 11 Notes to Consolidated Financial Statements F- 12 Schedule III - Real Estate and Accumulated Depreciation F- 36 F-1 Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Trustees Pebblebrook Hotel Trust: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Pebblebrook Hotel Trust and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations and comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes and financial statement schedule III (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 22, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Change in Accounting Principle As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for convertible debt as of January 1, 2021 due to the adoption of ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. F-2 The assessment of hotel properties for impairment As discussed in Note 2 to the consolidated financial statements, the Company reviews its investments in hotel properties for impairment whenever events or changes in circumstances indicate that the carrying value of the hotel properties may not be recoverable. For hotel properties that have an indication that its carrying value may not be recoverable, an undiscounted cash flow analysis is prepared using various inputs and assumptions, including estimated holding period and expected terminal capitalization rate. The novel coronavirus (COVID-19) has reduced travel significantly and adversely affected the hospitality industry and resulted in recoverability analyses being performed on all of the Company’s hotel properties. In addition, COVID-19 has increased uncertainty in future cash flow projections and hold periods. Investment in hotel properties was $6.1 billion, or 97% of total assets as of December 31, 2021. We identified the assessment of hotel properties for impairment as a critical audit matter. Significant auditor judgment was required to evaluate certain key assumptions, specifically, the judgments related to the Company’s estimated holding period, expected terminal capitalization rate, and projected undiscounted cash flows from operations and eventual disposition, including the effects of COVID-19 and the resulting duration of the economic effects on its properties. Changes in the key assumptions could have a significant impact on the determination of recoverability of the carrying value of the Company’s investment in hotel properties. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s process to evaluate hotel properties for impairment, including the specific assumptions described above. We inquired of Company officials and inspected documents, such as meeting minutes of the board of trustees, to identify Company strategies that may indicate it was more-likely-than not that a property will be sold significantly before the end of its previously estimated useful life. We read publicly available information in order to identify information regarding potential sales of the Company’s properties. We also performed sensitivity analyses over the estimated holding period of certain of the Company’s hotel properties by changing the Company’s estimates to assess the impact on the analysis. We evaluated the Company’s expected terminal capitalization rates by comparing to published third-party industry reports as well as the Company’s historical hotel property sales. For certain of the hotel properties, we performed sensitivity analyses over the estimated terminal capitalization rate by considering points within the ranges we obtained from published third party industry reports. We evaluated the Company’s projected undiscounted cash flows from operations, by comparing to published third-party industry reports evaluating the impact of COVID-19 on the hotel industry. We inquired and obtained representations from the Company regarding the status and evaluation of any potential disposal of properties and read minutes of the board of trustees. We corroborated that information with others in the organization who are responsible for, and have authority over, disposition activities. /s/ KPMG LLP We have served as the Company's auditor since 2009. McLean, Virginia February 22, 2022 F-3 Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Trustees Pebblebrook Hotel Trust: Opinion on Internal Control Over Financial Reporting We have audited Pebblebrook Hotel Trust and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of operations and comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes and financial statement schedule III (collectively, the consolidated financial statements), and our report dated February 22, 2022 expressed an unqualified opinion on those consolidated financial statements. The Company acquired the Jekyll Island Club Resort, the Margaritaville Hollywood Beach Resort, and the Estancia La Jolla Hotel & Spa during 2021, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021, the Jekyll Island Club Resort, the Margaritaville Hollywood Beach Resort, and the Estancia La Jolla Hotel & Spa’s internal control over financial reporting associated with total assets of $7.8 million and total revenues of $35.5 million included in the consolidated financial statements of the Company as of and for the year ended December 31, 2021. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of the Jekyll Island Club Resort, the Margaritaville Hollywood Beach Resort, and the Estancia La Jolla Hotel & Spa. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ KPMG LLP McLean, Virginia February 22, 2022 F-4 Table of Contents Pebblebrook Hotel Trust Consolidated Balance Sheets (in thousands, except share and per-share data) December 31, 2021 December 31, 2020 ASSETS Investment in hotel properties, net $ 6,079,333 $ 5,882,022 Cash and cash equivalents 58,518 124,274 Restricted cash 33,729 12,026 Hotel receivables (net of allowance for doubtful accounts of $ 1,142 and $ 183 , respectively) 37,045 10,225 Prepaid expenses and other assets 52,565 47,819 Total assets $ 6,261,190 $ 6,076,366 LIABILITIES AND EQUITY Debt $ 2,441,888 $ 2,280,471 Accounts payable, accrued expenses and other liabilities 250,584 226,446 Lease liabilities - operating leases 319,426 255,106 Deferred revenues 69,064 36,057 Accrued interest 4,567 4,653 Distribution payable 11,756 9,307 Total liabilities 3,097,285 2,812,040 Commitments and contingencies (Note 11) Shareholders’ equity: Preferred shares of beneficial interest, $ .01 par value (liquidation preference $ 740,000 and $ 510,000 at December 31, 2021 and December 31, 2020, respectively), 100,000,000 shares authorized; 29,600,000 shares issued and outstanding at December 31, 2021 and 20,400,000 shares issued and outstanding at December 31, 2020 296 204 Common shares of beneficial interest, $ .01 par value, 500,000,000 shares authorized; 130,813,750 shares issued and outstanding at December 31, 2021 and 130,673,300 shares issued and outstanding at December 31, 2020 1,308 1,307 Additional paid-in capital 4,268,042 4,169,870 Accumulated other comprehensive income (loss) ( 19,442 ) ( 60,071 ) Distributions in excess of retained earnings ( 1,094,023 ) ( 853,973 ) Total shareholders’ equity 3,156,181 3,257,337 Non-controlling interests 7,724 6,989 Total equity 3,163,905 3,264,326 Total liabilities and equity $ 6,261,190 $ 6,076,366 The accompanying notes are an integral part of these financial statements. F-5 Table of Contents Pebblebrook Hotel Trust Consolidated Statements of Operations and Comprehensive Income (in thousands, except share and per-share data) For the year ended December 31, 2021 2020 2019 Revenues: Room $ 483,191 $ 287,439 $ 1,103,947 Food and beverage 157,848 95,892 370,584 Other operating 92,005 59,557 137,682 Total revenues 733,044 442,888 1,612,213 Expenses: Hotel operating expenses: Room 127,105 91,771 275,855 Food and beverage 111,928 77,698 260,278 Other direct and indirect 257,547 209,957 438,035 Total hotel operating expenses 496,580 379,426 974,168 Depreciation and amortization 224,251 224,560 234,880 Real estate taxes, personal property taxes, property insurance, and ground rent 111,675 114,333 125,013 General and administrative 38,166 45,158 34,047 Transaction costs 100 10,544 8,679 Impairment loss 14,856 74,556 — (Gain) loss on sale of hotel properties ( 64,729 ) ( 117,401 ) ( 2,819 ) Other operating expenses 1,936 4,421 8,903 Total operating expenses 822,835 735,597 1,382,871 Operating income (loss) ( 89,791 ) ( 292,709 ) 229,342 Interest expense ( 96,633 ) ( 104,098 ) ( 108,474 ) Other 113 517 29 Income (loss) before income taxes ( 186,311 ) ( 396,290 ) 120,897 Income tax (expense) benefit ( 61 ) 3,697 ( 5,172 ) Net income (loss) ( 186,372 ) ( 392,593 ) 115,725 Net income (loss) attributable to non-controlling interests ( 1,514 ) ( 864 ) 283 Net income (loss) attributable to the Company ( 184,858 ) ( 391,729 ) 115,442 Distributions to preferred shareholders ( 42,105 ) ( 32,556 ) ( 32,556 ) Issuance costs of redeemed preferred shares ( 8,055 ) — — Net income (loss) attributable to common shareholders $ ( 235,018 ) $ ( 424,285 ) $ 82,886 Net income (loss) per share available to common shareholders, basic $ ( 1.80 ) $ ( 3.25 ) $ 0.63 Net income (loss) per share available to common shareholders, diluted $ ( 1.80 ) $ ( 3.25 ) $ 0.63 Weighted-average number of common shares, basic 130,804,354 130,610,015 130,471,670 Weighted-average number of common shares, diluted 130,804,354 130,610,015 130,718,306 F-6 Table of Contents Pebblebrook Hotel Trust Consolidated Statements of Operations and Comprehensive Income - Continued (in thousands, except share and per-share data) For the year ended December 31, 2021 2020 2019 Comprehensive Income: Net income (loss) $ ( 186,372 ) $ ( 392,593 ) $ 115,725 Other comprehensive income (loss): Change in fair value of derivative instruments 15,289 ( 63,861 ) ( 25,785 ) Amounts reclassified from other comprehensive income 25,210 28,505 ( 260 ) Comprehensive income (loss) ( 145,873 ) ( 427,949 ) 89,680 Comprehensive income (loss) attributable to non-controlling interests ( 1,251 ) ( 934 ) 209 Comprehensive income (loss) attributable to the Company $ ( 144,622 ) $ ( 427,015 ) $ 89,471 The accompanying notes are an integral part of these financial statements. F-7 Table of Contents Pebblebrook Hotel Trust Consolidated Statements of Equity (in thousands, except share data) For the year ended December 31, 2019 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 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 Issuance of shares, net of offering costs — — — — ( 275 ) — — ( 275 ) — ( 275 ) Issuance of common shares for Board of Trustees compensation — — 25,282 1 739 — — 740 — 740 Repurchase of common shares — — ( 126,681 ) ( 1 ) ( 4,008 ) — — ( 4,009 ) — ( 4,009 ) Share-based compensation — — 275,066 2 7,180 — — 7,182 1,057 8,239 Distributions on common shares/units — — — — — — ( 199,076 ) ( 199,076 ) ( 562 ) ( 199,638 ) Distributions on preferred shares — — — — — — ( 32,556 ) ( 32,556 ) ( 50 ) ( 32,606 ) Redemption of non-controlling interest LTIP units — — — — ( 30 ) — — ( 30 ) ( 95 ) ( 125 ) Other comprehensive income (loss): Change in fair value of derivative instruments — — — — — ( 25,785 ) — ( 25,785 ) — ( 25,785 ) Amounts reclassified from other comprehensive income — — — — — ( 260 ) — ( 260 ) — ( 260 ) Net income (loss) — — — — — — 115,442 115,442 283 115,725 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 F-8 Table of Contents Pebblebrook Hotel Trust Consolidated Statements of Equity - Continued (in thousands, except share data) For the year ended December 31, 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 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 Issuance of shares, net of offering costs — — — — ( 119 ) — — ( 119 ) — ( 119 ) Issuance of common shares for Board of Trustees compensation — — 23,528 1 636 — — 637 — 637 Repurchase of common shares — — ( 47,507 ) ( 1 ) ( 1,254 ) — — ( 1,255 ) — ( 1,255 ) Share-based compensation — — 103,083 1 12,162 — — 12,163 10,616 22,779 Distributions on common shares/units — — — — — — ( 4,692 ) ( 4,692 ) ( 45 ) ( 4,737 ) Distributions on preferred shares — — — — — — ( 32,556 ) ( 32,556 ) — ( 32,556 ) Redemption of non-controlling interest LTIP units — — 109,240 1 13,445 — — 13,446 ( 13,446 ) — Equity component of convertible senior notes — — — — 113,890 — — 113,890 — 113,890 Purchases of capped calls in connection with convertible senior notes — — — — ( 38,300 ) — — ( 38,300 ) — ( 38,300 ) Other comprehensive income (loss): Change in fair value of derivative instruments — — — — — ( 63,861 ) — ( 63,861 ) — ( 63,861 ) Amounts reclassified from other comprehensive income — — — — — 28,505 — 28,505 — 28,505 Net income (loss) — — — — — — ( 391,729 ) ( 391,729 ) ( 864 ) ( 392,593 ) Balance at December 31, 2020 20,400,000 $ 204 130,673,300 $ 1,307 $ 4,169,870 $ ( 60,071 ) $ ( 853,973 ) $ 3,257,337 $ 6,989 $ 3,264,326 F-9 Table of Contents Pebblebrook Hotel Trust Consolidated Statements of Equity - Continued (in thousands, except share data) For the year ended December 31, 2021 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 December 31, 2020 20,400,000 $ 204 130,673,300 $ 1,307 $ 4,169,870 $ ( 60,071 ) $ ( 853,973 ) $ 3,257,337 $ 6,989 $ 3,264,326 Redemption of preferred shares ( 10,000,000 ) ( 100 ) — — ( 241,845 ) — ( 8,055 ) ( 250,000 ) — ( 250,000 ) Issuance of shares, net of offering costs 19,200,000 192 — — 463,862 — — 464,054 — 464,054 Issuance of common shares for Board of Trustees compensation — — 27,711 1 515 — — 516 — 516 Repurchase of common shares — — ( 38,310 ) ( 1 ) ( 719 ) — — ( 720 ) — ( 720 ) Share-based compensation — — 151,049 1 10,433 — — 10,434 2,445 12,879 Distributions on common shares/units — — — — — — ( 5,032 ) ( 5,032 ) ( 66 ) ( 5,098 ) Distributions on preferred shares — — — — — — ( 42,105 ) ( 42,105 ) — ( 42,105 ) Cumulative effect adjustment from adoption of new accounting standard — — — — ( 