Pebblebrook Hotel Trust 10-K

Item 9A. Controls and Procedures. Disclosure Controls and Procedures Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) under the Exchange Act as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, these disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure. Management's Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Under the supervision and with the participation of our management, including our principal executive officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the original framework in Internal Control - Integrated Framework issued in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control - Integrated Framework , our management concluded that our internal control over financial reporting was effective as of December 31, 2023. KPMG LLP, an independent registered public accounting firm, has audited our consolidated financial statements included in this Annual Report on Form 10-K and, as part of its audit, has issued its report, included herein on page F-4, on the effectiveness of our internal control over financial reporting. There was no change to our internal control over financial reporting during the fourth quarter ended December 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. During the three months ended December 31, 2023, none of our officers or trustees adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement." Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. 46 PART III Item 10. Trustees, Executive Officers and Corporate Governance. The information required by this item is incorporated by reference to the Company's Proxy Statement for the 2024 Annual Meeting of Shareholders. Item 11. Executive Compensation. The information required by this item is incorporated by reference to the Company's Proxy Statement for the 2024 Annual Meeting of Shareholders. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters. The information required by this item is incorporated by reference to the Company's Proxy Statement for the 2024 Annual Meeting of Shareholders. Item 13. Certain Relationships and Related Transactions, and Trustee Independence. The information required by this item is incorporated by reference to the Company's Proxy Statement for the 2024 Annual Meeting of Shareholders. Item 14. Principal Accountant Fees and Services. Our independent registered public accounting firm is KPMG LLP , McLean, VA , Auditor Firm ID: 185 . The information required by this item is incorporated by reference to the Company's Proxy Statement for the 2024 Annual Meeting of Shareholders. 47 PART IV Item 15. Exhibits and Financial Statement Schedules. (a) The following documents are filed as part of this report: 1. Financial Statements Included herein on pages F- 1 through F- 34 . 2. Financial Statement Schedules The following financial statement schedule is included herein on pages F- 35 through F- 38 . Schedule III--Real Estate and Accumulated Depreciation All other schedules for which provision is made in Regulation S-X are either not required to be included herein under the related instructions or are inapplicable or the related information is included in the footnotes to the applicable financial statement and, therefore, have been omitted from this Item 15. 3. Exhibits The following exhibits are filed or furnished, as the case may be, as part of this Annual Report on Form 10-K: 48 Exhibit Number Description of Exhibit 3.1 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. 001-34571)). 3.2 Bylaws of Pebblebrook Hotel Trust, as amended and restated on February 17, 2023 (incorporated by reference to Exhibit 3.1 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on February 24, 2023 (File No. 001-34571)). 3.3 Second Amended and Restated Agreement of Limited Partnership of Pebblebrook Hotel, L.P., dated as of December 13, 2013 (incorporated by reference to Exhibit 3.1 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on December 17, 2013 (File No. 001-34571)). 3.4 First Amendment to the Second Amended and Restated Agreement of Limited Partnership of Pebblebrook Hotel, L.P., dated as of September 30, 2014 (incorporated by reference to Exhibit 3.4 to Pebblebrook Hotel Trust’s Annual Report on Form 10-K filed with the SEC on February 17, 2015 (File No. 001-34571)). 3.5 Second Amendment to the Second Amended and Restated Agreement of Limited Partnership of Pebblebrook Hotel, L.P., dated as of June 8, 2016 (incorporated by reference to Exhibit 3.5 to Pebblebrook Hotel Trust’s Current Report on Form 8‑K filed with the SEC on June 8, 2016 (File No. 001‑34571)). 3.6 Third Amendment to the Second Amended and Restated Agreement of Limited Partnership of Pebblebrook Hotel, L.P., dated as of November 30, 2018 (incorporated by reference to Exhibit 3.3 to Pebblebrook Hotel Trust’s Current Report on Form 8‑K filed with the SEC on December 3, 2018 (File No. 001‑34571)). 3.7 Fourth Amendment to the Second Amended and Restated Agreement of Limited Partnership of Pebblebrook Hotel, L.P., dated as of May 12, 2021 (incorporated by reference to Exhibit 3.2 to Pebblebrook Hotel Trust’s Current Report on Form 8‑K filed with the SEC on May 12, 2021 (File No. 001‑34571)). 3.8 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. 001-34571)). 3.9 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. 001-34571)). 4.1† Description of the Registrant's Securities. 4.2 Indenture, dated December 15, 2020, between the Company and The Bank of New York Mellon Trust Company, N.A. (incorporated by reference to Exhibit 4.1 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on December 16, 2020 (File No. 001-34571)). 4.3 First Supplemental Indenture, dated December 15, 2020, between the Company and The Bank of New York Mellon Trust Company, N.A. (incorporated by reference to Exhibit 4.2 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on December 16, 2020 (File No. 001-34571)). 10.1* Pebblebrook Hotel Trust 2009 Equity Incentive Plan, as amended and restated effective July 10, 2012 (incorporated by reference to Exhibit 10.1 to Pebblebrook Hotel Trust's Quarterly Report on Form 10-Q filed with the SEC on August 2, 2012 (File No. 001-34571)). 10.2* Amendment No. 1 to the Pebblebrook Hotel Trust 2009 Equity Incentive Plan, as amended and restated effective July 10, 2012, effective July 7, 2016 (incorporated by reference to Exhibit 10.1 to Pebblebrook Hotel Trust’s Quarterly Report on Form 10‑Q filed with the SEC on July 25, 2016 (File No. 001‑34571)). 