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Item 9A. Controls and Procedures

2023-02-21 compared with 2022-02-22 · 260 added, 329 removed, 1103 unchanged (35% of the section changed)

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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, 2022.

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.

We acquired Inn on Fifth on May 11, 2022 and Newport Harbor Island Resort (formerly Gurney's Newport Resort & Marina) on June 23, 2022 and have excluded the hotel operations of these properties from our assessment of effectiveness of internal control over financial reporting as of December 31, 2022.

Total assets and revenues for these hotels of $2.8 million and $35.8 million, respectively, for the year ended December 31, 2022 have been excluded from our assessment.

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Exhibit Number Description of Exhibit

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.

Declaration of Trust of Pebblebrook Hotel Trust, as amended and supplemented through July 23, 2021 (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.

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.

5 unchanged sentences

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.

Fifth Amendment to the Second Amended and Restated Agreement of Limited Partnership of Pebblebrook Hotel, L.P.

dated July 23, 2021 (incorporated by reference to Exhibit 3.2 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on July 27, 2021 (File No.

Sixth Amendment to the Second Amended and Restated Agreement of Limited Partnership of Pebblebrook Hotel., L.P., dated as of May 11, 2022 (incorporated by reference to Exhibit 3.1 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on May 12, 2022 (File No.

Description of the Registrant's Securities.

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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.

Amendment No.

4 to the Pebblebrook Hotel Trust 2009 Equity Incentive Plan, as amended and restated effective July 10, 2012, effective May 16, 2022 (incorporated by reference to Exhibit 10.1 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on May 16, 2022 (File No.

Change in Control Severance Agreement between Pebblebrook Hotel Trust and Jon E.

12 unchanged sentences

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

Fifth Amended and Restated Credit Agreement, dated as of October 13, 2022, 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 L/C issuer, and the other lenders party thereto (incorporated by reference to Exhibit 10.1 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on October 14, 2022 (File No.

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.

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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.

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.

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.

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.

Form of Performance Unit Award Agreement for Executive Officers (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.

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.

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.

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.

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.

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.

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.

List of Subsidiaries of Pebblebrook Hotel Trust.

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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).

As discussed in Note 5 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.

Basis for Opinion

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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.

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.

Assessment of estimated holding periods for investments in hotel properties

As discussed in Notes 2 and 4 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.

Investment in hotel properties, net of accumulated depreciation was 96% of total assets as of December 31, 2022.

We identified the assessment of the estimated holding periods for hotel properties as a critical audit matter.

A high degree of subjective and complex auditor judgment was required to assess the events or changes in circumstances used by the Company to evaluate the estimated holding periods.

A shortened estimated holding period could indicate a potential impairment.

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.

We evaluated the design and tested the operating effectiveness of internal controls related to the Company’s determination of the estimated holding periods for hotel properties.

We evaluated the relevant events or changes in circumstances that the Company used to evaluate its estimated holding periods by:

• inspecting documents, such as meeting minutes of the board of trustees, to assess the likelihood that a property will be sold significantly before the end of its previously estimated holding periods

• reading certain publicly available information to identify information regarding potential sales of the Company’s hotel properties

• inquiring of Company officials, including those in the organization who are responsible for, and have authority over, disposition activities

• obtaining representations from the Company regarding the status of potential plans to dispose of hotel properties.

We have served as the Company's auditor since 2009.

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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, 2022 and 2021, 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, 2022, and the related notes and financial statement schedule III (collectively, the consolidated financial statements), and our report dated February 21, 2023 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.

The Company acquired Inn on Fifth and Newport Harbor Island Resort during 2022, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022, Inn on Fifth and Newport Harbor Island Resort’s internal control over financial reporting associated with total assets of $2.8 million and total revenues of $35.8 million included in the consolidated financial statements of the Company as of and for the year ended December 31, 2022.

Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Inn on Fifth and Newport Harbor Island Resort.

Basis for Opinion

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Investment in hotel properties, net $ 5,874,876 $ 6,079,333

Hotel held for sale 44,861 —

Cash and cash equivalents 41,040 58,518

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Accrued interest 4,535 4,567

Liabilities related to hotel held for sale 428 —

Distribution payable 12,218 11,756

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Transaction costs 430 100 10,544

Impairment loss 14,856 74,556 —

Impairment and other losses 89,882 14,856 74,556

(Gain) loss on sale of hotel properties ( 6,194 ) ( 64,729 ) ( 117,401 )

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Distributions to preferred shareholders ( 45,074 ) ( 42,105 ) ( 32,556 )

Issuance costs of redeemed preferred shares ( 8,055 ) — —

Redemption of preferred shares 8,186 ( 8,055 ) —

Net income (loss) attributable to common shareholders $ ( 124,059 ) $ ( 235,018 ) $ ( 424,285 )

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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):

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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