113,099 ) — — ( 113,099 ) — ( 113,099 ) Purchases of capped calls in connection with convertible senior notes — — — — ( 20,975 ) — — ( 20,975 ) — ( 20,975 ) Other adjustment — — — — — 393 — 393 ( 393 ) — Other comprehensive income (loss): Change in fair value of derivative instruments — — — — — 15,026 — 15,026 263 15,289 Amounts reclassified from other comprehensive income — — — — — 25,210 — 25,210 — 25,210 Net income (loss) — — — — — — ( 184,858 ) ( 184,858 ) ( 1,514 ) ( 186,372 ) Balance at December 31, 2021 29,600,000 $ 296 130,813,750 $ 1,308 $ 4,268,042 $ ( 19,442 ) $ ( 1,094,023 ) $ 3,156,181 $ 7,724 $ 3,163,905 The accompanying notes are an integral part of these financial statements. F-10 Table of Contents Pebblebrook Hotel Trust Consolidated Statements of Cash Flows (in thousands) For the year ended December 31, 2021 2020 2019 Operating activities: Net income (loss) $ ( 186,372 ) $ ( 392,593 ) $ 115,725 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 224,251 224,560 234,880 Share-based compensation 11,433 22,779 8,239 Amortization of deferred financing costs, non-cash interest and other amortization 16,633 17,200 17,349 (Gain) loss on sale of hotel properties ( 64,729 ) ( 117,401 ) ( 2,819 ) Impairment loss 14,856 74,556 — Non-cash ground rent 7,061 6,198 6,395 Other adjustments ( 1,959 ) 347 2,365 Changes in assets and liabilities: Hotel receivables ( 27,509 ) 38,509 8,648 Prepaid expenses and other assets ( 428 ) 3,358 1,061 Accounts payable and accrued expenses 51,793 ( 60,673 ) ( 605 ) Deferred revenues 25,736 ( 18,616 ) 3,964 Net cash provided by (used in) operating activities 70,766 ( 201,776 ) 395,202 Investing activities: Improvements and additions to hotel properties ( 83,827 ) ( 125,014 ) ( 169,632 ) Proceeds from sales of hotel properties 255,927 375,131 470,352 Acquisition of hotel properties ( 253,541 ) — — Other investing activities ( 128 ) — ( 752 ) Net cash provided by (used in) investing activities ( 81,569 ) 250,117 299,968 Financing activities: Gross proceeds from issuance of preferred shares 480,000 — — Payment of offering costs — common and preferred shares ( 15,947 ) ( 119 ) ( 275 ) Payment of deferred financing costs ( 14,510 ) ( 16,372 ) ( 461 ) (Distributions to) contributions from non-controlling interest — — ( 125 ) Borrowings under revolving credit facilities — 760,115 414,771 Repayments under revolving credit facilities ( 40,000 ) ( 885,115 ) ( 419,771 ) Proceeds from debt 268,599 512,965 — Repayments of debt ( 392,236 ) ( 212,965 ) ( 518,207 ) Purchases of capped calls for convertible senior notes ( 20,975 ) ( 38,300 ) — Repurchases of common shares ( 720 ) ( 1,255 ) ( 4,009 ) Redemption of preferred shares ( 250,000 ) — — Distributions — common shares/units ( 5,279 ) ( 53,960 ) ( 184,836 ) Distributions — preferred shares ( 39,443 ) ( 32,556 ) ( 32,556 ) Repayments of refundable membership deposits ( 2,739 ) ( 1,354 ) ( 637 ) Net cash provided by (used in) financing activities ( 33,250 ) 31,084 ( 746,106 ) Net change in cash and cash equivalents and restricted cash ( 44,053 ) 79,425 ( 50,936 ) Cash and cash equivalents and restricted cash, beginning of year 136,300 56,875 107,811 Cash and cash equivalents and restricted cash, end of year $ 92,247 $ 136,300 $ 56,875 The accompanying notes are an integral part of these financial statements. F-11 Table of Contents PEBBLEBROOK HOTEL TRUST NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Note 1. Organization Pebblebrook Hotel Trust (the "Company") 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 United States cities, with an emphasis on major gateway coastal markets. As of December 31, 2021, the Company owned 53 hotels with a total of 13,247 guest rooms. The 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. Substantially all of the Company’s assets are held by, and all of the Company's operations are conducted through, Pebblebrook Hotel, L.P. (the "Operating Partnership"). The Company is the sole general partner of the Operating Partnership. As of December 31, 2021, the Company owned 99.3 % of the common limited partnership units issued by the Operating Partnership ("common units"). The remaining 0.7 % of the common units are owned by the other limited partners of the Operating Partnership. For the Company to maintain its qualification as a real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended (the "Code"), it cannot operate the hotels it owns. Therefore, the Operating Partnership and its subsidiaries lease the hotel properties to subsidiaries of Pebblebrook Hotel Lessee, Inc. (collectively with its subsidiaries, "PHL"), a 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. COVID-19 and Liquidity Update 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 individual responses, hotel demand dramatically declined. In response, the Company implemented significant cost controls, salary reductions and temporarily suspended operations at 47 of its hotels and resorts in 2020. In addition, to improve liquidity, the Company raised capital by issuing convertible notes and additional preferred shares as summarized below. As demand improved as a result of an increase in vaccinations and corresponding lifting of governmental restrictions and recommendations, the Company gradually reopened its hotels and resorts. As of December 31, 2021, all of the Company's hotels and resorts were open, with the exception of Hotel Vitale, whose operations will remain suspended until the completion of its renovations and repositioning, which we expect to occur in the second quarter of 2022. The COVID-19 pandemic had a significant negative impact on the Company's operations and financial results throughout 2021. Although results improved relative to 2020, the Company cannot estimate with certainty when travel demand will fully recover. However, the Company anticipates further recovery in 2022. Leisure travel in 2021 exceeded expectations, particularly at the Company's warmer-weather and resort properties, and we expect this trend to continue in 2022. However, business travel continues to be substantially lower. During 2021, the Company amended the agreements governing its existing credit facilities, term loan facilities and unsecured senior notes to, among other changes: • waive quarterly financial covenants until the second quarter of 2022, with substantially less-restrictive covenants through the end of the first quarter of 2023; • extend or provide the option for us to extend more than $ 1.0 billion of debt maturities including our revolving credit facility; • increase pricing until the end of the covenant waiver period; and • impose certain restrictions during the covenant waiver period on share repurchases, dividends, capital improvements, and hotel property acquisitions. F-12 Table of Contents Based on the amendments to the Company's credit agreements, actions noted above, and assumptions regarding the recovery of demand, the Company believes it has sufficient liquidity to meet its obligations for the next 12 months. For further discussion on the Company's liquidity, see Liquidity and Capital Resources included in Part II, Item 7 of this Annual Report on Form 10-K. During the year ended December 31, 2021, other significant transactions included: • On February 9, 2021, the Company issued, at a 5.5 % premium to par, an additional $ 250.0 million aggregate principal amount of the convertible notes originally issued in December 2020. • On April 1, 2021, the Company sold the Sir Francis Drake for $ 157.6 million. • On May 13, 2021, the Company raised $ 222.6 million of net proceeds from the issuance of 9,200,000 6.375 % Series G Cumulative Redeemable Preferred Shares. • On June 10, 2021, the Company sold The Roger New York for $ 19.0 million. • On July 22, 2021, the Company acquired the leasehold interest in Jekyll Island Club Resort for $ 94.0 million. • On July 27, 2021, the Company raised $ 242.1 million of net proceeds from the issuance of 10,000,000 5.70 % Series H Cumulative Redeemable Preferred Shares. • On August 21, 2021, the Company redeemed all outstanding 6.375 % Series D Cumulative Redeemable Preferred Shares. • On August 22, 2021, the Company redeemed all outstanding 6.50 % Series C Cumulative Redeemable Preferred Shares. • On September 9, 2021, the Company sold Villa Florence San Francisco on Union Square for $ 87.5 million. • On September 23, 2021, the Company acquired the leasehold interest in Margaritaville Hollywood Beach Resort for $ 270.0 million, including the assumption of a $ 161.5 million mortgage loan. • On October 20, 2021, the Company acquired Avalon Bed & Breakfast and Duval Gardens for $ 20.0 million, with both properties consolidated into the Company's Southernmost Beach Resort. • On December 1, 2021, the Company acquired the leasehold interest in Estancia La Jolla Hotel & Spa for $ 108.0 million, including the assumption of a $ 61.7 million mortgage loan. • The Company paid down $ 431.9 million of debt, consisting of $ 341.9 million of term loans, $ 50.0 million of senior unsecured notes and $ 40.0 million on the senior unsecured credit facility. Note 2. Summary of Significant Accounting Policies Basis of Presentation The Company and its subsidiaries are separate legal entities and maintain records and books of account separate and apart from each other. The consolidated financial statements include all of the accounts of the Company and its subsidiaries and are presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). All significant intercompany balances and transactions have been eliminated in consolidation. Investments in entities that the Company does not control, but over which the Company has the ability to exercise significant influence regarding operating and financial policies, are accounted for under the equity method. Certain reclassifications have been made to the prior period's financial statements to conform to the current year presentation. Use of Estimates The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and revenues and expenses. These estimates are prepared using management’s best judgment, after considering past, current and expected events and economic conditions. Actual results could differ from these estimates. Risks and Uncertainties The state of the overall economy can significantly impact hotel operational performance and thus, impact the Company's financial position. As discussed above, the impact of COVID-19 has significantly impacted the hotels' operational performance and therefore the Company has significantly reduced distributions to our shareholders in addition to taking other measures in order to reduce operating expenses. A continued reduction in travel may impact the Company's ability to service debt or meet other financial obligations. F-13 Table of Contents Fair Value Measurements A fair value measurement is based on the assumptions that market participants would use in pricing an asset or liability in an orderly transaction. The hierarchy for inputs used in measuring fair value are as follows: 1. Level 1 – Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. 2. Level 2 – Inputs include quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, and model-derived valuations whose inputs are observable. 3. Level 3 – Model-derived valuations with unobservable inputs. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. The Company's financial instruments include cash and cash equivalents, restricted cash, accounts payable and accrued expenses. Due to their short maturities, the carrying amounts of these assets and liabilities approximate fair value. See Note 5, Debt, to the accompanying consolidated financial statements for disclosures on the fair value of debt and derivative instruments. Investment in Hotel Properties Upon acquiring a business or hotel property, the Company measures and recognizes the fair value of the acquired land, land improvements, building, furniture, fixtures and equipment, identifiable intangible assets or liabilities, other assets and assumed liabilities. Identifiable intangible assets or liabilities typically arise from contractual arrangements in connection with the transaction, including terms that are above or below market compared to an estimated market agreement at the acquisition date. Acquisition-date fair values of assets and assumed liabilities are determined using a combination of the market, cost and income approaches. These valuation methodologies are based on significant Level 2 and Level 3 inputs in the fair value hierarchy, such as estimates of future income growth, capitalization rates, discount rates, capital expenditures and cash flow projections, including hotel revenues and net operating income, at the respective hotel properties. Transaction costs related to business combinations are expensed as incurred and included on the consolidated statements of operations and comprehensive income. Transaction costs related to asset acquisitions are capitalized and recorded to investment in hotel property. Hotel renovations and replacements of assets that improve or extend the life of the asset are recorded at cost and depreciated over their estimated useful lives. Furniture, fixtures and equipment under finance leases are recorded at the present value of the minimum lease payments. Repair and maintenance costs are expensed as incurred. Hotel properties are recorded at cost and depreciated using the straight-line method over an estimated useful life of 10 to 40 years for buildings, land improvements, and building improvements and 1 to 10 years for furniture, fixtures and equipment. Leasehold improvements are amortized over the shorter of the lease term or the useful lives of the related assets. Intangible assets arising from contractual arrangements are typically amortized over the life of the contract. The Company is required to make subjective