10.3* Amendment No. 2 to the Pebblebrook Hotel Trust 2009 Equity Incentive Plan, as amended and restated effective July 10, 2012, effective February 15, 2017 (incorporated by reference to Exhibit 10.1 to Pebblebrook Hotel Trust’s Current Report on Form 8-K filed with the SEC on February 22, 2017 (File No. 001‑34571)). 10.4* Amendment No. 3 to the Pebblebrook Hotel Trust 2009 Equity Incentive Plan, as amended and restated effective July 10, 2012, effective May 19, 2021 (incorporated by reference to Exhibit 10.1 to Pebblebrook Hotel Trust’s Current Report on Form 8-K filed with the SEC on May 21, 2021 (File No. 001‑34571)). 10.5* 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. 001-34571)). 10.6* Change in Control Severance Agreement between Pebblebrook Hotel Trust and Jon E. Bortz (incorporated by reference to Exhibit 10.2 to Pebblebrook Hotel Trust's Annual Report on Form 10-K filed with the SEC on March 24, 2010 (File No. 001-34571)). 10.7* Change in Control Severance Agreement between Pebblebrook Hotel Trust and Raymond D. Martz (incorporated by reference to Exhibit 10.3 to Pebblebrook Hotel Trust's Annual Report on Form 10-K filed with the SEC on March 24, 2010 (File No. 001-34571)). 10.8* Change in Control Severance Agreement between Pebblebrook Hotel Trust and Thomas C. Fisher (incorporated by reference to Exhibit 10.4 to Pebblebrook Hotel Trust's Annual Report on Form 10-K filed with the SEC on March 24, 2010 (File No. 001-34571)). 10.9* Form of Indemnification Agreement between Pebblebrook Hotel Trust and its officers and trustees (incorporated by reference to Exhibit 10.4 of Amendment No. 1 to Pebblebrook Hotel Trust's Registration Statement on Form S-11/A filed with the SEC on November 10, 2009 (File No. 333-162412)). 10.10* Form of Share Award Agreement for trustees (incorporated by reference to Exhibit 10.6 of Amendment No. 2 to Pebblebrook Hotel Trust's Registration Statement on Form S-11/A filed with the SEC on November 25, 2009 (File No. 333-162412)). 10.11* Form of LTIP Unit Vesting Agreement (incorporated by reference to Exhibit 10.2 to Pebblebrook Hotel Trust's Quarterly Report on Form 10-Q filed with the SEC on April 26, 2012 (File No. 001-34571)). 10.12* Form of Performance Unit Retention Award Agreement (incorporated by reference to Exhibit 10.2 to Pebblebrook Hotel Trust's Current Report on Form 8-K filed with the SEC on December 17, 2013 (File No. 001-34571)). 10.13 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. 001-34571)). 49 10.14 First Amendment to Fifth Amended Restated Credit Agreement, dated as of January 3, 2024, 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 January 4, 2024 (File No. 001-34571)). 10.15* Form of Share Award Agreement (time-based vesting) for Executive Officers (incorporated by reference to Exhibit 10.1 to Pebblebrook Hotel Trust’s Current Report on Form 8-K filed with the SEC on February 16, 2018 (File No. 001-34571)). 10.16* 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. 001-34571)). 10.17* Form of Performance Unit Award Agreement 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 24, 2023 (File No. 001-34571)). 10.18* Form of LTIP Class B Unit Vesting Agreement – retention award (incorporated by reference to Exhibit 10.6 to Pebblebrook Hotel Trust's Quarterly Report on Form 10-Q filed with the SEC on April 29, 2021 (File No. 001-34571)). 21.1† List of Subsidiaries of Pebblebrook Hotel Trust. 23.1† Consent of KPMG LLP. 31.1† Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2† Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1†† Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2†† Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 97.1† Clawback Policy. 101.INS XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. (1) 101.SCH Inline XBRL Taxonomy Extension Schema Document (1) 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document (1) 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document (1) 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document (1) 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document (1) 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) (1) ______________________ * Management agreement or compensatory plan or arrangement † Filed herewith. †† Furnished herewith. (1) Submitted electronically herewith. Attached as Exhibit 101 to this report are the following documents formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations and Comprehensive Income; (iii) Consolidated Statements of Equity; (iv) Consolidated Statements of Cash Flows; (v) Notes to Consolidated Financial Statements; and (vi) Cover Page (in connection with Exhibit 104). 50 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PEBBLEBROOK HOTEL TRUST Date: February 21, 2024 /s/ J ON E. B ORTZ Jon E. Bortz Chairman and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Name Title Date /s/ JON E. BORTZ Chief Executive Officer and Chairman of the Board (principal executive officer) February 21, 2024 Jon E. Bortz /s/ RAYMOND D. MARTZ Co-President, Chief Financial Officer, Treasurer and Secretary (principal financial officer and principal accounting officer) February 21, 2024 Raymond D. Martz /s/ CYDNEY C. DONNELL Trustee February 21, 2024 Cydney C. Donnell /s/ RON E. JACKSON Trustee February 21, 2024 Ron E. Jackson /s/ PHILLIP M. MILLER Trustee February 21, 2024 Phillip M. Miller /s/ MICHAEL J. SCHALL Trustee February 21, 2024 Michael J. Schall /s/ BONNY W. SIMI Trustee February 21, 2024 Bonny W. Simi /s/ EARL E. WEBB Trustee February 21, 2024 Earl E. Webb PEBBLEBROOK HOTEL TRUST INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page No. Reports of Independent Registered Public Accounting Firm F- 2 Consolidated Balance Sheets F- 5 Consolidated Statements of Operations and Comprehensive Income F- 6 Consolidated Statements of Equity F- 8 Consolidated Statements of Cash Flows F- 11 Notes to Consolidated Financial Statements F- 12 Schedule III - Real Estate and Accumulated Depreciation F- 35 F-1 Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Trustees Pebblebrook Hotel Trust: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Pebblebrook Hotel Trust and subsidiaries (the Company) as of December 31, 2023 and 2022, 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, 2023, and the related notes and financial statement schedule III (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 21, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Change in Accounting Principle 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 These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 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 $5,491 million, or 94% of total assets as of December 31, 2023. 