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Distributions on preferred shares — — — — — — ( 42,105 ) ( 42,105 ) — ( 42,105 )

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

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):

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Issuance of shares, net of offering costs — — — — ( 123 ) — — ( 123 ) — ( 123 )

Issuance of operating partnership units — — — — — — — — 78,000 78,000

Issuance of common shares for Board of Trustees compensation — — 33,866 1 737 — — 738 — 738

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Distributions on common shares/units — — — — — — ( 5,035 ) ( 5,035 ) ( 69 ) ( 5,104 )

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 ) —

Distributions on preferred shares/units — — — — — — ( 45,074 ) ( 45,074 ) ( 2,975 ) ( 48,049 )

Other comprehensive income (loss):

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(Gain) loss on sale of hotel properties ( 6,194 ) ( 64,729 ) ( 117,401 )

Impairment loss 14,856 74,556 —

Impairment and other losses 89,882 14,856 74,556

Non-cash ground rent 9,952 7,061 6,198

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Acquisition of hotel properties ( 247,163 ) ( 253,541 ) —

Property insurance proceeds 5,638 — —

Other investing activities ( 25 ) ( 128 ) —

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Payment of deferred financing costs ( 12,415 ) ( 14,510 ) ( 16,372 )

(Distributions to) contributions from non-controlling interest — — ( 125 )

Borrowings under revolving credit facilities 190,151 — 760,115

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Distributions — common shares/units ( 5,291 ) ( 5,279 ) ( 53,960 )

Distributions — preferred shares ( 39,443 ) ( 32,556 ) ( 32,556 )

Distributions — preferred shares/units ( 47,367 ) ( 39,443 ) ( 32,556 )

Repayments of refundable membership deposits ( 2,462 ) ( 2,739 ) ( 1,354 )

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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.

cities and resort properties located near our primary target urban markets and select destination resort markets, with an emphasis on major gateway coastal markets.

As of December 31, 2022, the Company owned interests in 51 hotels with a total of 12,756 guest rooms.

The hotel properties are located in:

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Key West, Florida;

Miami (Coral Gables), Florida;

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

Miami (Coral Gables), Florida;

Naples, Florida;

Philadelphia, Pennsylvania;

Newport, Rhode Island;

Portland, Oregon;

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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;

• impose certain restrictions during the covenant waiver period on share repurchases, dividends, capital improvements, and hotel property acquisitions.

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.

COVID-19 Update

The COVID-19 pandemic, which began in early 2020, has had a significant negative impact on the Company's operations and financial results.

Results have substantially improved through 2022.

The Company exited its debt covenant waiver period under its credit facilities as of the end of the second quarter of 2022.

As discussed in Note.

5 Debt , in October 2022, the Company refinanced its senior unsecured revolving credit facility and all of its term loans.

There continues to be significant uncertainty regarding the trends and outlook as a result of new variants and individual and government responses.

Summary of Significant Accounting Policies

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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.

The state of the overall economy can significantly impact hotel operational performance and thus the Company's financial position.

It is uncertain what the future affects of the COVID-19 pandemic will have on the overall economy or travel.

In addition, the rise in inflation and corresponding increase in interest rates may also impact the overall economy.

A decline in travel or a significant increase in costs may impact the Company's cash flow and ability to service debt or meet other financial obligations.

Fair Value Measurements

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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.

Debt to the accompanying consolidated financial statements for disclosures on the fair value of debt and derivative instruments.

Investment in Hotel Properties

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However, because each of the hotels has similar economic characteristics, facilities, and services, the hotel properties have been aggregated into a single operating segment.

Investments in Unconsolidated Entities

The Company owns a non-controlling equity interest in Fifth Wall Late-Stage Climate Technology Fund, L.P.

As of December 31, 2022, the Company has invested $ 5.5 million.

The Company's total equity commitment to the fund is $ 10.0 million.

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.

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.

In March 2020, January 2021 and December 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting , ASU 2021-01, Reference Rate Reform (Topic 848):

Scope , and ASU 2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848, respectively.

ASU 2020-04, ASU 2021-01 and ASU 2022-06 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.

The guidance in ASU 2020-04, ASU 2021-01 and ASU 2022-06 was effective upon issuance and, once adopted, may be applied prospectively to contract modifications and hedging relationships through December 31, 2024.

In October 2022, the Company amended the terms of its credit agreements to, among other things, change the reference rate from LIBOR to the Secured Overnight Financing Rate (“SOFR”).

The Company also amended the terms of the interest rate swap derivatives to match the SOFR reference rate.

The Company made certain ASC 848 elections related to the changes in critical terms of the hedging relationships which allowed the Company to not dedesignate these hedging relationships.

The adoption of ASU 2020-04, ASU 2021-01 and ASU 2022-06 has not had and is not expected to have a material impact on the Company's consolidated financial statements.