assessments as to the useful lives and classification of properties for purposes of determining the amount of depreciation expense to reflect each year with respect to the assets. These assessments may impact the Company’s results of operations. The Company reviews its investments in hotel properties for impairment whenever events or changes in circumstances indicate that the carrying value of the hotel properties may not be recoverable. Events or circumstances that may cause a review include, but are not limited to, when a hotel property experiences a current or projected loss from operations, when it becomes more likely than not that a hotel property will be sold before the end of its useful life, adverse changes in the demand for lodging at the properties due to declining national or local economic conditions and/or new hotel construction in markets where the hotels are located. When such conditions exist, the Company performs an analysis to determine if the estimated undiscounted future cash flows from operations and the proceeds from the ultimate disposition of a hotel exceed its carrying value. If the estimated undiscounted future cash flows are less than the carrying value of the asset, an adjustment to reduce the carrying value to the related hotel’s estimated fair market value is recorded and an impairment loss is recognized. In the evaluation of impairment of its hotel properties, the Company makes many assumptions and estimates including projected cash flows both from operations and eventual disposition, expected useful life and estimated holding period, future required capital expenditures, and fair values, including consideration of expected terminal capitalization rates, discount rates, and comparable selling prices. The Company will adjust its assumptions with respect to the remaining useful life of the hotel property when circumstances change or it is more likely than not that the hotel property will be sold prior to its previously expected useful life. F-14 Table of Contents The Company will classify a hotel as held for sale and will cease recording depreciation expense when a binding agreement to sell the property has been signed under which the buyer has committed a significant amount of nonrefundable cash, approval of the Company's board of trustees (the "Board of Trustees") has been obtained, no significant financing contingencies exist, and the sale is expected to close within one year. If the fair value less costs to sell is lower than the carrying value of the hotel, the Company will record an impairment loss. The Company will classify the loss, together with the related operating results, as continuing or discontinuing operations on the statements of operations and classify the assets and related liabilities as held for sale on the balance sheet. Intangible Assets and Liabilities Intangible assets or liabilities are recorded on non-market contracts assumed as part of the acquisition of certain hotels. The Company reviews the terms of agreements assumed in conjunction with the purchase of a hotel to determine if the terms are over or under market compared to an estimated market agreement at the acquisition date. Under market lease assets or over market contract liabilities are recorded at the acquisition date and amortized using the straight-line method over the term of the agreement. The Company does not amortize intangible assets with indefinite useful lives, but reviews these assets for impairment annually or at interim periods if events or circumstances indicate that the asset may be impaired. Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand, demand deposits with financial institutions and short-term liquid investments with an original maturity of three months or less. The Company maintains cash and cash equivalents balances in excess of insured limits with various financial institutions. This may subject the Company to significant concentrations of credit risk. The Company performs periodic evaluations of the credit quality of these financial institutions. Restricted Cash Restricted cash primarily consists of reserves for replacement of furniture and fixtures, cash held in escrow pursuant to certain lender or hotel management agreement requirements to pay for real estate taxes, ground rent or property insurance and cash held in cash management and lockbox accounts pursuant to certain mortgage loan requirements. Prepaid Expenses and Other Assets The Company's prepaid expenses and other assets consist of prepaid real estate taxes, prepaid insurance, inventories, over or under market leases, and corporate office equipment and furniture. Derivative Instruments In the normal course of business, the Company is exposed to the effects of interest rate changes. The Company may enter into derivative instruments including interest rate swaps, caps and collars to manage or hedge interest rate risk. Derivative instruments are recorded at fair value on the balance sheet date. Unrealized gains and losses of hedging instruments are reported in other comprehensive income (loss) and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Revenue Recognition Revenue consists of amounts derived from hotel operations, including the sales of rooms, food and beverage, and other ancillary services. Room revenue is recognized over the length of a customer's hotel stay. Revenue from food and beverage and other ancillary services is generated when a customer chooses to purchase goods or services separately from a hotel room and revenue is recognized on these distinct goods and services at the point in time or over the time period that goods or services are provided to the customer. Certain ancillary services are provided by third parties and the Company assesses whether it is the principal or agent in these arrangements. If the Company is the agent, revenue is recognized based upon the commission earned from the third party. If the Company is the principal, the Company recognizes revenue based upon the gross sales price. Some contracts for rooms or food and beverage services require an upfront deposit which is recorded as deferred revenues (or contract liabilities) and recognized once the performance obligations are satisfied. 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. 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. The accretion is included in interest expense. F-15 Table of Contents Certain of the Company's hotels have retail spaces, restaurants or other spaces which the Company leases to third parties. Lease revenue is recognized on a straight-line basis over the life of the lease and included in other operating revenues in the Company's consolidated statements of operations and comprehensive income. The Company collects sales, use, occupancy and similar taxes at its hotels which are presented on a net basis on the consolidated statements of operations and comprehensive income. Accounts receivable primarily represents receivables from hotel guests who occupy hotel rooms and utilize hotel services. The Company maintains an allowance for doubtful accounts sufficient to cover estimated potential credit losses. Income Taxes To qualify as a REIT for federal income tax purposes, the Company must meet a number of organizational and operational requirements, including a requirement that it currently distribute at least 90 percent of its REIT taxable income (determined without regard to the deduction for dividends paid and excluding net capital gains) to its shareholders. As a REIT, the Company generally is not subject to federal corporate income tax on that portion of its taxable income that is currently distributed to shareholders. The Company is subject to certain state and local taxes on its income and property, and to federal income and excise taxes on its undistributed taxable income. In addition, the Company's TRS lessees are subject to federal and state income taxes. The Company accounts for income taxes using the asset and liability method under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Valuation allowances are provided if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Share-based Compensation The Company has adopted an equity incentive plan that provides for the grant of common share options, share awards, share appreciation rights, performance units and other equity-based awards. Equity-based compensation is measured at the fair value of the award on the date of grant and recognized as an expense on a straight-line basis over the vesting period. Share-based compensation awards that contain a performance condition are reviewed at least quarterly to assess the achievement of the performance condition. Compensation expense will be adjusted when a change in the assessment of achievement of the specific performance condition level is determined to be probable. The determination of fair value of these awards is subjective and involves significant estimates and assumptions including expected volatility of the Company's shares, expected dividend yield, expected term and assumptions of whether these awards will achieve parity with other operating partnership units or achieve performance thresholds. Earnings Per Share Basic earnings per share (“EPS”) is computed by dividing the net income (loss) available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS is computed by dividing net income (loss) available to common shareholders, as adjusted for dilutive securities, by the weighted-average number of common shares outstanding plus dilutive securities. Any anti-dilutive securities are excluded from the diluted per-share calculation. Comprehensive Income (Loss) The purpose of reporting comprehensive income (loss) is to report a measure of all changes in equity of an entity that result from recognized transactions and other economic events of the period other than transactions with owners in their capacity as owners. Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss). Segment Information The Company separately evaluates the performance of each of its hotel properties. However, because each of the hotels has similar economic characteristics, facilities, and services, the hotel properties have been aggregated into a single operating segment. New Accounting Pronouncements Convertible Debt In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) , which simplified the accounting for convertible instruments by eliminating the requirement to separate conversion features from the host contract. The new guidance eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. As a result, in more cases, convertible debt will be accounted for as a single instrument. The guidance also removes certain conditions for equity classification related to contracts in an entity’s own equity and requires the application of the if-converted method for calculating diluted earnings per share. F-16 Table of Contents The Company early adopted ASU 2020-06 effective January 1, 2021 and reclassified its equity component of the convertible debt to the liability. Convertible debt is now recorded entirely as a single liability with no portion of the proceeds from the issuance of the convertible debt instrument recorded as attributable to the conversion feature. In addition, the Company ceased recording non-cash interest expense associated with the amortization of the debt discount and calculates earnings per share using the if-converted method to the extent those shares are not anti-dilutive. Reference Rate Reform In March 2020 and January 2021, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting and ASU 2021-01, Reference Rate Reform (Topic 848) , respectively. ASU 2020-04 and ASU 2021-01 provide optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform, if certain criteria are met. The guidance in ASU 2020-04 and ASU 2021-01 was effective upon issuance and, once adopted, may be applied prospectively to contract modifications and hedging relationships through December 31, 2022. In 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company will continue to evaluate the impact of the adoption of ASU 2020-04 and ASU 2021-01 on its consolidated financial statements. Note 3. Acquisition and Disposition of Hotel Properties Acquisitions On July 22, 2021, the Company acquired the leasehold interest in the 200 -room Jekyll Island Club Resort in Jekyll Island, Georgia for $ 94.0 million, excluding prorations and transaction costs, using cash on hand. On September 23, 2021, the Company acquired the leasehold interest in the 369 -room Margaritaville Hollywood Beach Resort in Hollywood, Florida for $ 270.0 million, excluding prorations and transaction costs, using cash on hand and the assumption of a $ 161.5 million mortgage loan. On October 20, 2021, the Company acquired the 19 -room Avalon Bed & Breakfast and the 12 -room Duval Gardens in Key West, Florida for $ 20.0 million, excluding prorations and transaction costs, using cash on hand. Both properties were consolidated into the Company's Southernmost Beach Resort. On December 1, 2021, the Company acquired the leasehold interest in the 210 -room Estancia La Jolla Hotel & Spain La Jolla, California for $ 108.0 million, excluding prorations and transaction costs, using cash on hand and the assumption of a $ 61.7 million mortgage loan. See Note 5, Debt , for additional information about the mortgage loans assumed and Note 11, Commitments and Contingencies , for additional information about the leasehold interests acquired. Dispositions The following table summarizes disposition transactions during the years ended December 31, 2021 and 2020 (in thousands): Hotel Property Name Location Sale Date Sale Price Sir Francis Drake San Francisco, CA April 1, 2021 $ 157,625 The Roger New York New York, NY June 10, 2021 19,000 Villa Florence San Francisco on Union Square San Francisco, CA September 