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. F-2 The following are the primary procedures we performed to address this critical audit matter. 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. /s/ KPMG LLP We have served as the Company's auditor since 2009. McLean, Virginia February 21, 2024 F-3 Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Trustees Pebblebrook Hotel Trust: Opinion on Internal Control Over Financial Reporting We have audited Pebblebrook Hotel Trust and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, 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, 2023, and the related notes and financial statement schedule III (collectively, the consolidated financial statements), and our report dated February 21, 2024 expressed an unqualified opinion on those consolidated financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ KPMG LLP McLean, Virginia February 21, 2024 F-4 Table of Contents Pebblebrook Hotel Trust Consolidated Balance Sheets (in thousands, except share and per-share data) December 31, 2023 December 31, 2022 ASSETS Investment in hotel properties, net $ 5,490,776 $ 5,874,876 Hotel held for sale — 44,861 Cash and cash equivalents 183,747 41,040 Restricted cash 9,894 11,229 Hotel receivables (net of allowance for doubtful accounts of $ 689 and $ 431 , respectively) 43,912 45,258 Prepaid expenses and other assets 96,644 116,276 Total assets $ 5,824,973 $ 6,133,540 LIABILITIES AND EQUITY Debt $ 2,319,801 $ 2,387,293 Accounts payable, accrued expenses and other liabilities 238,644 250,518 Lease liabilities - operating leases 320,617 320,402 Deferred revenues 76,874 73,603 Accrued interest 6,830 4,535 Liabilities related to hotel held for sale — 428 Distribution payable 11,862 12,218 Total liabilities 2,974,628 3,048,997 Commitments and contingencies (Note 11) Shareholders’ equity: Preferred shares of beneficial interest, $ .01 par value (liquidation preference $ 690,000 and $ 715,000 at December 31, 2023 and December 31, 2022, respectively), 100,000,000 shares authorized; 27,600,000 shares issued and outstanding at December 31, 2023 and 28,600,000 shares issued and outstanding at December 31, 2022 276 286 Common shares of beneficial interest, $ .01 par value, 500,000,000 shares authorized; 120,191,349 shares issued and outstanding at December 31, 2023 and 126,345,293 shares issued and outstanding at December 31, 2022 1,202 1,263 Additional paid-in capital 4,078,912 4,182,359 Accumulated other comprehensive income (loss) 24,374 35,724 Distributions in excess of retained earnings ( 1,341,264 ) ( 1,223,117 ) Total shareholders’ equity 2,763,500 2,996,515 Non-controlling interests 86,845 88,028 Total equity 2,850,345 3,084,543 Total liabilities and equity $ 5,824,973 $ 6,133,540 The accompanying notes are an integral part of these financial statements. F-5 Table of Contents Pebblebrook Hotel Trust Consolidated Statements of Operations and Comprehensive Income (in thousands, except share and per-share data) For the year ended December 31, 2023 2022 2021 Revenues: Room $ 914,109 $ 910,936 $ 483,191 Food and beverage 351,852 346,702 157,848 Other operating 153,988 134,253 92,005 Total revenues 1,419,949 1,391,891 733,044 Expenses: Hotel operating expenses: Room 248,020 225,992 127,105 Food and beverage 264,163 243,543 111,928 Other direct and indirect 428,897 413,939 257,547 Total hotel operating expenses 941,080 883,474 496,580 Depreciation and amortization 240,645 239,583 224,251 Real estate taxes, personal property taxes, property insurance, and ground rent 124,595 126,134 111,675 General and administrative 44,789 39,187 38,166 Impairment 81,788 89,633 14,856 Gain on sale of hotel properties ( 30,375 ) ( 6,194 ) ( 64,729 ) Business interruption insurance income ( 32,985 ) — — Other operating expenses 12,602 5,352 2,036 Total operating expenses 1,382,139 1,377,169 822,835 Operating income (loss) 37,810 14,722 ( 89,791 ) Interest expense ( 115,660 ) ( 99,988 ) ( 96,633 ) Other 4,229 562 113 Income (loss) before income taxes ( 73,621 ) ( 84,704 ) ( 186,311 ) Income tax (expense) benefit ( 655 ) ( 277 ) ( 61 ) Net income (loss) ( 74,276 ) ( 84,981 ) ( 186,372 ) Net income (loss) attributable to non-controlling interests 3,741 2,190 ( 1,514 ) Net income (loss) attributable to the Company ( 78,017 ) ( 87,171 ) ( 184,858 ) Distributions to preferred shareholders ( 43,649 ) ( 45,074 ) ( 42,105 ) Redemption of preferred shares 8,396 8,186 ( 8,055 ) Net income (loss) attributable to common shareholders $ ( 113,270 ) $ ( 124,059 ) $ ( 235,018 ) Net income (loss) per share available to common shareholders, basic $ ( 0.93 ) $ ( 0.95 ) $ ( 1.80 ) Net income (loss) per share available to common shareholders, diluted $ ( 0.93 ) $ ( 0.95 ) $ ( 1.80 ) Weighted-average number of common shares, basic 121,813,042 130,453,944 130,804,354 Weighted-average number of common shares, diluted 121,813,042 130,453,944 130,804,354 F-6 Table of Contents Pebblebrook Hotel Trust Consolidated Statements of Operations and Comprehensive Income - Continued (in thousands, except share and per-share data) For the year ended December 31, 2023 2022 2021 Comprehensive Income: Net income (loss) $ ( 74,276 ) $ ( 84,981 ) $ ( 186,372 ) Other comprehensive income (loss): Change in fair value of derivative instruments 17,572 55,479 15,289 Amounts reclassified from other comprehensive income ( 28,995 ) 52 25,210 Comprehensive income (loss) ( 85,699 ) ( 29,450 ) ( 145,873 ) Comprehensive income (loss) attributable to non-controlling interests 3,668 2,555 ( 1,251 ) Comprehensive income (loss) attributable to the Company $ ( 89,367 ) $ ( 32,005 ) $ ( 144,622 ) The accompanying notes are an integral part of these financial statements. F-7 Table of Contents Pebblebrook Hotel Trust Consolidated Statements of Equity (in thousands, except share data) For the year ended December 31, 2021 Preferred Shares Common Shares Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Distributions in Excess of Retained Earnings Total Shareholders' Equity Non-Controlling Interests Total Equity Shares Amount Shares Amount Balance at December 31, 2020 20,400,000 $ 204 130,673,300 $ 1,307 $ 4,169,870 $ ( 60,071 ) $ ( 853,973 ) $ 3,257,337 $ 6,989 $ 3,264,326 Redemption of preferred shares ( 10,000,000 ) ( 100 ) — — ( 241,845 ) — ( 8,055 ) ( 250,000 ) — ( 250,000 ) Issuance of shares, net of offering costs 19,200,000 192 — — 463,862 — — 464,054 — 464,054 Issuance of common shares for Board of Trustees compensation — — 27,711 1 515 — — 516 — 516 Repurchase of common shares — — ( 38,310 ) ( 1 ) ( 719 ) — — ( 720 ) — ( 720 ) Share-based compensation — — 151,049 1 10,433 — — 10,434 2,445 12,879 Distributions on common shares/units — — — — — — ( 5,032 ) ( 5,032 ) ( 66 ) ( 5,098 ) Distributions on preferred shares — — — — — — ( 42,105 ) ( 42,105 ) — ( 42,105 ) Cumulative effect adjustment from adoption of new accounting standard — — — — ( 113,099 ) — — ( 113,099 ) — ( 113,099 ) Purchases of capped calls in connection with convertible senior notes — — — — ( 20,975 ) — — ( 20,975 ) — ( 20,975 ) Other adjustment — — — — — 393 — 393 ( 393 ) — Other comprehensive income (loss): Change in fair value of derivative instruments — — — — — 15,026 — 15,026 263 15,289 Amounts reclassified from other comprehensive income — — — — — 25,210 — 25,210 — 25,210 Net income (loss) — — — — — — ( 184,858 ) ( 184,858 ) ( 1,514 ) ( 186,372 ) Balance at December 31, 2021 29,600,000 $ 296 130,813,750 $ 1,308 $ 4,268,042 $ ( 19,442 ) $ ( 1,094,023 ) $ 3,156,181 $ 7,724 $ 3,163,905 F-8 Table of Contents Pebblebrook Hotel Trust Consolidated Statements of Equity - Continued (in thousands, except share data) For the year ended December 31, 2022 Preferred Shares Common Shares Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Distributions in Excess of Retained Earnings Total Shareholders' Equity Non-Controlling Interests Total Equity Shares Amount Shares Amount Balance at December 31, 2021 29,600,000 $ 296 130,813,750 $ 1,308 $ 4,268,042 $ ( 19,442 ) $ ( 1,094,023 ) $ 3,156,181 $ 7,724 $ 3,163,905 Redemption of preferred shares ( 1,000,000 ) ( 10 ) — — ( 24,176 ) — 8,186 ( 16,000 ) — ( 16,000 ) 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 Repurchase of common shares — — ( 4,609,626 ) ( 47 ) ( 70,677 ) — — ( 70,724 ) — ( 70,724 ) Share-based compensation — — 107,303 1 8,556 — — 8,557 2,793 11,350 Distributions on common shares/units — — — — — — ( 5,035 ) ( 5,035 ) ( 69 ) ( 5,104 ) Distributions on preferred shares/units — — — — — — ( 45,074 ) ( 45,074 ) ( 2,975 ) ( 48,049 ) Other comprehensive income (loss): Change in fair value of derivative instruments — — — — — 55,114 — 55,114 365 55,479 Amounts reclassified from other comprehensive income — — — — — 52 — 52 — 52 Net income (loss) — — — — — — ( 87,171 ) ( 87,171 ) 2,190 ( 84,981 ) Balance at December 31, 2022 28,600,000 $ 286 126,345,293 $ 1,263 $ 4,182,359 $ 35,724 $ ( 1,223,117 ) $ 2,996,515 $ 88,028 $ 3,084,543 F-9 Table of Contents Pebblebrook Hotel Trust Consolidated Statements of Equity - Continued (in thousands, except share data) For the year ended December 31, 2023 Preferred Shares Common Shares Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Distributions in Excess of Retained Earnings Total Shareholders' Equity Non-Controlling Interests Total Equity Shares Amount Shares Amount Balance at December 31, 2022 28,600,000 $ 286 126,345,293 $ 1,263 $ 4,182,359 $ 35,724 $ ( 1,223,117 ) $ 2,996,515 $ 88,028 $ 3,084,543 Redemption of preferred shares ( 1,000,000 ) ( 10 ) — — ( 24,176 ) — 8,396 ( 15,790 ) — ( 15,790 ) Redemption of non-controlling interest OP units — — 133,605 1 3,514 — — 3,515 ( 3,515 ) — Issuance of common shares for Board of Trustees compensation — — 55,480 1 753 — — 754 — 754 Repurchase of common shares — — ( 6,578,436 ) ( 65 ) ( 92,688 ) — — ( 92,753 ) — ( 92,753 ) Share-based compensation — — 235,407 2 9,150 — — 9,152 3,393 12,545 Distributions on common shares/units — — — — — — ( 4,877 ) ( 4,877 ) ( 72 ) ( 4,949 ) Distributions on preferred shares/units — — — — — — ( 43,649 ) ( 43,649 ) ( 4,657 ) ( 48,306 ) Other comprehensive income (loss): Change in fair value of derivative instruments — — — — — 17,645 — 17,645 ( 73 ) 17,572 Amounts reclassified from other comprehensive income — — — — — ( 28,995 ) — ( 28,995 ) — ( 28,995 ) Net income (loss) — — — — — — ( 78,017 ) ( 78,017 ) 3,741 ( 74,276 ) Balance at December 31, 2023 27,600,000 $ 276 120,191,349 $ 1,202 $ 4,078,912 $ 24,374 $ ( 1,341,264 ) $ 2,763,500 $ 86,845 $ 2,850,345 The accompanying notes are an integral part of these financial statements. F-10 Table of Contents Pebblebrook Hotel Trust Consolidated Statements of Cash Flows (in thousands) For the year ended December 31, 2023 2022 2021 Operating activities: Net income (loss) $ ( 74,276 ) $ ( 84,981 ) $ ( 186,372 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 240,645 239,583 224,251 Share-based compensation 12,545 11,350 11,433 Amortization of deferred financing costs, non-cash interest and other amortization 12,124 13,453 16,633 Gain on sale of hotel properties ( 30,375 ) ( 6,194 ) ( 64,729 ) Impairment 81,788 89,633 14,856 Non-cash ground rent 9,898 9,952 7,061 Other adjustments ( 7,801 ) ( 4,713 ) ( 1,959 ) Changes in assets and liabilities: Hotel receivables 1,171 ( 7,974 ) ( 27,509 ) Prepaid expenses and other assets ( 11,190 ) ( 10,018 ) ( 428 ) Accounts payable and accrued expenses ( 5,860 ) 24,808 51,793 Deferred revenues 7,528 3,846 25,736 Net cash provided by (used in) operating activities 236,197 278,745 70,766 Investing activities: Improvements and additions to hotel properties ( 200,634 ) ( 116,743 ) ( 83,827 ) Proceeds from sales of hotel properties 314,941 248,908 255,927 Acquisition of hotel properties — ( 247,163 ) ( 253,541 ) Property insurance proceeds 30,210 5,638 — Other investing activities ( 2,495 ) ( 25 ) ( 128 ) Net cash provided by (used in) investing activities 142,022 ( 109,385 ) ( 81,569 ) Financing activities: Gross proceeds from issuance of preferred shares — — 480,000 Payment of offering costs — common and preferred shares — ( 123 ) ( 15,947 ) Payment of deferred financing costs ( 2,710 ) ( 12,415 ) ( 14,510 ) Borrowings under revolving credit facilities 10,000 190,151 — Repayments under revolving credit facilities ( 10,000 ) ( 190,151 ) ( 40,000 ) Proceeds from debt 140,000 1,380,000 268,599 Repayments of debt ( 211,088 ) ( 1,434,956 ) ( 392,236 ) Purchases of capped calls for convertible senior notes — — ( 20,975 ) Repurchases of common shares ( 92,753 ) ( 70,724 ) ( 720 ) Redemption of preferred shares ( 15,790 ) ( 16,000 ) ( 250,000 ) Distributions — common shares/units ( 4,971 ) ( 5,291 ) ( 5,279 ) Distributions — preferred shares/units ( 48,607 ) ( 47,367 ) ( 39,443 ) Other financing activities ( 928 ) ( 2,462 ) ( 2,739 ) Net cash provided by (used in) financing activities ( 236,847 ) ( 209,338 ) ( 33,250 ) Net change in cash and cash equivalents and restricted cash 141,372 ( 39,978 ) ( 44,053 ) Cash and cash equivalents and restricted cash, beginning of year 52,269 92,247 136,300 Cash and cash equivalents and restricted cash, end of year $ 193,641 $ 52,269 $ 92,247 The accompanying notes are an integral part of these financial statements. F-11 Table of Contents PEBBLEBROOK HOTEL TRUST NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Note 1. Organization Pebblebrook Hotel Trust (the "Company") is an internally managed hotel investment company, formed as a Maryland real estate investment trust in October 2009 to opportunistically acquire and invest in hotel properties located primarily in major U.S. 