Business Combinations

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to the recognition of an acquired contract liability and to payment terms and their effect on subsequent revenue recognized by the acquirer.

The amendments in ASU 2021-08 require that an entity (acquirer) to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606.

At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts.

ASU 2021-08 is effective for fiscal years beginning after December 15, 2022 and early adoption is permitted.

The Company does not expect the adoption of ASU 2021-08 to have a material effect on its consolidated financial statements and disclosures.

Acquisition and Disposition of Hotel Properties

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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.

On December 1, 2021, the Company acquired the leasehold interest in the 210 -room Estancia La Jolla Hotel & Spa in 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.

On May 11, 2022, the Company acquired the 119 -room Inn on Fifth in Naples, Florida for $ 156.0 million, excluding prorations and transactions costs.

This transaction was funded with cash on hand, the issuance of 16,291 common units of limited partnership interest in the Operating Partnership and 3,104,400 preferred units of the Operating Partnership designated as 6.0 % Series Z Preferred Units.

On June 23, 2022, the Company acquired the 257 -room Newport Harbor Island Resort (formerly Gurney's Newport Resort & Marina) in Newport, Rhode Island for $ 174.0 million using cash on hand and proceeds from its senior unsecured revolving credit facility.

Debt for additional information about the mortgage loans assumed and Note 11.

Commitments and Contingencies for additional information about the leasehold interests acquired.

The following table summarizes disposition transactions during the years ended December 31, 2022 and 2021 (in thousands):

Hotel Property Name Location Sale Date Sale Price

The Marker San Francisco San Francisco, CA June 28, 2022 $ 77,000

Sofitel Philadelphia at Rittenhouse Square Philadelphia, PA August 2, 2022 80,000

Hotel Spero San Francisco, CA August 25, 2022 71,000

Hotel Vintage Portland Portland, OR September 14, 2022 32,900

2022 Total $ 260,900

Sir Francis Drake San Francisco, CA April 1, 2021 $ 157,625

2 unchanged sentences

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.

For the years ended December 31, 2022, 2021 and 2020, the accompanying consolidated statements of operations and comprehensive income included operating (loss) of $( 2.3 ) million, $( 21.7 ) million and $( 32.4 ) million, respectively, excluding impairment loss and gain 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.

Held for Sale

As of December 31, 2022, the Company had entered into an agreement to sell The Heathman Hotel for approximately $ 45.0 million.

This hotel was designated as held for sale as it met the held for sale criteria, and as a result, the Company recorded an impairment to reduce the carrying value of the property.

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

The Company expects to complete the sale in the first quarter of 2023, however, no assurances can be given that the sale will be completed on these terms or at all.

Investment in Hotel Properties

11 unchanged sentences

Investment in hotel properties, net $ 5,874,876 $ 6,079,333

On September 27, 2022, LaPlaya Beach Resort and LaPlaya Beach Club ("LaPlaya") and Inn on Fifth, both located in Naples, Florida, and Southernmost Beach Resort located in Key West, Florida were impacted by the effects of Hurricane Ian.

Inn on Fifth and Southernmost Beach Resort did not suffer significant damage and have been reopened.

LaPlaya was closed in anticipation of the storm and is expected to be re-opened in stages beginning in the first quarter of 2023.

The Company anticipates LaPlaya to have reopened fully by the middle of 2023.

The Company’s insurance policies provide coverage for property damage, business interruption and reimbursement for other costs that were incurred relating to damages sustained during Hurricane Ian.

Insurance proceeds are subject to deductibles.

As of December 31, 2022, the Company recognized an impairment loss of $ 7.9 million for the damage to LaPlaya and Southernmost Beach Resort which is recorded in impairment and other losses in the Company’s accompanying consolidated statement of operations and comprehensive income.

The Company recorded a receivable for costs incurred to remediate the damage in excess of the deductible.

Through December 31, 2022, the Company has received $ 15.8 million in preliminary advances from the insurance providers and continues to work with the insurance providers on the settlement of the property and business interruption claims.

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 Company periodically adjusts its estimate of future operating cash flows and estimated hold periods for certain properties.

As a result of this review, 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, 2022, the Company recognized an impairment loss of $ 81.7 million related to three hotels as a result of their fair values being lower than their carrying values.

The impairment losses were determined using Level 2 inputs under authoritative guidance for fair value measurements using purchase and sale agreements and information from marketing efforts for these properties.

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 three properties as a result of their fair values being lower than their carrying values.

The impairment loss was determined using Level 2 inputs under authoritative guidance for fair value measurements using information from marketing efforts for these properties.

Right-of-use Assets and Lease Liabilities

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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.

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.

2 unchanged sentences

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

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;

• extended other terms through the waiver period.

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;

• set the minimum Unsecured ICR for the second quarter of 2022 to 1.50 :1.00.