9, 2021 87,500 2021 Total $ 264,125 Sofitel Washington DC Lafayette Square and InterContinental Buckhead Atlanta Washington, DC / Buckhead, GA March 6, 2020 $ 331,000 Union Station Hotel Nashville, Autograph Collection Nashville, TN July 29, 2020 56,000 2020 Total $ 387,000 For the years ended December 31, 2021, 2020 and 2019, the accompanying consolidated statements of operations and comprehensive income included operating income (loss) of $( 6.5 ) million, $( 15.5 ) million and $ 33.8 million, respectively, excluding impairment loss and (gain) loss on sale of hotel properties, related to the hotel properties sold. The sales of the hotel properties described above did not represent a strategic shift that had a major effect on the Company’s operations and financial results, and therefore, did not qualify as discontinued operations. F-17 Table of Contents Note 4. Investment in Hotel Properties Investment in hotel properties as of December 31, 2021 and 2020 consisted of the following (in thousands): December 31, 2021 December 31, 2020 Land $ 926,330 $ 973,848 Buildings and improvements 5,197,816 4,849,644 Furniture, fixtures and equipment 535,607 515,975 Finance lease asset 91,181 114,835 Construction in progress 15,869 5,443 $ 6,766,803 $ 6,459,745 Right-of-use asset, operating leases 378,939 320,564 Investment in hotel properties $ 7,145,742 $ 6,780,309 Less: Accumulated depreciation ( 1,066,409 ) ( 898,287 ) Investment in hotel properties, net $ 6,079,333 $ 5,882,022 Impairment The Company reviews its investment in hotel properties for impairment whenever events or circumstances indicate potential impairment. As a result of the ongoing effects of the COVID-19 pandemic on its expected future operating cash flows and estimated hold periods for certain properties, the Company determined certain impairment triggers had occurred and therefore, the Company assessed its investment in hotel properties for recoverability. Based on the analyses performed, for the year ended December 31, 2021, the Company recognized an impairment loss of $ 14.9 million related to one hotel as a result of its fair value being lower than its carrying value. The impairment loss was determined using Level 2 inputs under authoritative guidance for fair value measurements using information from marketing efforts for this property. For the year ended December 31, 2020, the Company recognized an impairment loss of $ 74.6 million related to two hotels and the 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 using information from marketing efforts for this property. Right-of-use Assets and Lease Liabilities The Company recognized right-of-use assets and related liabilities related to its ground leases, all of which are operating leases. When the rate implicit in the lease could not be determined, the Company used incremental borrowing rates, which ranged from 4.7 % to 7.6 %. In addition, the term used includes any options to exercise extensions when it is reasonably certain the Company will exercise such option. See Note 11, Commitments and Contingencies , for additional information about the ground leases. The right-of-use assets and liabilities are amortized to ground rent expense over the term of the underlying lease agreements. As of December 31, 2021, the Company's lease liabilities consisted of operating lease liabilities of $ 319.4 million and financing lease liabilities of $ 42.0 million. As of December 31, 2020, the Company's lease liabilities consisted of operating lease liabilities of $ 255.1 million and financing lease liabilities of $ 46.4 million. The financing lease liabilities are included in accounts payable, accrued expenses and other liabilities on the Company's accompanying consolidated balance sheets. Note 5. Debt On February 18, 2021, the Company amended its credit agreements and related documents governing its unsecured revolving credit facilities, term loan agreements and senior notes, which: • waived all of its financial covenants until the second quarter of 2022 (with substantially less-restrictive covenants through the end of the first quarter of 2023), except for the minimum fixed charge coverage ("FCCR") and the minimum unsecured interest coverage ratio ("Unsecured ICR") which were extended through December 31, 2021; • extended the majority of the remaining balance of the Company's Sixth Term Loan 2021 tranche, from November 2021 to November 2022; • increased the spread on the unsecured revolving credit facility to LIBOR plus 2.40 % and unsecured term loans to LIBOR plus 2.35 %; • increased the fixed rate on the senior unsecured notes by 0.45 % during the waiver period; and • extended other terms through the waiver period. F-18 Table of Contents On December 9, 2021, the Company amended its credit agreements and related documents governing its unsecured revolving credit facilities, term loan agreements and senior notes, which: • extended the maturity date of the Company's senior unsecured credit facility from January 2022 to March 2023, and provided an option to extend for up to two six-month periods; • extended the maturity date of the Company's PHL unsecured credit facility from January 2022 to March 2023, and reduced the borrowing capacity principal amount from $ 25.0 million to $ 20.0 million; • extended the maturity date for $ 274.0 million of the Company's First Term Loan from January 2023 to March 2024; • provided an option to extend up to $ 69.8 million of the remaining principal balance of the Company's Sixth Term Loan Tranche 2021 from November 2022 to November 2023; • provided an option to extend up to $ 93.0 million of the remaining principal balance of the Company's Sixth Term Loan Tranche 2022 from November 2022 to November 2023; • set the maximum amount of permitted additional secured non-recourse indebtedness at $ 400.0 million; • set the amount that may be reinvested in the acquisition of unencumbered hotel properties funded by the disposition of hotel properties at $ 1.0 billion; • extended the waiver period for the minimum FCCR and the minimum Unsecured ICR financial covenants until the second quarter of 2022; • set the minimum FCCR for the second quarter of 2022 to 1.25 :1.00; and • set the minimum Unsecured ICR for the second quarter of 2022 to 1.50 :1.00. F-19 Table of Contents The Company's debt consisted of the following as of December 31, 2021 and 2020 (dollars in thousands): Balance Outstanding as of Interest Rate Maturity Date December 31, 2021 December 31, 2020 Revolving credit facilities Senior unsecured credit facility Floating (1)(2)(3) March 2023 $ — $ 40,000 PHL unsecured credit facility Floating (2)(4) March 2023 — — Total revolving credit facilities $ — $ 40,000 Unsecured term loans First Term Loan Floating (5) January 2023 26,000 300,000 First Term Loan Extended Floating (5) March 2024 274,000 — Second Term Loan Floating (5) April 2022 26,327 65,000 Fourth Term Loan Floating (5) October 2024 110,000 110,000 Sixth Term Loan Tranche 2021 Floating (5) November 2021 — 40,966 Tranche 2021 Extended Floating (5)(9) November 2022 82,071 173,034 Tranche 2022 Floating (5)(10) November 2022 114,670 286,000 Tranche 2023 Floating (5) November 2023 400,000 400,000 Tranche 2024 Floating (5) January 2024 400,000 400,000 Total Sixth Term Loan 996,741 1,300,000 Total term loans at stated value 1,433,068 1,775,000 Deferred financing costs, net ( 5,812 ) ( 8,455 ) Total term loans $ 1,427,256 $ 1,766,545 Convertible senior notes Convertible senior notes 1.75 % December 2026 750,000 500,000 Debt premium (discount), net 11,605 ( 113,099 ) Deferred financing costs, net ( 16,204 ) ( 12,568 ) Total convertible senior notes $ 745,401 $ 374,333 Senior unsecured notes Series A Notes 5.15 % (6) December 2023 47,600 60,000 Series B Notes 5.38 % (7) December 2025 2,400 40,000 Total senior unsecured notes at stated value 50,000 100,000 Deferred financing costs, net ( 162 ) ( 407 ) Total senior unsecured notes $ 49,838 $ 99,593 Mortgage loans Margaritaville Hollywood Beach Resort Floating (8) May 2022 161,500 — Estancia La Jolla Hotel & Spa 5.07 % September 2028 61,373 — Total mortgage loans at stated value 222,873 — Debt premium (discount), net ( 2,735 ) — Deferred financing costs, net ( 745 ) — Total mortgage loans $ 219,393 $ — Total debt $ 2,441,888 $ 2,280,471 ______________________ (1) Borrowings bear interest at floating rates equal to, at the Company's option, either (i) LIBOR plus an applicable margin or (ii) an Adjusted Base Rate (as defined in the applicable credit agreement) plus an applicable margin. (2) In December 2021, the Company exercised the option to extend the maturity date to March 2023, pursuant to certain terms and conditions and payment of an extension fee. (3) Of the total borrowing capacity, $ 39.0 million will mature in January 2022. The Company has the option to extend the maturity date of March 2023 for the remaining $ 611.0 million for up to two six-month periods, pursuant to certain terms and conditions and payment of an extension fee. (4) Borrowings bear interest at floating rates equal to, at the Company's option, either (i) LIBOR plus an applicable margin or (ii) a Eurocurrency Rate (as defined in the applicable credit agreement) plus an applicable margin. (5) 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 December 31, 2021, approximately $ 1.3 billion of the borrowings under the term loan facilities bore an effective weighted-average fixed interest rate of 4.06 %, after taking into account interest rate swap agreements, and approximately $ 113.1 million bore an effective weighted-average floating interest rate of 2.64 %. As of December 31, 2020, approximately $ 1.4 billion of the borrowings under the term loan facilities bore an effective weighted-average fixed interest rate of 4.19 %, after taking into account interest rate swap agreements, and approximately $ 345.0 million bore a weighted-average floating interest rate of 2.46 %. (6) In February 2021, the interest rate increased from 4.70 % to 5.15 %. The increased interest rate is effective through the end of the waiver period. F-20 Table of Contents (7) In February 2021, the interest rate increased from 4.93 % to 5.38 %. The increased interest rate is effective through the end of the waiver period. (8) The loan bears interest at a floating rate equal to one-month LIBOR plus a weighted-average spread of 2.37 %. The Company has the option to extend the maturity date for up to two one-year periods. (9) The Company has the option to extend the maturity date for $ 69.8 million of the principal balance by up to one year, subject to certain terms and conditions and payment of an extension fee. (10) The Company has the option to extend the maturity date for $ 93.0 million of the principal balance by up to one year, subject to certain terms and conditions and payment of an extension fee. Unsecured Revolving Credit Facilities The Company has a $ 650.0 million senior unsecured revolving credit facility, of which $ 39.0 million will mature in January 2022. The remaining $ 611.0 will mature in March 2023, with options to extend the maturity date for up to two six-month periods , subject to certain terms and conditions and payment of an extension fee. As of December 31, 2021, the Company had no outstanding borrowings, $ 12.1 million of outstanding letters of credit and borrowing capacity of $ 637.9 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 the London Inter-bank Offered Rate ("LIBOR") or the alternate base rate, plus an additional margin amount, or spread. The Company has the ability to further increase the aggregate borrowing capacity under the credit agreement up to $ 1.3 billion, subject to lender approval. 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 amendments to the credit agreements and related documentation described above, the spread on the borrowings is fixed at 2.40 % 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. The credit agreement contains certain financial covenants, including a maximum leverage ratio, a minimum fixed charge coverage ratio, and a maximum percentage of secured debt to total asset value. The Company also has a $ 20.0 million unsecured revolving credit facility (the "PHL Credit Facility") to be used for PHL's working capital and general corporate purposes. This credit facility has substantially similar terms as the Company's senior unsecured revolving credit facility and matures in March 2023. Borrowings on the PHL Credit Facility bear interest at LIBOR plus 1.45 % to 2.25 %, depending on the Company's leverage ratio. As a result of the amendments described above, the spread of the borrowings is fixed at 2.40 % 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 December 31, 2021, the Company had no borrowings under the PHL Credit Facility and had $ 20.0 million borrowing capacity remaining available 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. The Company will incur a fee that shall be agreed upon with the issuing bank. 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 $ 12.1 million and $ 6.8 million were outstanding as of December 31, 2021 and 2020, respectively. As of December 31, 2021, the Company was in compliance with all debt covenants of the credit agreements that govern the unsecured revolving credit facilities. Unsecured Term Loan Facilities The Company has senior unsecured term loans with different maturities. Each unsecured term loan bears interest at a variable rate of a benchmark interest rate plus an applicable margin, depending on the Company's leverage ratio. 