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, 2023, the Company owned interests in 46 hotels with a total of 11,924 guest rooms. The hotel properties are located in: Boston, Massachusetts; Chicago, Illinois; Hollywood, Florida; Jekyll Island, Georgia; Key West, Florida; Los Angeles, California (Beverly Hills, Santa Monica, and West Hollywood); Naples, Florida; Newport, Rhode Island; Portland, Oregon; San Diego, California; San Francisco, California; Santa Cruz, California; Stevenson, Washington; and Washington, D.C. Substantially all of the Company’s assets are held by, and all of the Company's operations are conducted through, Pebblebrook Hotel, L.P. (the "Operating Partnership"). The Company is the sole general partner of the Operating Partnership. As of December 31, 2023, the Company owned 99.3 % of the common limited partnership units issued by the Operating Partnership ("common units"). The remaining 0.7 % of the common units are owned by the other limited partners of the Operating Partnership. For the Company to maintain its qualification as a real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended (the "Code"), it cannot operate the hotels it owns. Therefore, the Operating Partnership and its subsidiaries lease the hotel properties to subsidiaries of Pebblebrook Hotel Lessee, Inc. (collectively with its subsidiaries, "PHL"), a taxable REIT subsidiary ("TRS"), which in turn engage third-party eligible independent contractors to manage the hotels. PHL is consolidated into the Company’s financial statements. Note 2. Summary of Significant Accounting Policies Basis of Presentation The Company and its subsidiaries are separate legal entities and maintain records and books of account separate and apart from each other. The consolidated financial statements include all of the accounts of the Company and its subsidiaries and are presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). All significant intercompany balances and transactions have been eliminated in consolidation. Investments in entities that the Company does not control, but over which the Company has the ability to exercise significant influence regarding operating and financial policies, are accounted for under the equity method. Certain reclassifications have been made to the prior period's financial statements to conform to the current year presentation. Use of Estimates The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and revenues and expenses. These estimates are prepared using management’s best judgment, after considering past, current and expected events and economic conditions. Actual results could differ from these estimates. Risks and Uncertainties The state of the overall economy can significantly impact hotel operational performance and thus 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 A fair value measurement is based on the assumptions that market participants would use in pricing an asset or liability in an orderly transaction. The hierarchy for inputs used in measuring fair value are as follows: 1. Level 1 – Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. 2. Level 2 – Inputs include quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, and model-derived valuations whose inputs are observable. F-12 Table of Contents 3. Level 3 – Model-derived valuations with unobservable inputs. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. The Company's financial instruments include cash and cash equivalents, restricted cash, accounts payable and accrued expenses. Due to their short maturities, the carrying amounts of these assets and liabilities approximate fair value. See Note 5. Debt to the accompanying consolidated financial statements for disclosures on the fair value of debt and derivative instruments. Investment in Hotel Properties Upon acquiring a business or hotel property, the Company measures and recognizes the fair value of the acquired land, land improvements, building, furniture, fixtures and equipment, identifiable intangible assets or liabilities, other assets and assumed liabilities. Identifiable intangible assets or liabilities typically arise from contractual arrangements in connection with the transaction, including terms that are above or below market compared to an estimated market agreement at the acquisition date. Acquisition-date fair values of assets and assumed liabilities are determined using a combination of the market, cost and income approaches. These valuation methodologies are based on significant Level 2 and Level 3 inputs in the fair value hierarchy, such as estimates of future income growth, capitalization rates, discount rates, capital expenditures and cash flow projections, including hotel revenues and net operating income, at the respective hotel properties. Transaction costs related to business combinations are expensed as incurred and included on the consolidated statements of operations and comprehensive income. Transaction costs related to asset acquisitions are capitalized and recorded to investment in hotel property. Hotel renovations and replacements of assets that improve or extend the life of the asset are recorded at cost and depreciated over their estimated useful lives. Furniture, fixtures and equipment under finance leases are recorded at the present value of the minimum lease payments. Repair and maintenance costs are expensed as incurred. Hotel properties are recorded at cost and depreciated using the straight-line method over an estimated useful life of 10 to 40 years for buildings, land improvements, and building improvements and 1 to 10 years for furniture, fixtures and equipment. Leasehold improvements are amortized over the shorter of the lease term or the useful lives of the related assets. Intangible assets arising from contractual arrangements are typically amortized over the life of the contract. The Company is required to make subjective assessments as to the useful lives and classification of properties for purposes of determining the