In 2021, the Company amended the agreements governing its credit facilities, term loan facilities and senior notes to, among other things, waive financial covenants until the second quarter of 2022 (with substantially less-restrictive covenants through the end of the first quarter of 2023), extend certain debt maturity dates and increase the interest rate spread.

The Company exited the debt covenant waiver period as of the end of the second quarter of 2022.

On October 13, 2022, the Company entered into the Fifth Amended and Restated Credit Agreement with Bank of America, N.A., as administrative agent and certain other agents and lenders ("Credit Agreement").

The $ 2.0 billion Credit Agreement provides for a $ 650.0 million senior unsecured revolving credit facility and three $ 460.0 million unsecured term loan facilities totaling $ 1.38 billion.

Proceeds from the new term loans and $ 26.7 million of cash on hand were used to repay the outstanding balances on the prior term loans.

The Company incurred $ 7.4 million in costs related to the refinancing which were recorded in interest expense in the accompanying consolidated statement of operations.

The Company may request additional lender commitments to increase the aggregate borrowing capacity under the Credit Agreement up to an additional $ 970.0 million.

The Company's debt consisted of the following as of December 31, 2022 and 2021 (dollars in thousands):

Balance Outstanding as of

Interest Rate Maturity Date December 31, 2021 December 31, 2020

Interest Rate at December 31, 2022 Maturity Date December 31, 2022 December 31, 2021

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

Senior unsecured credit facility - (1)(2)

October 2026 $ — $ —

PHL unsecured credit facility - (1)

October 2026 — —

Revolving credit facilities $ — $ —

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)

Term Loan 2024 4.84 % (1)

October 2024 460,000 —

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

Term Loan 2025 3.59 % (1)

October 2025 460,000 —

Term Loan 2027 3.19 % (1)

October 2027 460,000 —

First Term Loan - January 2023 — 26,000

First Term Loan Extended - March 2024 — 274,000

Second Term Loan - April 2022 — 26,327

Fourth Term Loan - October 2024 — 110,000

Sixth Term Loan Tranche 2021 Extended - November 2022 — 82,071

Sixth Term Loan Tranche 2022 - November 2022 — 114,670

Sixth Term Loan Tranche 2023 - November 2023 — 400,000

Sixth Term Loan Tranche 2024 - January 2024 — 400,000

Term loan principal $ 1,380,000 $ 1,433,068

Convertible senior notes principal 1.75 % December 2026 $ 750,000 $ 750,000

Senior unsecured notes

1 unchanged sentence

December 2023 47,600 47,600

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

Series B Notes 4.93 % December 2025 2,400 2,400

Senior unsecured notes principal $ 50,000 $ 50,000

Mortgage loans

Margaritaville Hollywood Beach Resort Floating (8)

Margaritaville Hollywood Beach Resort 6.69 % (4)

May 2023 161,500 161,500

Estancia La Jolla Hotel & Spa 5.07 % September 2028 59,485 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

Mortgage loans principal $ 220,985 $ 222,873

Total debt principal $ 2,400,985 $ 2,455,941

Unamortized debt premiums, discount and deferred financing costs, net ( 13,692 ) ( 14,053 )

Debt, Net $ 2,387,293 $ 2,441,888

______________________

(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.

(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.

(1) Borrowings bear interest at floating rates.

Interest rate at December 31, 2022 gives effect to interest rate hedges.

(2) The Company has the option to extend the maturity date of October 13, 2026 for up to two six-month periods, pursuant to certain terms and conditions and payment of an extension fee, for a maximum maturity date of October 13, 2027.

(3) The Company intends to pay off the Series A Notes using available cash or borrowings under the revolving credit facility at maturity.

(4) In April 2022, the Company exercised its option to extend the maturity date to May 2023.

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.

The Company has the option to extend the maturity date further to May 2024, which the Company expects to exercise.

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 $ 650.0 million senior unsecured revolving credit facility provided for in the Credit Agreement matures in October 2026 and provides for two six-month extension options, subject to certain terms and conditions and payment of an extension fee.

All borrowings under the $ 650.0 million senior unsecured revolving credit facility bear interest at a rate per annum equal to, at the option of the Company, (i) SOFR plus 0.10 % (the “SOFR Adjustment”) plus a margin that is based upon the Company’s leverage ratio or (ii) the Base Rate (as defined by the Credit Agreement) plus a margin that is based on the Company’s leverage ratio.

The margins for revolving credit facility loans range in amount from 1.45 % to 2.50 % for SOFR-based loans and 0.45 % to 1.50 % for Base Rate-based loans, depending on the Company’s leverage ratio.

As of December 31, 2022, the Company had no outstanding borrowings, $ 12.6 million of outstanding letters of credit and a borrowing capacity of $ 637.4 million remaining on its senior unsecured revolving credit facility.

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.

Under the terms of the credit agreement for the senior 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 facility.