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. During the year ended December 31, 2021, the Company repaid $ 341.9 million aggregate principal balance of the Company's Second Term Loan and Sixth Term Loan. As of December 31, 2021, 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 for further discussion on the interest rate swaps. Convertible Senior Notes In December 2020, the Company issued $ 500.0 million aggregate principal amount of 1.75 % Convertible Senior Notes due December 2026 (the "Convertible Notes"). The net proceeds from this offering of the Convertible Notes were approximately $ 487.3 million after deducting the underwriting fees and other expenses paid by the Company. In February 2021, the Company issued an additional $ 250.0 million aggregate principal amount of Convertible Notes. These additional Convertible Notes were sold at a 5.5 % premium to par and generated net proceeds of approximately $ 257.2 million after deducting the underwriting fees and other expenses paid by the Company of $ 6.5 million, which was offset by a premium received in the amount of $ 13.8 million. F-21 Table of Contents The Convertible Notes are governed by an indenture (the “Base Indenture”) between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee. The Convertible Notes bear interest at a rate of 1.75 % per annum, payable semi-annually in arrears on June 15th and December 15th of each year, beginning on June 15, 2021. The Convertible Notes will mature on December 15, 2026. The Company recorded coupon interest expense of $ 12.7 million and $ 0.4 million for the years ended December 31, 2021 and 2020, respectively. The Company separated the Convertible Notes issued in December 2020 into liability and equity components. The initial carrying amount of the liability component was $ 386.1 million and was calculated using a discount rate of 6.25 %. The discount rate was based on the terms of debt instruments that were similar to the Convertible Notes. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the principal amount of such Convertible Notes, or $ 113.9 million. The amount recorded in equity was not subject to remeasurement or amortization. The $ 113.9 million also represented the initial discount recorded on the Convertible Notes. As a result of the Company's early adoption of ASU 2020-06 on January 1, 2021, the Convertible Notes are now recorded as a single liability with no portion recorded in equity. The Company also ceased recording non-cash interest expense associated with the amortization of the debt discount. Prior to June 15, 2026, the Convertible Notes will be convertible upon certain circumstances. On and after June 15, 2026, holders may convert any of their Convertible Notes into the Company’s common shares of beneficial interest (“common shares”) at the applicable conversion rate at any time at their election two days prior to the maturity date. The initial conversion rate is 39.2549 common shares per $1,000 principal amount of Convertible Notes, which represents an initial conversion price of approximately $ 25.47 per share. The conversion rate is subject to adjustment in certain circumstances. As of December 31, 2021 and 2020, the if-converted value of the Convertible Notes did not exceed the principal amount. The Company may redeem for cash all or a portion of the Convertible Notes, at its option, on or after December 20, 2023 upon certain circumstances. The redemption price will be equal to 100 % of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. If certain make-whole fundamental changes occur, the conversion rate for the Convertible Notes may be increased. In connection with the Convertible Notes issuances, the Company entered into privately negotiated capped call transactions (the “Capped Call Transactions”) with certain of the underwriters of the offerings of the Convertible Notes or their respective affiliates and other financial institutions. The Capped Call Transactions initially cover, subject to anti-dilution adjustments substantially similar to those applicable to the Convertible Notes, the number of common shares underlying the Convertible Notes. The Capped Call Transactions are expected generally to reduce the potential dilution to holders of common shares upon conversion of the Convertible Notes and/or offset the potential cash payments that the Company could be required to make in excess of the principal amount of any converted Convertible Notes upon conversion thereof, with such reduction and/or offset subject to a cap. The upper strike price of the Capped Call Transactions is $ 33.0225 per share. The cost of the Capped Call Transactions entered into in December 2020 and February 2021 was $ 38.3 million and $ 21.0 million, respectively, and was recorded within additional paid-in capital. Senior Unsecured Notes The Company has $ 47.6 million of senior unsecured notes outstanding bearing a fixed interest rate of 4.70 % per annum and maturing in December 2023 (the "Series A Notes") and $ 2.4 million of senior unsecured notes outstanding bearing a fixed interest rate of 4.93 % per annum and maturing in December 2025 (the "Series B Notes"). As a result of the amendments described above, the interest rates of the Series A Notes and the Series B Notes are fixed at 5.15 % and 5.38 %, respectively, for the duration of the waiver period. 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 December 31, 2021, the Company was in compliance with all such debt covenants. Mortgage Loans On September 23, 2021, the Company assumed a $ 161.5 million loan secured by a first-lien mortgage on the leasehold interest of Margaritaville Hollywood Beach Resort ("Margaritaville"). The loan requires interest-only payments based on a floating interest rate of one-month LIBOR plus a weighted-average spread of 2.37 %. The loan matures on May 9, 2022 and may be extended for up to two one-year periods. If the loan is extended for the second of the two one-year periods, the interest rate spread will increase by 20 basis points for the second-year period only. The Company expects to exercise both extensions. The loan is also subject to an interest rate cap agreement. On December 1, 2021, the Company assumed a $ 61.7 million loan secured by a first-lien mortgage on the leasehold interest of Estancia La Jolla Hotel & Spa ("Estancia"). The loan requires both principal and interest monthly payments based on a fixed interest rate of 5.07 %. The loan matures on September 1, 2028. F-22 Table of Contents The Company's mortgage loans associated with Margaritaville and Estancia are non-recourse to the Company except for customary carve-outs to the general non-recourse liability. The loans contain customary provisions regarding events of default, as well as customary cash management, cash trap and lockbox provisions. Cash trap provisions are triggered if the hotel's performance is below a certain threshold. Once triggered, all of the cash flow generated by the hotel is deposited directly into lockbox accounts and then swept into cash management accounts for the benefit of our lender. No event of default has occurred under the loan documents. The mortgage loans triggered the cash trap provisions prior to the acquisitions, and therefore cash from hotel operations is being held by the lender in the cash management accounts and reflected as restricted cash in the accompanying consolidated balance sheets. Cash will be released from the lockbox once the hotel reaches profitability levels that terminate the cash trap or the loan is paid off. Interest Expense The components of the Company's interest expense consisted of the following for the years ended December 31, 2021, 2020, and 2019 (in thousands): For the year ended December 31, 2021 2020 2019 Unsecured revolving credit facilities $ 2,092 $ 10,210 $ 4,530 Unsecured term loan facilities 61,529 72,642 79,813 Convertible senior notes 12,662 365 — Senior unsecured notes 3,562 4,792 4,792 Mortgage debt 1,375 — 2,293 Amortization of deferred financing fees, (premiums) and discounts 9,741 7,296 7,115 Other 5,672 8,793 9,931 Total interest expense $ 96,633 $ 104,098 $ 108,474 Fair Value 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, convertible senior notes and the Estancia mortgage loan) as of December 31, 2021 and 2020 was $ 747.8 million and $ 491.8 million, respectively. Future Minimum Principal Payments As of December 31, 2021, the future minimum principal payments for the Company's debt, assuming all extension options available in the Company's debt agreements are exercised, are as follows (in thousands): 2022 $ 62,124 2023 638,419 2024 947,584 2025 4,602 2026 752,318 Thereafter 50,894 Total debt principle payments $ 2,455,941 Deferred financing costs, net ( 22,923 ) Debt premium (discount), net 8,870 Total debt $ 2,441,888 Derivative and Hedging Activities The Company enters into interest rate swap agreements to hedge against interest rate fluctuations. All of the Company's interest rate swaps are cash flow hedges. 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. F-23 Table of Contents The Company's interest rate swaps at December 31, 2021 and 2020 consisted of the following, by maturity date (dollars in thousands): Aggregate Notional Value as of Hedge Type Interest Rate Range Maturity December 31, 2021 December 31, 2020 Swap-cash flow 1.46 % - 1.75 % January 2021 $ — $ 490,000 Swap-cash flow 2.60 % October 2021 — 110,000 Swap-cash flow 1.78 % - 1.79 % January 2022 180,000 180,000 Swap-cash flow 1.64 % - 1.68 % April 2022 100,000 100,000 Swap-cash flow 0.17 % January 2023 200,000 — Swap-cash flow 1.99 % November 2023 250,000 250,000 Swap-cash flow 2.60 % January 2024 300,000 300,000 Swap-cash flow 1.43 % - 1.44 % February 2026 290,000 — Total $ 1,320,000 $ 1,430,000 The Company records all derivative instruments at fair value in the accompanying consolidated balance sheets. Fair values of interest rate swaps and caps are determined using the standard market methodology of netting the discounted future fixed cash receipts/payments and the discounted expected variable cash payments/receipts. Variable interest rates used in the calculation of projected receipts and payments on the swaps are based on an expectation of future interest rates derived from observable market interest rate curves (Overnight Index Swap curves) and volatilities (Level 2 inputs). Derivatives expose the Company to credit risk in the event of non-performance by the counterparties under the terms of the interest rate hedge agreements. The Company incorporates these counterparty credit risks in its fair value measurements. The Company believes it minimizes the credit risk by transacting with major creditworthy financial institutions. As of December 31, 2021, the Company's derivative instruments were in both asset and liability positions, with aggregate asset and liability fair values of $ 0.6 million and $ 20.2 million, respectively. Derivative assets are included in prepaid expenses and other assets and derivative liabilities are included in accounts payable, accrued expenses and other liabilities in the accompanying consolidated balance sheets. The Company expects approximately $ 13.2 million will be reclassified from accumulated other comprehensive income (loss) to interest expense within the next 12 months. Note 6. Revenue 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 years ended December 31, 2021, 2020 and 2019 (in thousands): For the year ended December 31, 2021 2020 2019 Southern Florida/Georgia $ 166,310 $ 76,971 $ 115,600 San Diego, CA 165,977 96,071 243,598 Boston, MA 124,440 63,356 273,669 Los Angeles, CA 94,275 51,664 200,398 Portland, OR 53,978 27,174 105,571 San Francisco, CA 43,601 66,896 319,195 Other (1) 28,608 27,453 128,627 Chicago, IL 27,279 15,604 82,690 Washington, D.C. 20,630 12,739 111,552 Seattle, WA 7,946 4,960 31,313 $ 733,044 $ 442,888 $ 1,612,213 ______________________ (1) Other includes: Nashville, TN, New York, NY, Philadelphia, PA and Santa Cruz, CA. 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 period is expected to be recognized as revenue over the following 12 months. F-24 Table of Contents Note 7. Equity Common Shares The Company is authorized to issue up to 500,000,000 common shares. Each outstanding common share entitles the holder to one vote on each matter submitted to a vote of shareholders. Holders of common shares are entitled to receive dividends when authorized by the Board of Trustees. Share Repurchase Program On February 22, 2016, the Company announced that the Board of Trustees authorized a share repurchase program of up to $ 150.0 million of common shares. Under this program, the Company may repurchase common shares from time to time in transactions on the open market or by private agreement. The Company may suspend or discontinue this program at any time. Upon repurchase by the Company, common shares cease to be outstanding and become authorized but unissued common shares. For the year ended December 31, 2021, the Company had no repurchases under this program and as of December 31, 2021, $ 56.6 million of common shares remained available for repurchase under this program. The credit agreements governing the Company's existing indebtedness prohibits the Company from repurchasing common shares until the Company has certified compliance with certain financial covenants through June 30, 2022. 