amount of depreciation expense to reflect each year with respect to the assets. These assessments may impact the Company’s results of operations. The Company reviews its investments in hotel properties for impairment whenever events or changes in circumstances indicate that the carrying value of the hotel properties may not be recoverable. Events or circumstances that may cause a review include, but are not limited to, when a hotel property experiences a current or projected loss from operations, when it becomes more likely than not that a hotel property will be sold before the end of its useful life, adverse changes in the demand for lodging at the properties due to declining national or local economic conditions and/or new hotel construction in markets where the hotels are located. When such conditions exist, the Company performs an analysis to determine if the estimated undiscounted future cash flows from operations and the proceeds from the ultimate disposition of a hotel exceed its carrying value. If the estimated undiscounted future cash flows are less than the carrying value of the asset, an adjustment to reduce the carrying value to the related hotel’s estimated fair market value is recorded and an impairment loss is recognized. In the evaluation of impairment of its hotel properties, the Company makes many assumptions and estimates including projected cash flows both from operations and eventual disposition, expected useful life and estimated holding period, future required capital expenditures, and fair values, including consideration of expected terminal capitalization rates, discount rates, and comparable selling prices. The Company will adjust its assumptions with respect to the remaining useful life of the hotel property when circumstances change or it is more likely than not that the hotel property will be sold prior to its previously expected useful life. The Company will classify a hotel as held for sale and will cease recording depreciation expense when a binding agreement to sell the property has been signed under which the buyer has committed a significant amount of nonrefundable cash, approval of the Company's board of trustees (the "Board of Trustees") has been obtained, no significant financing contingencies exist, and the sale is expected to close within one year. If the fair value less costs to sell is lower than the carrying value of the hotel, the Company will record an impairment loss. The Company will classify the loss, together with the related operating results, as continuing or discontinuing operations on the statements of operations and classify the assets and related liabilities as held for sale on the balance sheet. F-13 Table of Contents Intangible Assets and Liabilities Intangible assets or liabilities are recorded on non-market contracts assumed as part of the acquisition of certain hotels. The Company reviews the terms of agreements assumed in conjunction with the purchase of a hotel to determine if the terms are over or under market compared to an estimated market agreement at the acquisition date. Under market lease assets or over market contract liabilities are recorded at the acquisition date and amortized using the straight-line method over the term of the agreement. The Company does not amortize intangible assets with indefinite useful lives, but reviews these assets for impairment annually or at interim periods if events or circumstances indicate that the asset may be impaired. Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand, demand deposits with financial institutions and short-term liquid investments with an original maturity of three months or less. The Company maintains cash and cash equivalents balances in excess of insured limits with various financial institutions. This may subject the Company to significant concentrations of credit risk. The Company performs periodic evaluations of the credit quality of these financial institutions. Restricted Cash Restricted cash primarily consists of reserves for replacement of furniture and fixtures, cash held in escrow pursuant to certain lender or hotel management agreement requirements to pay for real estate taxes, ground rent or property insurance and cash held in cash management and lockbox accounts pursuant to certain mortgage loan requirements. Prepaid Expenses and Other Assets The Company's prepaid expenses and other assets consist of prepaid real estate taxes, prepaid insurance, inventories, over or under market leases, and corporate office equipment and furniture. Derivative Instruments In the normal course of business, the Company is exposed to the effects of interest rate changes. The Company may enter into derivative instruments including interest rate swaps, caps and collars to manage or hedge interest rate risk. Derivative instruments are recorded at fair value on the balance sheet date. Unrealized gains and losses of hedging instruments are reported in other comprehensive income (loss) and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Revenue Recognition Revenue consists of amounts derived from hotel operations, including the sales of rooms, food and beverage, and other ancillary services. Room revenue is recognized over the length of a customer's hotel stay. Revenue from food and beverage and other ancillary services is generated when a customer chooses to purchase goods or services separately from a hotel room and revenue is recognized on these distinct goods and services at the point in time or over the time period that goods or services are provided to the customer. Certain ancillary services are provided by third parties and the Company assesses whether it is the principal or agent in these arrangements. If the Company is the agent, revenue is recognized based upon the commission earned from the third party. If the Company is the principal, the Company recognizes revenue based upon the gross sales price. Some contracts for rooms or food and beverage services require an upfront deposit which is recorded as deferred revenues (or contract liabilities) and recognized once the performance obligations are satisfied. The Company recognizes revenue related to nonrefundable membership initiation fees and refundable membership initiation deposits over the expected life of an active membership. For refundable membership initiation deposits, the difference between the amount paid by the member and the present value of the refund obligation is deferred and recognized as other operating revenues on the consolidated statements of operations and