The Company pays a fee at a rate per annum equal to the applicable margin based upon the Company's leverage ratio.

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 $ 12.6 million and $ 12.1 million were outstanding as of December 31, 2022 and 2021, respectively.

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.

On October 13, 2022, PHL amended and restated the agreement governing the PHL Credit Facility to extend the maturity to October 2026.

The PHL Credit Facility has substantially similar terms as the Company's senior unsecured revolving credit facility.

Borrowings on the PHL Credit Facility bear interest at a rate per annum equal to, at the option of the Company, (i) SOFR plus the SOFR Adjustment plus a margin that is based upon the Company’s leverage ratio or (ii) the Base Rate (as defined by the Credit Agreement) plus a margin that is based on the Company’s leverage ratio.

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

As of December 31, 2022, the Company had no borrowings under the PHL Credit Facility and had $ 20.0 million borrowing capacity remaining available under the PHL Credit Facility.

As of December 31, 2022, 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.

The three $ 460.0 million term loans provided for in the Credit Agreement mature in October 2024, October 2025 and October 2027, respectively.

The term loans bear interest at a rate per annum equal to, at the option of the Company, (i) SOFR plus the SOFR Adjustment plus a margin that is based upon the Company’s leverage ratio or (ii) the Base Rate (as defined by the Credit Agreement) plus a margin that is based on the Company’s leverage ratio.

The margins for term loans range in amount from 1.40 % to 2.45 % for SOFR-based loans and 0.40 % to 1.45 % for Base Rate-based loans, depending on the Company's leverage ratio.

The term loans are subject to the debt covenants in the Credit Agreement.

As of December 31, 2022, the Company was in compliance with all debt covenants of its term loans.

The Company entered into interest rate swap agreements to fix the SOFR rate on a portion of these unsecured term loan facilities.

See Derivative and Hedging Activities for further discussion on the interest rate swaps.

31 unchanged sentences

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.

3 unchanged sentences

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.

In April 2022, the Company exercised its option to extend the maturity date to May 9, 2023.

The Company has an option to extend the maturity date further to May 9, 2024, which the Company expects to exercise.

If the loan is extended, the interest rate spread will increase by 20 basis points.

The loan is also subject to an interest rate cap agreement.

6 unchanged sentences

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.

These properties are not in a cash trap and no event of default has occurred under the loan documents.

Interest Expense

26 unchanged sentences

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

Hedge Type Interest Rate Range

Maturity December 31, 2022 December 31, 2021

Swap-cash flow — January 2022 $ — $ 180,000

Swap-cash flow — April 2022 — 100,000

Swap-cash flow 0.05 % - 0.07 %

7 unchanged sentences

Total $ 1,040,000 $ 1,320,000

______________________

(1) In October 2022, the Company transitioned from LIBOR-based interest rates to SOFR-based interest rates for its interest rate swap agreements.

There are no other substantive changes to its interest rate swap agreements as part of this transition.

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

4 unchanged sentences

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.

As of December 31, 2022, the Company's derivative instruments were in an asset position with an aggregate fair value of $ 36.0 million.

None of the Company's derivative instruments was in a liability position as of December 31, 2022.

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 $ 23.2 million will be reclassified from accumulated other comprehensive income (loss) to interest expense within the next 12 months.

In January 2023, the Company entered into interest rate swap agreements with an aggregate notional amount of $ 400.0 million, which will be effective in November 2023.

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

2 unchanged sentences

2022 2021 2020

Southern Florida/Georgia $ 166,310 $ 76,971 $ 115,600

San Diego, CA $ 303,701 $ 165,977 $ 96,071

Southern Florida/Georgia 271,167 166,310 76,971

Boston, MA 243,861 124,440 63,356

Los Angeles, CA 168,310 94,275 51,664

Portland, OR 53,978 27,174 105,571

San Francisco, CA 116,022 43,601 66,896

28,608 27,453 128,627

Portland, OR 87,625 53,978 27,174

Chicago, IL 68,402 27,279 15,604

63,071 28,608 27,453

Washington, D.C.

4 unchanged sentences

(1) Other includes:

Nashville, TN, New York, NY, Philadelphia, PA and Santa Cruz, CA.

Nashville, TN, New York, NY, Philadelphia, PA, Newport, RI and Santa Cruz, CA.

Payments from customers are primarily made when services are provided.

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Holders of common shares are entitled to receive dividends when authorized by the Board of Trustees.

Share Repurchase Program

During the fourth quarter of 2022, the Company repurchased 4,559,839 common shares for an aggregate purchase price of $ 69.6 million, or an average of approximately $ 15.27 per share.

Upon repurchase by the Company, these common shares ceased to be outstanding and became authorized but unissued common shares.

Common Share Repurchase Programs

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.

2 unchanged sentences

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.

For the year ended December 31, 2022, the Company repurchased $ 56.6 million of common shares, and as of December 31, 2022, no common shares remained available for repurchase under this program.