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 common shares. Under this program, the Company may repurchase common shares from time to time in transactions on the open market or by private agreement. The Company may suspend or discontinue this program at any time. This $ 100.0 million share repurchase program will commence upon completion of the Company's $ 150.0 million share repurchase program. ATM Program On April 29, 2021, the Company filed a prospectus supplement with the SEC to sell up to $ 200.0 million of common shares under an "at the market" offering program (the "ATM program"). No common shares were issued or sold under the ATM program during the year ended December 31, 2021. As of December 31, 2021, $ 200.0 million of common shares remained available for issuance under the ATM program. Common Dividends The Company declared the following dividends on common shares/units for the year ended December 31, 2021: Dividend per Share/Unit For the Quarter Ended Record Date Payable Date $ 0.01 March 31, 2021 March 31, 2021 April 15, 2021 $ 0.01 June 30, 2021 June 30, 2021 July 15, 2021 $ 0.01 September 30, 2021 September 30, 2021 October 15, 2021 $ 0.01 December 31, 2021 December 31, 2021 January 18, 2022 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”). In May 2021, the Company issued 9,200,000 6.375 % Series G Cumulative Redeemable Preferred Shares at a public offering price of $ 25.00 per share for net proceeds of $ 222.6 million. In July 2021, the Company issued 10,000,000 5.70 % Series H Cumulative Redeemable Preferred Shares at a public offering price of $ 25.00 per share for net proceeds of $ 242.1 million. In August 2021, the Company redeemed all outstanding shares of 6.50 % Series C Cumulative Redeemable Preferred Shares and 6.375 % Series D Cumulative Redeemable Preferred Shares at the redemption amount of $ 25.00 per share plus accrued and unpaid dividends of $ 0.17 and $ 0.16 per share, respectively. F-25 Table of Contents The following Preferred Shares were outstanding as of December 31, 2021 and 2020: Security Type December 31, 2021 December 31, 2020 6.50 % Series C — 5,000,000 6.375 % Series D — 5,000,000 6.375 % Series E 4,400,000 4,400,000 6.30 % Series F 6,000,000 6,000,000 6.375 % Series G 9,200,000 — 5.70 % Series H 10,000,000 — 29,600,000 20,400,000 . The Series E, Series F, Series G and Series H Cumulative Redeemable Preferred Shares (collectively, the “Preferred Shares”) rank senior to the common shares and on parity with each other with respect to payment of distributions. The Preferred Shares do not have any maturity date and are not subject to mandatory redemption. The Series E and Series F Preferred Shares could not be redeemed prior to March 4, 2018, and May 25, 2021, respectively, except in limited circumstances relating to the Company’s continuing qualification as a REIT or as discussed below. The Series G and Series H Preferred Shares may not be redeemed prior to May 13, 2026 and July 27, 2026, respectively, except in limited circumstances relating to the Company’s continuing qualification as a REIT or as discussed below. On or after such dates, the Company may, at its option, redeem the Preferred Shares, in each case in whole or from time to time in part, by payment of $ 25.00 per share, plus any accumulated, accrued and unpaid distributions through the date of redemption. Upon the occurrence of a change of control, as defined in the Company's declaration of trust, the result of which the common shares and the common securities of the acquiring or surviving entity are not listed on the New York Stock Exchange, the NYSE MKT or Nasdaq, or any successor exchanges, the Company may, at its option, redeem the Preferred Shares in whole or in part within 120 days following the change of control by paying $ 25.00 per share, plus any accrued and unpaid distributions through the date of redemption. If the Company does not exercise its right to redeem the Preferred Shares upon a change of control, the holders of the Preferred Shares have the right to convert some or all of their shares into a number of common shares based on defined formulas subject to share caps. The share cap on each Series E Preferred Share is 1.9372 common shares, on each Series F Preferred Share is 2.0649 common shares, on each Series G Preferred Share is 2.1231 common shares, and on each Series H Preferred Share is 2.2311 common shares. Preferred Dividends The Company declared the following dividends on preferred shares for the year ended December 31, 2021: Security Type Dividend per Share/Unit For the Quarter Ended Record Date Payable Date 6.50 % Series C $ 0.41 March 31, 2021 March 31, 2021 April 15, 2021 6.50 % Series C $ 0.41 June 30, 2021 June 30, 2021 July 15, 2021 6.50 % Series C $ 0.17 August 22, 2021 August 22, 2021 6.375 % Series D $ 0.40 March 31, 2021 March 31, 2021 April 15, 2021 6.375 % Series D $ 0.40 June 30, 2021 June 30, 2021 July 15, 2021 6.375 % Series D $ 0.16 August 21, 2021 August 21, 2021 6.375 % Series E $ 0.40 March 31, 2021 March 31, 2021 April 15, 2021 6.375 % Series E $ 0.40 June 30, 2021 June 30, 2021 July 15, 2021 6.375 % Series E $ 0.40 September 30, 2021 September 30, 2021 October 15, 2021 6.375 % Series E $ 0.40 December 31, 2021 December 31, 2021 January 18, 2022 6.30 % Series F $ 0.39 March 31, 2021 March 31, 2021 April 15, 2021 6.30 % Series F $ 0.39 June 30, 2021 June 30, 2021 July 15, 2021 6.30 % Series F $ 0.39 September 30, 2021 September 30, 2021 October 15, 2021 6.30 % Series F $ 0.39 December 31, 2021 December 31, 2021 January 18, 2022 6.375 % Series G (1) $ 0.67 September 30, 2021 September 30, 2021 October 15, 2021 6.375 % Series G $ 0.40 December 31, 2021 December 31, 2021 January 18, 2022 5.70 % Series H (2) $ 0.31 September 30, 2021 September 30, 2021 October 15, 2021 5.70 % Series H $ 0.36 December 31, 2021 December 31, 2021 January 18, 2022 ______________________ (1) The initial long-period dividend for the 6.375 % Series G Preferred Shares was paid in October 2021. (2) The initial short-period dividend for the 5.70 % Series H Preferred Shares was paid in October 2021. F-26 Table of Contents Non-controlling Interest of Common Units in Operating Partnership Holders of Operating Partnership units ("OP Units") have certain redemption rights that enable OP unit holders to cause the Operating Partnership to redeem their units in exchange for, at the Company’s option, cash per unit equal to the market price of common shares at the time of redemption or common shares on a one-for-one basis. 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. 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 December 31, 2021 and 2020, the Operating Partnership had 133,605 OP units held by third parties, excluding LTIP units. As of December 31, 2021, 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. As of December 31, 2021 and 2020, the Operating Partnership had 727,208 and 127,111 LTIP units outstanding, respectively. Of the 727,208 LTIP units outstanding at December 31, 2021, 127,111 LTIP units have vested. Only vested LTIP units may be converted to common units of the Operating Partnership, which in turn can be tendered for redemption as described above. Note 8. Share-Based Compensation Plan The Company maintains the 2009 Equity Incentive Plan, as amended and restated (as amended, the "Plan"), to attract and retain independent trustees, executive officers and other key employees and service providers. The Plan provides for the grant of options to purchase common shares, share awards, share appreciation rights, performance units and other equity-based awards. Share awards under the Plan vest over a period determined by the Board of Trustees, generally over three to five years . The Company pays or accrues for dividends on share-based awards. 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 December 31, 2021, there were 1,809,516 common shares available for issuance under the Plan. Service Condition Share Awards From time to time, the Company awards restricted common shares under the Plan to members of the Board of Trustees, officers and employees. 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 December 31, 2021: Shares Weighted-Average Grant Date Fair Value Unvested at January 1, 2019 127,732 $ 32.22 Granted 88,430 $ 32.64 Vested ( 66,276 ) $ 30.20 Forfeited ( 707 ) $ 32.70 Unvested at December 31, 2019 149,179 $ 33.37 Granted 390,242 $ 23.62 Vested ( 72,824 ) $ 33.13 Forfeited ( 6,787 ) $ 27.68 Cancelled ( 217,083 ) $ 25.53 Unvested at December 31, 2020 242,727 $ 24.94 Granted 415,531 $ 22.69 Vested ( 81,591 ) $ 30.41 Forfeited ( 9,236 ) $ 23.37 Unvested at December 31, 2021 567,431 $ 22.53 F-27 Table of Contents 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 canceled the February 2020 service condition share award (retention grant) and as a result accelerated and recognized an expense of $ 5.5 million. For the years ended December 31, 2021, 2020 and 2019 the Company recognized approximately $ 4.1 million, $ 8.1 million, and $ 2.4 million, respectively, of share-based compensation expense related to these awards in the accompanying consolidated statements of operations and comprehensive income. As of December 31, 2021, there was $ 8.8 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 3.2 years. Performance-Based Equity Awards On December 13, 2013, the Board of Trustees approved a target award of 252,088 performance-based equity awards to officers and employees of the Company that were eligible for vesting in January 2016, 2017, 2018, 2019 and 2020. The actual number of common shares that vested was based on the two performance criteria defined in the award agreements for the period of performance beginning on the grant date and ending on the applicable vesting date. Based upon the extent to which the performance criteria had been met, the Company issued 25,134 , 12,285 , 72,236 and 35,471 common shares in January 2016, 2017, 2018 and 2019, respectively, and 27,881 common shares in February 2020. On February 10, 2016, the Board of Trustees approved a target award of 100,919 performance-based equity awards to officers and employees of the Company. In January 2019, these awards were vested and the Company issued 142,173 and 31,146 common shares to officers and employees, respectively. The actual number of common shares that vested was based on the three performance criteria defined in the award agreements for the period of performance from January 1, 2016 through December 31, 2018. On February 15, 2017, the Board of Trustees approved a target award of 81,939 performance-based equity awards to officers and employees of the Company. In January 2020, these awards vested and the Company issued 1,972 and 405 common shares to officers and employees, respectively. The actual number of common shares that vested was based on the two performance criteria defined in the award agreements for the period of performance from January 1, 2017 through December 31, 2019. On February 14, 2018, the Board of Trustees approved a target award of 78,918 performance-based equity awards to officers and employees of the Company. In January 2021, none of these awards vested and the Company issued no common shares to officers or employees. The actual number of common shares that vested was based on the two performance criteria defined in the award agreements for the period of performance from January 1, 2018 through December 31, 2020. On February 13, 2019, the Board of Trustees approved a target award of 126,891 performance-based equity awards to officers and employees of the Company. These awards will vest, if at all, in 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 2022 based on the two performance criteria defined in the award agreements for the period of performance from January 1, 2019 through December 31, 2021. On February 12, 2020, the Board of Trustees approved a target award of 161,777 performance-based equity awards to officers and employees of the Company. 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. On February 18, 2021, the Board of Trustees approved a target award of 189,348 performance-based equity awards to officers and employees of the Company. These awards will vest, if at all, in 2024. The actual number of common shares that ultimately vest will be from 0 % to 200 % of the target award and will be determined in 2024 based on the performance criteria defined in the award agreements for the period of performance from January 1, 2021 through December 31, 2023. F-28 Table of Contents The grant date fair value of the performance awards, with market conditions, were determined using a Monte Carlo simulation method with the following assumptions (dollars in millions): Performance Award Grant Date Percentage of Total Award Grant Date Fair Value by Component Volatility Interest Rate Dividend Yield December 13, 2013 Relative Total Shareholder Return 50.00 % $ 4.7 29.00 % 0.34 % - 2.25 % 2.40 % Absolute Total Shareholder Return 50.00 % $ 2.9 29.00 % 0.34 % - 2.25 % 2.40 % February 10, 2016 Relative Total Shareholder Return 70.00 % $ 1.6 25.00 % 0.71 % 3.00 % Absolute Total Shareholder Return 15.00 % $ 0.2 25.00 % 0.71 % 3.00 % EBITDA Comparison 15.00 % $ 0.4 25.00 % 0.71 % 3.00 % February 15, 2017 Relative and Absolute Total Shareholder Return 65.00 % / 35.00 % $ 2.7 28.00 % 1.27 % 5.60 % February 14, 2018 Relative and Absolute Total Shareholder Return 65.00 % / 35.00 % $ 3.5 28.00 % 2.37 % 4.70 % February 13, 2019 Relative and Absolute Total Shareholder Return 65.00 % / 35.00 % $ 4.5 26.00 % 2.52 % 4.20 % February 12, 2020 Relative Total Shareholder Return 100.00 % $ 4.9 23.40 % 1.41 % — % February 18, 2021 Relative Total Shareholder Return 100.00 % $ 6.0 56.00 % 0.19 % — % 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. 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 December 31, 2021, there was approximately $ 5.8 million of unrecognized compensation expense related to these performance-based equity awards which will be recognized over the weighted-average remaining vesting period of 1.7 years. For the years ended December 31, 2021, 2020 and 2019 the Company recognized approximately $ 4.9 million, $ 4.1 million and $ 4.8 million, respectively, of share-based compensation expense related to performance-based equity awards in the accompanying consolidated statements of operations and comprehensive income. Long-Term Incentive Partnership ("LTIP") Units LTIP units, which are also referred to as profits interest units, may be issued to eligible participants for the performance of services to or for the benefit of the Operating Partnership. LTIP units are a class of partnership unit in the Operating Partnership and receive, whether vested or not, the same per-unit profit distributions as the other outstanding units in the Operating Partnership, which equal per-share distributions on common shares. LTIP units are allocated their pro-rata share of the Company's net income (loss). 