comprehensive income over the expected life of an active membership. The present value of the refund obligation is recorded as a membership initiation deposit liability in the consolidated balance sheets and accretes over the nonrefundable term using the effective interest method using the Company's incremental borrowing rate. The accretion is included in interest expense. Certain of the Company's hotels have retail spaces, restaurants or other spaces which the Company leases to third parties. Lease revenue is recognized on a straight-line basis over the life of the lease and included in other operating revenues in the Company's consolidated statements of operations and comprehensive income. The Company collects sales, use, occupancy and similar taxes at its hotels which are presented on a net basis on the consolidated statements of operations and comprehensive income. Accounts receivable primarily represents receivables from hotel guests who occupy hotel rooms and utilize hotel services. The Company maintains an allowance for doubtful accounts sufficient to cover estimated potential credit losses. F-14 Table of Contents Income Taxes To qualify as a REIT for federal income tax purposes, the Company must meet a number of organizational and operational requirements, including a requirement that it currently distribute at least 90 percent of its REIT taxable income (determined without regard to the deduction for dividends paid and excluding net capital gains) to its shareholders. As a REIT, the Company generally is not subject to federal corporate income tax on that portion of its taxable income that is currently distributed to shareholders. The Company is subject to certain state and local taxes on its income and property, and to federal income and excise taxes on its undistributed taxable income. In addition, the Company's TRS lessees are subject to federal and state income taxes. The Company accounts for income taxes using the asset and liability method under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Valuation allowances are provided if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Share-based Compensation The Company has adopted an equity incentive plan that provides for the grant of common share options, share awards, share appreciation rights, performance units and other equity-based awards. Equity-based compensation is measured at the fair value of the award on the date of grant and recognized as an expense on a straight-line basis over the vesting period. Share-based compensation awards that contain a performance condition are reviewed at least quarterly to assess the achievement of the performance condition. Compensation expense will be adjusted when a change in the assessment of achievement of the specific performance condition level is determined to be probable. The determination of fair value of these awards is subjective and involves significant estimates and assumptions including expected volatility of the Company's shares, expected dividend yield, expected term and assumptions of whether these awards will achieve parity with other operating partnership units or achieve performance thresholds. Earnings Per Share Basic earnings per share (“EPS”) is computed by dividing the net income (loss) available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS is computed by dividing net income (loss) available to common shareholders, as adjusted for dilutive securities, by the weighted-average number of common shares outstanding plus dilutive securities. Any anti-dilutive securities are excluded from the diluted per-share calculation. Comprehensive Income (Loss) The purpose of reporting comprehensive income (loss) is to report a measure of all changes in equity of an entity that result from recognized transactions and other economic events of the period other than transactions with owners in their capacity as owners. Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss). Segment Information The Company separately evaluates the performance of each of its hotel properties. However, because each of the hotels has similar economic characteristics, facilities, and services, the hotel properties have been aggregated into a single operating segment. 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, 2023, the Company has invested $ 7.9 million. The Company's total equity commitment to the fund is $ 10.0 million. F-15 Table of Contents New Accounting Pronouncements Disclosure Improvements In October, 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative ("ASU 2023-06"). ASU 2023-06 incorporates 14 of the 27 disclosure requirements published in SEC Release No. 33-10532 - Disclosure Update and Simplification into various topics within the Accounting Standards Codification ("ASC"). ASU 2023-06's amendments represent clarifications to, or technical corrections of, current requirements. For SEC registrants, the effective date for each amendment will vary based on the date on which the SEC removes that related disclosure from its rules. If the SEC does not act to remove its related requirement by June 30, 2027, any related FASB amendments will be removed from the ASC and will not be effective. Early adoption is prohibited. The Company is currently assessing the potential impacts of ASU 2023-06 and does not expect it to have a material effect on its consolidated financial statements and disclosures. Segment Reporting In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"). ASU 2023-07 expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. All disclosure requirements under ASU 2023-07 are also required for public entities with a single reportable segment. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently assessing the impacts of adopting ASU 2023-07 on its consolidated financial statements and disclosures. Income Taxes In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"). ASU 2023-09 requires entities to disclose disaggregated information about their effective tax rate reconciliation as well as information on income taxes paid. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied on a prospective basis, with the option to apply retrospectively. The Company is currently assessing the impacts of adopting ASU 2023-09 on its consolidated financial statements and disclosures. Note 3. Acquisition and Disposition of Hotel Properties Acquisitions There were no acquisitions of hotel properties during the year ended December 31, 2023. 