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

1 unchanged sentence

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.

For the year ended December 31, 2022, the Company repurchased $ 13.0 million common shares under this program and, as of December 31, 2022, $ 87.0 million of common shares remained available for repurchase under this program.

On February 21, 2023, we announced that our Board of Trustees authorized a new share repurchase program of up to $ 150.0 million of the Company's outstanding common shares.

Under this program, we may repurchase common shares from time to time in transactions on the open market or by private agreement.

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").

13 unchanged sentences

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.

On December 27, 2022, the Company repurchased 1,000,000 5.70 % Series H Cumulative Redeemable Preferred Shares at a privately negotiated price of $ 16.00 per share.

The difference between the carrying amount of the repurchased shares, net of issuance costs, and the consideration paid to repurchase the shares is considered a return from preferred shareholders of $ 8.2 million and recorded as an adjustment to net income (loss) attributable to common shareholders on the Company's basic and diluted earnings per share.

The following Preferred Shares were outstanding as of December 31, 2022 and 2021:

Security Type December 31, 2022 December 31, 2021

6.50 % Series C

6.375 % Series D

6.375 % Series E

3 unchanged sentences

6.375 % Series G

9,200,000 9,200,000

5.70 % Series H

9,000,000 10,000,000

28,600,000 29,600,000

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 Company may redeem the Series E and Series F Preferred Shares at any time.

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.

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 American 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.

On February 21, 2023, the Company announced that its Board of Trustees approved a repurchase program of up to $ 100.0 million of the Preferred Shares.

Under the terms of the program, the Company may repurchase up to an aggregate of $ 100.0 million of the Preferred Shares.

The aggregate liquidation value of the Preferred Shares that may be repurchased pursuant to the Preferred Shares Repurchase Program, as of February 21, 2023, was $ 715.0 million.

The timing, manner, price and amount of any repurchases will be determined by the Company in its discretion and will depend on a variety of factors, including legal requirements, price, liquidity and economic considerations, and market conditions.

The program does not require us to repurchase any specific number of preferred shares.

The program does not have an expiration date and may be suspended, modified or discontinued at any time.

Preferred Dividends

1 unchanged sentence

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

15 unchanged sentences

6.375 % Series G

$ 0.40 March 31, 2022 March 31, 2022 April 15, 2022

6.375 % Series G

$ 0.40 June 30, 2022 June 30, 2022 July 15, 2022

6.375 % Series G

$ 0.40 September 30, 2022 September 30, 2022 October 17, 2022

2 unchanged sentences

5.70 % Series H

$ 0.36 March 31, 2022 March 31, 2022 April 15, 2022

5.70 % Series H

$ 0.36 June 30, 2022 June 30, 2022 July 15, 2022

5.70 % Series H

$ 0.36 September 30, 2022 September 30, 2022 October 17, 2022

1 unchanged sentence

$ 0.36 December 31, 2022 December 30, 2022 January 17, 2023

______________________

(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.

Non-controlling Interest of Common Units in Operating Partnership

2 unchanged sentences

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.

On May 11, 2022, in connection with the acquisition of Inn on Fifth in Naples, Florida, the Company issued 16,291 OP units in the Operating Partnership.

As of December 31, 2022 and 2021, the Operating Partnership had 149,896 and 133,605 OP units, respectively, held by third parties, excluding LTIP units.

As of December 31, 2022, 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.

As of December 31, 2022 and 2021, the Operating Partnership had 727,208 LTIP units outstanding.

Of the 727,208 LTIP units outstanding at December 31, 2022, 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.

Non-controlling Interest of Preferred Units in Operating Partnership

On May 11, 2022, in connection with the acquisition of Inn on Fifth in Naples, Florida, the Company issued 3,104,400 preferred units in the Operating Partnership, designated as 6.0 % Series Z Cumulative Perpetual Preferred Units ("Series Z Preferred Units").

The Series Z Preferred Units rank senior to the common OP units and on parity with the Operating Partnership's Series E, Series F, Series G and Series H Preferred Units.

Holders of Series Z Preferred Units are entitled to receive quarterly distributions at an annual rate of 6.0 % of the liquidation preference value of $ 25.00 per share.

At any time, holders of Series Z Preferred Units may elect to convert some or all of their units into any other series of the Operating Partnership’s preferred units outstanding at that time.

After the second anniversary of the issuance of the Series Z Preferred Units, holders may elect to redeem some or all of their units for, at the Company’s election, cash, common shares having an equivalent value or preferred shares on a one-for-one basis.

After the fifth anniversary of their issuance, the Company may redeem the Series Z Preferred Units for cash, common shares having an equivalent value or preferred shares on a one-for-one basis.

At any time following a change of control of the Company, holders of Series Z Preferred Units may elect to redeem some or all of their units for, at the Company’s election, cash or common shares having an equivalent value.