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 December 31, 2021, 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. On December 13, 2013, the Board of Trustees approved a grant of 226,882 LTIP Class B units to executive officers of the Company. These LTIP units were subject to time-based vesting in five equal annual installments beginning January 1, 2016 and ending on January 1, 2020. The fair value of each award was determined based on the closing price of the Company’s common shares on the grant date of $ 29.19 per unit. The aggregate grant date fair value of the LTIP Class B units was $ 6.6 million. F-29 Table of Contents On February 12, 2020, the Board of Trustees granted 415,818 LTIP Class B units to executive officers of the Company. These LTIP units were to vest ratably on January 1, 2023, 2024, 2025 and 2026. In March 2020, the Company canceled this grant and as a result accelerated and recognized the full expense of $ 10.5 million. On July 24, 2020, 109,240 LTIP Class B units were redeemed for common shares. On February 18, 2021, the Board of Trustees granted 600,097 LTIP Class B units to executive officers of the Company. These LTIP units vest ratably on January 1, 2023, 2024, 2025 and 2026, contingent upon continued employment with the Company. The fair value of each award was determined based on the closing price of the Company’s common shares on the grant date of $ 22.69 per unit. The aggregate grant date fair value of the LTIP Class B units was $ 13.6 million. As of December 31, 2021 and 2020, the Operating Partnership had 727,208 and 127,111 LTIP units outstanding, respectively. Of the 727,208 LTIP units outstanding at December 31, 2021, 127,111 LTIP units have vested. Only vested LTIP units may be converted to common units of the Operating Partnership, which in turn can be tendered for redemption. For the years ended December 31, 2021, 2020 and 2019, the Company recognized approximately $ 2.4 million, $ 10.6 million and $ 1.1 million, respectively, in expense related to these LTIP units. As of December 31, 2021, there was $ 11.2 million of 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. Note 9. Income Taxes The Company has elected to be taxed as a REIT under Sections 856 through 860 of the Code. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its REIT taxable income (determined without regard to the deduction for dividends paid and excluding net capital gains) to its shareholders. It is the Company's current intention to adhere to these requirements and maintain the Company's qualification for taxation as a REIT. As a REIT, the Company generally is not subject to federal corporate income tax on that portion of its taxable income that is currently distributed to shareholders. However, as a REIT, the Company is still subject to certain state and local taxes on its income and property, and to federal income and excise taxes on its undistributed taxable income. In addition, taxable income of TRSs, including our TRS lessees, are subject to federal, state and local income taxes. For federal income tax purposes, the cash distributions paid to the Company’s common shareholders and preferred shareholders may be characterized as ordinary income, return of capital (generally non-taxable) or capital gains. Tax law permits certain characterization of distributions which could result in differences between cash basis and tax basis distribution amounts. F-30 Table of Contents The following characterizes distributions paid per common share and preferred share on a tax basis for the years ended December 31, 2021, 2020 and 2019: 2021 2020 2019 Amount % Amount % Amount % Common Shares: Ordinary non-qualified income $ — — % $ — — % $ 0.5609 30.03 % Qualified dividend — — % — — % 0.0069 0.37 % Capital gain 0.0128 32.00 % 0.0100 33.33 % 1.3000 69.60 % Return of capital 0.0272 68.00 % 0.0200 66.67 % — — % Total $ 0.0400 100.00 % $ 0.0300 100.00 % $ 1.8678 100.00 % Series C Preferred Shares: Ordinary non-qualified income $ — — % $ — — % $ 0.6100 30.03 % Qualified dividend — — % — — % 0.0075 0.37 % Capital gain 0.1725 12.45 % 0.4063 33.34 % 1.4138 69.60 % Return of capital 1.2133 87.55 % 0.8125 66.66 % — — % Total $ 1.3858 100.00 % $ 1.2188 100.00 % $ 2.0313 100.00 % Series D Preferred Shares: Ordinary non-qualified income $ — — % $ — — % $ 0.5982 30.03 % Qualified dividend — — % — — % 0.0074 0.37 % Capital gain 0.1692 12.49 % 0.3984 33.33 % 1.3866 69.60 % Return of capital 1.1855 87.51 % 0.7969 66.67 % — — % Total $ 1.3547 100.00 % $ 1.1953 100.00 % $ 1.9922 100.00 % Series E Preferred Shares: (1) Ordinary non-qualified income $ — — % $ — — % $ 0.5982 30.03 % Qualified dividend — — % — — % 0.0074 0.37 % Capital gain 0.5118 32.11 % 0.3984 33.33 % 1.3866 69.60 % Return of capital 1.0819 67.89 % 0.7969 66.67 % — — % Total $ 1.5937 100.00 % $ 1.1953 100.00 % $ 1.9922 100.00 % Series F Preferred Shares: (1) Ordinary non-qualified income $ — — % $ — — % $ 0.5912 30.03 % Qualified dividend — — % — — % 0.0073 0.37 % Capital gain 0.5058 32.11 % 0.3938 33.34 % 1.3703 69.60 % Return of capital 1.0692 67.89 % 0.7875 66.66 % — — % Total $ 1.5750 100.00 % $ 1.1813 100.00 % $ 1.9688 100.00 % Series G Preferred Shares: Ordinary non-qualified income $ — — % $ — — % $ — — % Qualified dividend — — % — — % — — % Capital gain 0.5787 86.00 % — — % — — % Return of capital 0.0942 14.00 % — — % — — % Total $ 0.6729 100.00 % $ — — % $ — — % Series H Preferred Shares: Ordinary non-qualified income $ — — % $ — — % $ — — % Qualified dividend — — % — — % — — % Capital gain 0.2655 86.01 % — — % — — % Return of capital 0.0432 13.99 % — — % — — % Total $ 0.3087 100.00 % $ — — % $ — — % ______________________ (1) Issued upon completion of the Company's merger with LaSalle on November 30, 2018. Of the common distributions declared on November 19, 2018 and December 14, 2018 and 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 per Series C Preferred Share, $ 0.3984 per Series D Preferred Share, $ 0.3984 per Series E Preferred Share and $ 0.3938 per Series F Preferred Share, were treated as 2019 distributions for tax purposes. F-31 Table of Contents 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 was treated as a 2021 distribution for tax purposes. The preferred share distributions declared on December 15, 2020 and paid on January 15, 2021 were treated as 2021 distributions for tax purposes. Of the common distribution declared on December 15, 2021 and paid on January 18, 2022, $ 0.0100 will be treated as a 2022 distribution for tax purposes. The preferred share distributions declared on December 15, 2021 and paid on January 18, 2022, $ 0.3984 of Series E, $ 0.3938 of Series F, $ 0.3984 of Series G and $ 0.3563 of Series H will be treated as 2022 distributions for tax purposes. The Company's provision (benefit) for income taxes consists of the following (in thousands): For the year ended December 31, 2021 2020 2019 Federal Current $ — $ ( 127 ) $ 3,061 Deferred — ( 6,266 ) ( 106 ) State and local Current 61 668 3,938 Deferred — 2,028 ( 1,721 ) Income tax expense (benefit) $ 61 $ ( 3,697 ) $ 5,172 A reconciliation of the statutory federal tax expense (benefit) to the Company's income tax expense (benefit) is as follows (in thousands): For the year ended December 31, 2021 2020 2019 Statutory federal tax expense (benefit) $ ( 38,251 ) $ ( 72,098 ) $ 25,388 State income tax expense (benefit), net of federal tax expense (benefit) ( 6,990 ) ( 5,046 ) 943 REIT income not subject to tax 22,235 53,311 ( 21,522 ) Change in valuation allowance 23,077 20,056 — Other ( 10 ) 80 363 Income tax expense (benefit), net $ 61 $ ( 3,697 ) $ 5,172 The Company has provided a valuation allowance against its federal and state deferred tax asset at December 31, 2021 and 2020 due to the uncertainty of realizing the loss in future years. As of December 31, 2021, the Company had a receivable of $ 6.9 million representing the portion of taxable losses that were carried back to prior years in which the Company had taxable income. The significant components of the Company's deferred tax assets as of December 31, 2021 and 2020 consisted of the following (in thousands): December 31, 2021 December 31, 2020 Deferred Tax Assets: Net operating loss carryover $ 41,109 $ 18,309 State taxes and other 2,470 1,631 Depreciation 418 980 Total deferred tax asset before valuation allowance $ 43,997 $ 20,920 Valuation allowance ( 43,997 ) ( 20,920 ) Deferred tax asset net of valuation allowance $ — $ — 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 December 31, 2021 and 2020, the statute of limitations remains open for all major jurisdictions for tax years dating back to 2017 and 2016, respectively. F-32 Table of Contents Note 10. 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 year ended December 31, 2021 2020 2019 Numerator: Net income (loss) attributable to common shareholders $ ( 235,018 ) $ ( 424,285 ) $ 82,886 Less: dividends paid on unvested share-based compensation ( 47 ) ( 8 ) ( 294 ) Net income (loss) available to common shareholders $ ( 235,065 ) $ ( 424,293 ) $ 82,592 Denominator: Weighted-average number of common shares — basic 130,804,354 130,610,015 130,471,670 Effect of dilutive share-based compensation — — 246,636 Weighted-average number of common shares — diluted 130,804,354 130,610,015 130,718,306 Net income (loss) per share available to common shareholders — basic $ ( 1.80 ) $ ( 3.25 ) $ 0.63 Net income (loss) per share available to common shareholders — diluted $ ( 1.80 ) $ ( 3.25 ) $ 0.63 For the years ended December 31, 2021, 2020 and 2019, 1,033,747 , 600,436 and zero , 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 years ended December 31, 2021 and 2020, 29,441,175 and 19,627,450 , respectively, of common shares underlying the Convertible Notes have been excluded from diluted 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. Note 11. Commitments and Contingencies Hotel Management Agreements The Company’s hotel properties are operated pursuant to management agreements with various management companies. The terms of these management agreements range from 1 year to 22 years, not including renewals, and 1 year to 52 years, including renewals. The majority of the Company’s management agreements are terminable at will by the Company upon paying a termination fee and some are terminable by the Company upon sale of the property, with, in some cases, the payment of termination fees. Most of the agreements also provide the Company the ability to terminate based on failure to achieve defined operating performance thresholds. Termination fees range from zero to up to six times the annual base management and incentive management fees, depending on the agreement and the reason for termination. Certain of the Company’s management agreements are non-terminable except upon the manager’s breach of a material representation or the manager’s failure to meet performance thresholds as defined in the management agreement. The management agreements require the payment of a base management fee generally between 1 % and 4 % of hotel revenues. Under certain management agreements, the management companies are also eligible to receive an incentive management fee if hotel operating income, cash flows or other performance measures, as defined in the agreements, exceed certain performance thresholds. 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 years ended December 31, 2021, 2020 and 2019, com bined base and incentive management fees were $ 18.4 million, $ 9.4 million and $ 44.8 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. Reserve Funds Certain of the Company’s agreements with its hotel managers, franchisors, ground lessors and lenders have provisions for the Company to provide funds, typically 4.0 % of hotel revenues, sufficient to cover the cost of (a) certain non-routine repairs and maintenance to the hotels and (b) replacements and renewals to the hotels’ furniture, fixtures and equipment. Restricted Cash At December 31, 2021 and 2020, the Company had $ 33.7 million and $ 12.0 million, respectively, in restricted cash, which consisted of funds held in cash management and lockbox accounts held by a lender, reserves for replacement of furniture and fixtures and reserves to pay for real estate taxes, ground rent or property insurance under certain hotel management agreements or loan agreements. F-33 Table of Contents Hotel, Ground and Finance Leases As of December 31, 2021, the following hotels were subject to leases as follows: Lease Properties Lease Type Lease Expiration Date Restaurant at Southernmost Beach Resort Operating lease April 2029 Paradise Point Resort & Spa Operating lease May 2050 Hotel Monaco Washington DC Operating lease November 2059 Argonaut Hotel Operating lease December 2059 Hotel Zephyr Fisherman's Wharf Operating lease February 2062 Viceroy Santa Monica Hotel Operating lease September 2065 Estancia La Jolla Hotel & Spa Operating lease January 2066 San Diego Mission Bay Resort Operating lease July 2068 Hotel Vitale Operating lease March 2070 (1) Hyatt Regency Boston Harbor Operating lease April 2077 The Westin Copley Place, Boston Operating lease December 2077 (2) The Liberty, a Luxury Collection Hotel, Boston Operating lease May 2080 Jekyll Island Club Resort and Restaurant Operating lease January 2089 Hotel Zelos San Francisco Operating lease June 2097 Hotel Palomar Los Angeles Beverly Hills Operating lease January 2107 (3) Margaritaville Hollywood Beach Resort Operating lease July 2112 Hotel Zeppelin San Francisco Operating and finance lease June 2089 (4) Harbor Court Hotel San Francisco Finance lease August 2052 ______________________ (1) The expiration date assumes the exercise of a 14 -year extension option. (2) No payments are required through maturity. (3) The expiration date assumes the exercise of all 19 five-year extension options. (4) The expiration date assumes the exercise of a 30-year extension option. The Company's leases may require minimum fixed rent payments, percentage rent payments based on a percentage of revenues in excess of certain thresholds or rent payments equal to the greater of a minimum fixed rent or percentage rent. Minimum fixed rent may be adjusted annually by increases in the consumer price index and may be subject to minimum and maximum increases. Some leases also contain certain restrictions on modifications that can be made to the hotel structures due to their status as national historic landmarks. 