As of December 31, 2022, the Operating Partnership had 3,104,400 Series Z Preferred Units outstanding.

Share-Based Compensation Plan

14 unchanged sentences

Forfeited ( 6,787 ) $ 27.68

Cancelled ( 217,083 ) $ 25.53

Unvested at December 31, 2020 242,727 $ 24.94

2 unchanged sentences

Forfeited ( 9,236 ) $ 23.37

Cancelled ( 217,083 ) $ 25.53

Unvested at December 31, 2021 567,431 $ 22.53

9 unchanged sentences

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 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 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.

4 unchanged sentences

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.

In January 2022, 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, 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.

4 unchanged sentences

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.

On May 16, 2022, the Board of Trustees approved a target award of 175,898 performance-based equity awards to officers and employees of the Company.

These awards will vest, if at all, in 2025.

The actual number of common shares that ultimately vest will be from 0 % to 200 % of the target award and will be determined in 2025 based on the performance criteria defined in the award agreements for the period of performance from January 1, 2022 through December 31, 2024.

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 %

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

February 15, 2017

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 %

10 unchanged sentences

Relative Total Shareholder Return 100.00 % $ 6.0 56.00 % 0.19 % — %

Relative Total Shareholder Return 100.00 % $ 5.3 58.70 % 2.72 % — %

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.

9 unchanged sentences

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.

On February 12, 2020, the Board of Trustees granted 415,818 LTIP Class B units to executive officers of the Company.

6 unchanged sentences

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.

As of December 31, 2022 and 2021, the Operating Partnership had 727,208 LTIP units outstanding.

Of the 727,208 LTIP units outstanding at December 31, 2022, 127,111 LTIP units have vested.

56 unchanged sentences

Total $ 1.7812 100.00 % $ 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.

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.

2 unchanged sentences

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 common and preferred distributions declared on December 15, 2021 and paid on January 18, 2022 were treated as 2022 distributions for tax purposes.

The common and preferred distributions declared on December 15, 2022 and paid on January 17, 2023 will be treated as 2022 distributions for tax purposes.

The Company's provision (benefit) for income taxes consists of the following (in thousands):

27 unchanged sentences

Deferred tax asset net of valuation allowance $ — $ —

As of December 31, 2022 and 2021, the Company had no material unrecognized tax benefits.

As a policy, the Company recognizes penalties and interest accrued related to unrecognized tax benefits as a component of income tax expense, however, there are currently no such accruals.

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

7 unchanged sentences

dividends paid on unvested share-based compensation ( 45 ) ( 47 ) ( 8 )

Net income (loss) available to common shareholders $ ( 235,065 ) $ ( 424,293 ) $ 82,592

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) available to common shareholders — basic and diluted $ ( 124,104 ) $ ( 235,065 ) $ ( 424,293 )

Weighted-average number of common shares — basic and diluted 130,453,944 130,804,354 130,610,015

Net income (loss) per share available to common shareholders — basic $ ( 0.95 ) $ ( 1.80 ) $ ( 3.25 )

Net income (loss) per share available to common shareholders — diluted $ ( 0.95 ) $ ( 1.80 ) $ ( 3.25 )

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, 2022, 2021 and 2020, 1,079,474 , 1,033,747 and 600,436 , 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, 2022, 2021 and 2020, 29,441,175 , 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.

3 unchanged sentences

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 remaining terms of these management agreements are up to 11 years, not including renewals, and up to 30 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.

22 unchanged sentences

San Diego Mission Bay Resort Operating lease July 2068

Hotel Vitale Operating lease March 2070 (1)

1 Hotel San Francisco (formerly Hotel Vitale) Operating lease March 2070 (1)

Hyatt Regency Boston Harbor Operating lease April 2077

42 unchanged sentences

Distributions payable on common shares/units $ 1,316 $ 1,537 $ 1,749

Distributions payable on preferred shares $ 10,219 $ 7,558 $ 7,558

Distributions payable on preferred shares/units $ 10,902 $ 10,219 $ 7,558

Issuance of common shares for Board of Trustees compensation $ 738 $ 516 $ 637

1 unchanged sentence

Issuance of common shares for LTIP units redemption $ — $ — $ 2,831

Issuance of common units in connection with hotel acquisition $ 390 $ — $ —

Issuance of preferred units in connection with hotel acquisition $ 77,610 $ — $ —

Accrued additions and improvements to hotel properties $ ( 2,759 ) $ 3,110 $ 9,164

Right of use assets obtained in exchange for lease liabilities $ 1,005 $ 65,599 $ —

Purchase of ground lease $ — $ — $ 16,604

Write-off of fully depreciated building, furniture, fixtures and equipment $ 72,532 $ — $ —

3 unchanged sentences

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.

The Company repurchased an aggregate of 897,565 of its common shares at an average price of $ 14.49 per share subsequent to December 31, 2022.

Pebblebrook Hotel Trust

8 unchanged sentences

Le Meridien Delfina Santa Monica — 18,784 81,580 2,295 15,180 18,784 95,308 3,747 117,839 34,056 83,783 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 2,688 — 84,010 2,417 86,427 28,101 58,326 1907 2/16/2011 3 - 40 years

5 unchanged sentences

Hotel Vintage Seattle — 8,170 23,557 706 8,986 8,170 29,941 3,308 41,419 12,577 28,842 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 32,687 24,403 119,381 10,109 153,893 44,418 109,475 1969 8/23/2012 3 - 40 years

7 unchanged sentences

Hotel Palomar Los Angeles Beverly Hills — — 90,675 1,500 15,021 — 100,652 6,544 107,196 27,713 79,483 1972 11/20/2014 3 - 40 years

Revere Hotel Boston Common — 41,857 207,817 10,596 ( 39,966 ) 17,367 184,069 18,868 220,304 59,579 160,725 1972 12/18/2014 3 - 40 years

LaPlaya Beach Resort & Club — 112,575 82,117 6,733 10,375 112,575 92,498 6,727 211,800 26,253 185,547 1968 5/21/2015 3 - 40 years

Pebblebrook Hotel Trust

5 unchanged sentences

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 16,987 29,125 105,221 4,589 138,935 26,339 112,596 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

1 Hotel San Francisco — — 105,693 3,896 38,458 — 133,733 14,314 148,047 19,992 128,055 2005 11/30/2018 3 - 40 years

Chaminade Resort & Spa — 22,590 37,114 6,009 17,151 22,590 51,531 8,743 82,864 12,524 70,340 1985 11/30/2018 3 - 40 years

4 unchanged sentences

Chamberlain West Hollywood Hotel — 14,462 43,157 5,983 1,989 14,462 44,418 6,711 65,591 8,439 57,152 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

Hotel Ziggy — 12,440 36,932 3,951 6,797 12,440 41,991 5,689 60,120 8,621 51,499 1954 11/30/2018 3 - 40 years

The Westin Copley Place, Boston — — 291,754 35,780 9,287 — 298,049 38,772 336,821 52,437 284,384 1983 11/30/2018 3 - 40 years

6 unchanged sentences

Hilton San Diego Gaslamp Quarter — 33,017 131,926 7,741 12,388 33,017 139,806 12,249 185,072 21,928 163,144 2000 11/30/2018 3 - 40 years

Solamar Hotel — — 74,768 8,830 37,713 23,472 82,569 15,270 121,311 16,016 105,295 2005 11/30/2018 3 - 40 years

L'Auberge Del Mar — 33,304 92,297 5,393 14,212 33,316 102,867 9,023 145,206 15,347 129,859 1989 11/30/2018 3 - 40 years

San Diego Mission Bay Resort — — 80,733 9,458 27,278 30 99,872 17,567 117,469 22,938 94,531 1962 11/30/2018 3 - 40 years

The Heathman Hotel — 14,243 38,694 7,062 ( 6,981 ) 11,706 33,846 7,437 52,989 8,535 44,454 1927 11/30/2018 3 - 40 years

Pebblebrook Hotel Trust

5 unchanged sentences

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 22,093 90,420 269,301 15,398 375,119 37,221 337,898 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

The Marker Key West Harbor Resort — 25,463 66,903 2,486 1,325 25,463 66,976 3,738 96,177 10,536 85,641 2014 11/30/2018 3 - 40 years

Hotel Chicago Downtown, Autograph Collection — 39,576 114,014 7,608 ( 16,394 ) 39,576 96,787 8,470 144,833 17,339 127,494 1998 11/30/2018 3 - 40 years

5 unchanged sentences

59,485 — 104,280 3,646 4,907 193 105,977 6,663 112,833 5,227 107,606 2004 12/1/2021 2 - 40 years

Inn on Fifth — 50,503 95,826 7,989 997 50,503 96,537 8,275 155,315 2,638 152,677 1960 5/11/2022 3 - 40 years

Newport Harbor Island Resort — 43,287 118,227 12,817 1,011 43,287 118,790 13,265 175,342 3,048 172,294 1969 6/23/2022 3 - 40 years

$ 220,985 $ 908,295 $ 4,787,504 $ 348,408 $ 685,174 $ 909,462 $ 5,296,003 $ 523,916 $ 6,729,381 $ 1,180,434 $ 5,548,947

10 unchanged sentences

Balance at December 31, 2019 $ 6,732,637

Acquisitions 23,472

Capital expenditures 115,850

2 unchanged sentences

Balance at December 31, 2020 $ 6,459,745

Acquisitions 488,447

Capital expenditures 86,936

20 unchanged sentences

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

What changed 10-K

Item 9A. Controls and Procedures