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. 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 years ended December 31, 2021, 2020 and 2019 are as follows (in thousands): For the year ended December 31, 2021 2020 2019 Fixed ground rent $ 16,825 $ 17,220 $ 17,042 Variable ground rent 9,616 4,924 14,689 Total ground rent $ 26,441 $ 22,144 $ 31,731 F-34 Table of Contents Future maturities of lease liabilities for the Company's operating leases at December 31, 2021 were as follows (in thousands): 2022 $ 20,556 2023 20,252 2024 20,356 2025 20,485 2026 20,781 Thereafter 1,605,674 Total lease payments $ 1,708,104 Less: Imputed interest ( 1,388,678 ) Present value of lease liabilities $ 319,426 Litigation The nature of the operations of hotels exposes the Company's hotels, the Company and the Operating Partnership to the risk of claims and litigation in the normal course of their business. The Company has insurance to cover certain potential material losses. The Company is not presently subject to any material litigation nor, to the Company’s knowledge, is any material litigation threatened against the Company. Note 12. Supplemental Information to Statements of Cash Flows (in thousands) For the year ended December 31, 2021 2020 2019 Interest paid, net of capitalized interest $ 84,453 $ 90,655 $ 91,918 Interest capitalized $ 1,391 $ 1,247 $ 347 Income taxes paid (refunded) $ ( 258 ) $ 3,469 $ 4,568 Non-Cash Investing and Financing Activities: Convertible debt discount adjustment $ 113,099 $ — $ — Distributions payable on common shares/units $ 1,537 $ 1,749 $ 51,006 Distributions payable on preferred shares $ 10,219 $ 7,558 $ 7,558 Issuance of common shares for Board of Trustees compensation $ 516 $ 637 $ 740 Issuance of common shares for executive and employee bonuses $ 1,446 $ — $ — Issuance of common shares for LTIP units redemption $ — $ 2,831 $ — Accrued additions and improvements to hotel properties $ 3,110 $ 9,164 $ 3,192 Right of use assets obtained in exchange for lease liabilities $ 65,599 $ — $ 257,167 Purchase of ground lease $ — $ — $ 16,604 Write-off of fully depreciated building, furniture, fixtures and equipment $ — $ — $ 28,120 Write-off of deferred financing costs $ 6,574 $ 1,979 $ 3,013 Mortgage loans assumed in connection with acquisition of hotel properties $ 223,177 $ — $ — Below (above) market contracts assumed in connection with acquisition of hotel properties $ 3,071 $ — $ — Note 13. Subsequent Events On February 18, 2022, the Board of Trustees granted awards of an aggregate of 303,858 service condition restricted common shares and target performance-based equity to executive officers and employees of the Company. These awards will vest over three years. The actual number of common shares to be issued under the performance-based equity awards will be determined in early 2025 and will be based on certain performance criteria stipulated in the agreements for the period January 1, 2022 through December 31, 2024. F-35 Table of Contents Pebblebrook Hotel Trust Schedule III--Real Estate and Accumulated Depreciation As of December 31, 2021 (in thousands) Initial Costs Gross Amount at End of Year Description Encumbrances Land Building and Improvements Furniture, Fixtures and Equipment Cost Capitalized Subsequent to Acquisition (1) Land Building and Improvements Furniture, Fixtures and Equipment Total Accumulated Depreciation Net Book Value Year of Original Construction Date of Acquisition Depreciation Life Hotel Monaco Washington DC $ — $ — $ 60,630 $ 2,441 $ 22,193 $ — $ 77,178 $ 8,086 $ 85,264 $ 30,084 $ 55,180 1839 9/9/2010 3 - 40 years Skamania Lodge — 7,130 44,987 3,523 28,117 11,058 62,757 9,942 83,757 24,592 59,165 1993 11/3/2010 3 - 40 years Le Meridien Delfina Santa Monica — 18,784 81,580 2,295 19,253 18,784 92,782 10,346 121,912 37,563 84,349 1972 11/19/2010 3 - 40 years Sofitel Philadelphia at Rittenhouse Square — 18,000 64,256 4,639 21,432 18,000 76,777 13,550 108,327 32,618 75,709 2000 12/3/2010 3 - 40 years Argonaut Hotel — — 79,492 4,247 8,958 — 83,861 8,836 92,697 32,054 60,643 1907 2/16/2011 3 - 40 years The Westin San Diego Gaslamp Quarter — 25,537 86,089 6,850 39,487 25,537 116,189 16,237 157,963 44,374 113,589 1987 4/6/2011 1 - 40 years Hotel Monaco Seattle — 10,105 38,888 2,073 12,437 10,105 45,713 7,685 63,503 20,471 43,032 1969 4/7/2011 3 - 40 years Mondrian Los Angeles — 20,306 110,283 6,091 32,922 20,306 128,022 21,274 169,602 51,015 118,587 1959 5/3/2011 3 - 40 years W Boston — 19,453 63,893 5,887 17,225 19,453 76,499 10,506 106,458 27,998 78,460 2009 6/8/2011 2 - 40 years Hotel Zetta San Francisco — 7,294 22,166 290 17,692 7,294 35,390 4,758 47,442 14,236 33,206 1913 4/4/2012 3 - 40 years Hotel Vintage Seattle — 8,170 23,557 706 8,974 8,170 29,875 3,362 41,407 11,487 29,920 1922 7/9/2012 3 - 40 years Hotel Vintage Portland — 6,222 23,012 1,093 16,328 6,222 35,050 5,383 46,655 15,305 31,350 1894 7/9/2012 3 - 40 years W Los Angeles - West Beverly Hills — 24,403 93,203 3,600 31,990 24,403 119,015 9,778 153,196 39,777 113,419 1969 8/23/2012 3 - 40 years Hotel Zelos San Francisco — — 63,430 3,780 13,346 — 74,705 5,851 80,556 22,532 58,024 1907 10/25/2012 3 - 40 years Embassy Suites San Diego Bay - Downtown — 20,103 90,162 6,881 36,346 20,103 117,542 15,847 153,492 40,036 113,456 1988 1/29/2013 3 - 40 years The Hotel Zags — 8,215 37,874 1,500 7,696 8,215 43,609 3,461 55,285 12,248 43,037 1962 8/28/2013 3 - 40 years Hotel Zephyr Fisherman's Wharf — — 116,445 3,550 41,186 — 153,626 7,555 161,181 44,737 116,444 1964 12/9/2013 3 - 40 years Hotel Zeppelin San Francisco — 12,561 43,665 1,094 36,945 12,561 75,653 6,051 94,265 25,281 68,984 1913 5/22/2014 1 - 45 years The Nines, a Luxury Collection Hotel, Portland — 18,493 92,339 8,757 12,898 18,493 98,967 15,027 132,487 32,493 99,994 1909 7/17/2014 3 - 40 years Hotel Colonnade Coral Gables, Autograph Collection — 12,108 46,317 1,271 19,043 12,108 59,389 7,242 78,739 18,572 60,167 1989 11/12/2014 2 - 40 years Hotel Palomar Los Angeles Beverly Hills — — 90,675 1,500 14,627 — 100,465 6,337 106,802 24,113 82,689 1972 11/20/2014 3 - 40 years F-36 Table of Contents Pebblebrook Hotel Trust Schedule III--Real Estate and Accumulated Depreciation As of December 31, 2021 (in thousands) Initial Costs Gross Amount at End of Year Description Encumbrances Land Building and Improvements Furniture, Fixtures and Equipment Cost Capitalized Subsequent to Acquisition (1) Land Building and Improvements Furniture, Fixtures and Equipment Total Accumulated Depreciation Net Book Value Year of Original Construction Date of Acquisition Depreciation Life Revere Hotel Boston Common — 41,857 207,817 10,596 ( 42,702 ) 17,367 181,990 18,211 217,568 52,464 165,104 1972 12/18/2014 3 - 40 years LaPlaya Beach Resort & Club — 112,575 82,117 6,733 37,601 112,575 116,386 10,065 239,026 29,961 209,065 1968 5/21/2015 3 - 40 years Hotel Zoe Fisherman's Wharf — 29,125 90,323 2,500 16,757 29,125 105,128 4,452 138,705 22,443 116,262 1990 6/11/2015 2 - 40 years Hotel Vitale — — 105,693 3,896 22,215 — 117,578 14,226 131,804 13,178 118,626 2005 11/30/2018 3 - 40 years The Marker San Francisco — 45,243 68,244 5,453 2,579 45,243 69,799 6,477 121,519 11,222 110,297 1910/1995 11/30/2018 3 - 40 years Hotel Spero — 39,363 64,804 11,235 760 39,363 65,154 11,645 116,162 10,164 105,998 1928/1999 11/30/2018 3 - 40 years Chaminade Resort & Spa — 22,590 37,114 6,009 14,890 22,590 49,484 8,529 80,603 8,898 71,705 1985 11/30/2018 3 - 40 years Harbor Court Hotel San Francisco — — 79,009 6,190 1,634 — 79,843 6,990 86,833 9,126 77,707 1926/1991 11/30/2018 3 - 40 years Viceroy Santa Monica Hotel — — 91,442 5,257 11,000 — 99,912 7,787 107,699 12,971 94,728 1967/2002 11/30/2018 3 - 40 years Le Parc Suite Hotel — 17,876 65,515 2,496 12,525 17,876 74,626 5,910 98,412 9,834 88,578 1970 11/30/2018 3 - 40 years Montrose West Hollywood — 16,842 58,729 6,499 2,329 16,842 59,623 7,934 84,399 7,821 76,578 1976 11/30/2018 3 - 40 years Chamberlain West Hollywood Hotel — 14,462 43,157 5,983 1,847 14,462 44,372 6,615 65,449 6,294 59,155 1970/2005 11/30/2018 3 - 40 years Grafton on Sunset — 12,440 36,932 3,951 4,040 12,440 39,095 5,828 57,363 6,121 51,242 1954 11/30/2018 3 - 40 years The Westin Copley Place, Boston — — 291,754 35,780 6,494 — 296,555 37,473 334,028 39,291 294,737 1983 11/30/2018 3 - 40 years The Liberty, A Luxury Collection Hotel, Boston — — 195,797 15,126 3,937 — 198,148 16,712 214,860 22,534 192,326 1851/2007 11/30/2018 3 - 40 years Hyatt Regency Boston Harbor — — 122,344 6,862 8,176 — 130,027 7,355 137,382 14,807 122,575 1993 11/30/2018 3 - 40 years George Hotel — 15,373 65,529 4,489 427 15,373 65,805 4,640 85,818 8,593 77,225 1928 11/30/2018 3 - 40 years Viceroy Washington DC — 18,686 60,927 2,838 9,064 18,686 66,819 6,010 91,515 8,284 83,231 1962 11/30/2018 3 - 40 years Hotel Zena Washington DC — 19,035 60,402 2,066 27,972 19,035 84,559 5,881 109,475 8,304 101,171 1972 11/30/2018 3 - 40 years Paradise Point Resort & Spa — — 199,304 22,032 10,843 21 205,749 26,409 232,179 27,274 204,905 1962 11/30/2018 3 - 40 years Hilton San Diego Gaslamp Quarter — 33,017 131,926 7,741 2,027 33,017 133,368 8,326 174,711 16,434 158,277 2000 11/30/2018 3 - 40 years F-37 Table of Contents Pebblebrook Hotel Trust Schedule III--Real Estate and Accumulated Depreciation As of December 31, 2021 (in thousands) Initial Costs Gross Amount at End of Year Description Encumbrances Land Building and Improvements Furniture, Fixtures and Equipment Cost Capitalized Subsequent to Acquisition (1) Land Building and Improvements Furniture, Fixtures and Equipment Total Accumulated Depreciation Net Book Value Year of Original Construction Date of Acquisition Depreciation Life Solamar Hotel — — 74,768 8,830 25,656 23,472 75,642 10,140 109,254 11,631 97,623 2005 11/30/2018 3 - 40 years L'Auberge Del Mar — 33,304 92,297 5,393 13,198 33,316 102,110 8,766 144,192 10,876 133,316 1989 11/30/2018 3 - 40 years San Diego Mission Bay Resort — — 80,733 9,458 26,754 30 99,627 17,288 116,945 16,729 100,216 1962 11/30/2018 3 - 40 years The Heathman Hotel — 14,243 38,694 7,062 1,341 14,243 39,672 7,425 61,340 6,419 54,921 1927 11/30/2018 3 - 40 years Southernmost Beach Resort — 90,396 253,954 8,676 21,067 90,420 269,376 14,297 374,093 26,873 347,220 1958-2008 11/30/2018 3 - 40 years The Marker Resort Key West Harbor Resort — 25,463 66,903 2,486 3,762 25,463 69,430 3,721 98,614 7,870 90,744 2014 11/30/2018 3 - 40 years Hotel Chicago Downtown, Autograph Collection — 39,576 114,014 7,608 ( 17,007 ) 39,576 96,300 8,315 144,191 13,128 131,063 1998 11/30/2018 3 - 40 years The Westin Michigan Avenue Chicago — 44,983 103,160 23,744 10,446 44,983 112,155 25,195 182,333 19,510 162,823 1963/1972 11/30/2018 3 - 40 years Jekyll Island Club Resort — — 88,912 5,031 872 — 89,091 5,724 94,815 2,383 92,432 1986 7/22/2021 2 - 40 years Margaritaville Hollywood Beach Resort (2) 161,500 — 244,230 22,288 82 — 244,230 22,370 266,600 2,993 263,607 2015 9/23/2021 3 - 40 years Estancia La Jolla Hotel & Spa (3) 61,373 — 104,280 3,646 — — 104,280 3,646 107,926 393 107,533 2004 12/1/2021 2 - 40 years $ 222,873 $ 923,333 $ 4,793,767 $ 350,022 $ 699,681 $ 926,330 $ 5,288,997 $ 551,476 $ 6,766,803 $ 1,066,409 $ 5,700,394 ______________________ (1) Disposals are reflected as reductions to cost capitalized subsequent to acquisition (2) Encumbrance on Margaritaville Hollywood Beach Resort is presented at face value, which excludes an unamortized loan discount and deferred financing costs of $ 2.7 million and $ 0.4 million, respectively, at December 31, 2021. (3) Encumbrance on Estancia La Jolla Hotel & Spa is presented at face value, which excludes unamortized deferred financing costs of $ 0.3 million at December 31, 2021. F-38 Table of Contents Pebblebrook Hotel Trust Schedule III--Real Estate and Accumulated Depreciation - Continued As of December 31, 2021 (in thousands) Reconciliation of Real Estate and Accumulated Depreciation: Reconciliation of Real Estate: Balance at December 31, 2018 $ 7,077,623 Acquisitions 23,472 Capital expenditures 159,574 Disposal of Assets ( 503,383 ) Other ( 24,649 ) Balance at December 31, 2019 $ 6,732,637 Capital expenditures 115,850 Disposal of Assets ( 314,186 ) Other ( 74,556 ) Balance at December 31, 2020 $ 6,459,745 Acquisitions 488,447 Capital expenditures 86,936 Disposal of Assets ( 253,469 ) Other ( 14,856 ) Balance at December 31, 2021 $ 6,766,803 Reconciliation of Accumulated Depreciation: Balance at December 31, 2018 $ 543,430 Depreciation 226,953 Disposal of Assets ( 35,061 ) Balance at December 31, 2019 $ 735,322 Depreciation 223,286 Disposal of Assets ( 60,321 ) Balance at December 31, 2020 $ 898,287 Depreciation 223,225 Disposal of Assets ( 55,103 ) Balance at December 31, 2021 $ 1,066,409 The aggregate cost of properties for federal income tax purposes is approximately $ 6.4 billion as of December 31, 2021. F-39