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. F-16 Table of Contents Dispositions The following table summarizes disposition transactions during the years ended December 31, 2023 and 2022 (in thousands): Hotel Property Name Location Sale Date Sale Price The Heathman Hotel Portland, OR February 22, 2023 $ 45,000 Retail at The Westin Michigan Avenue Chicago Chicago, IL March 17, 2023 27,300 Hotel Colonnade Coral Gables Coral Gables, FL March 28, 2023 63,000 Hotel Monaco Seattle Seattle, WA May 9, 2023 63,250 Hotel Vintage Seattle Seattle, WA May 24, 2023 33,700 Hotel Zoe Fisherman’s Wharf San Francisco, CA November 14, 2023 68,500 Marina City Retail at Hotel Chicago Downtown, Autograph Collection Chicago, IL December 21, 2023 30,000 2023 Total $ 330,750 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 For the years ended December 31, 2023, 2022 and 2021, the accompanying consolidated statements of operations and comprehensive income included operating (loss) of $( 0.8 ) million, $( 3.9 ) million and $( 33.2 ) million, respectively, excluding impairment loss and gain on sale of hotel properties related to the hotel properties sold and held for sale. 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, 2023, no properties were designated as held for sale by the Company. 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. As noted above, the Company completed the sale of The Heathman Hotel in February 2023. Note 4. Investment in Hotel Properties Investment in hotel properties as of December 31, 2023 and 2022 consisted of the following (in thousands): December 31, 2023 December 31, 2022 Land $ 810,633 $ 897,756 Buildings and improvements 5,005,894 5,170,976 Furniture, fixtures and equipment 511,451 504,518 Finance lease asset 91,181 91,181 Construction in progress 27,123 11,961 $ 6,446,282 $ 6,676,392 Right-of-use asset, operating leases 360,761 370,383 Investment in hotel properties $ 6,807,043 $ 7,046,775 Less: Accumulated depreciation ( 1,316,267 ) ( 1,171,899 ) Investment in hotel properties, net $ 5,490,776 $ 5,874,876 F-17 Table of Contents Hurricane Ian On September 27, 2022, LaPlaya Beach Resort & 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 or disruption. LaPlaya was closed in anticipation of the storm and required remediation and repairs from the damage and remained closed. In 2023, LaPlaya began to reopen in stages as the buildings and facilities were repaired. The Company expects LaPlaya's remediation and repair to be substantially completed in the first quarter of 2024. 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 and the Company has recorded a receivable for the expenditures to date which it anticipates to collect from the insurance providers in excess of the deductibles. For the years ended December 31, 2023 and 2022, the Company recognized an aggregate impairment loss of zero and $ 7.9 million, respectively, for the damage to LaPlaya and Southernmost Beach Resort. For the year ended December 31, 2023, the Company incurred $ 6.6 million of expenses related to payroll, repair and claims administration for which reimbursement from insurance policies is uncertain and therefore is included in other operating expenses in the Company's consolidated statements of operations and comprehensive income. Through December 31, 2023 and 2022, the Company has received a total of $ 84.3 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. Impairment The Company reviews its investment in hotel properties for impairment whenever events or circumstances indicate potential impairment. The Company periodically adjusts its estimate of future operating cash flows and estimated hold periods for certain properties. As a result of its review, the Company may identify an impairment trigger has occurred and assess its investment in hotel properties for recoverability. For the years ended December 31, 2023, 2022, and 2021, the Company recognized impairment losses of $ 81.8 million related to three hotels and one retail component of a hotel property, $ 81.7 million related to three hotels and $ 14.9 million related to one hotel, respectively, 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. Right-of-use Assets and Lease Liabilities The Company recognized right-of-use assets and related liabilities related to its ground leases, all of which are operating leases. When the rate implicit in the lease could not be determined, the Company used incremental borrowing rates, which ranged from 4.7 % to 7.6 %. In addition, the term used includes any options to exercise extensions when it is reasonably certain the Company will exercise such option. See Note 11. Commitments and Contingencies for additional information about the ground leases. The right-of-use assets and liabilities are amortized to ground rent expense over the term of the underlying lease agreements. As of December 31, 2023, the Company's lease liabilities consisted of operating lease liabilities of $ 320.6 million and financing lease liabilities of $ 43.4 million. As of December 31, 2022, the Company's lease liabilities consisted of operating lease liabilities of $ 320.4 million and financing lease liabilities of $ 42.7 million. The financing lease liabilities are included in accounts payable, accrued expenses and other liabilities on the Company's accompanying consolidated balance sheets. F-18 Table of Contents Note 5. Debt 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 (the "Credit Agreement"). The 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. The Company may request additional lender commitments to increase the aggregate borrowing capacity under the Credit Agreement up to an additional $ 970.0 million. On January 3, 2024, the Company entered into the First Amendment to the Credit Agreement which extended the maturity date of $ 356.7 million borrowed under Term Loan 2024 to January 2028. In connection with the extension, the Company also repaid $ 60.0 million of its outstanding Term Loan 2024 obligation with available cash. The remaining $ 43.3 million of Term Loan 2024's balance will continue to mature in October 2024 and will be paid with available cash or borrowings under the revolving credit facility at maturity. On January 3, 2024, the Company also repaid $ 50.0 million of its outstanding Term Loan 2025 obligation with available cash. The Company's debt consisted of the following as of December 31, 2023 and 2022 (dollars in thousands): Balance Outstanding as of Interest Rate at December 31, 2023 Maturity Date December 31, 2023 December 31, 2022 Revolving credit facilities Senior unsecured credit facility - (1)(2) October 2026 $ — $ — PHL unsecured credit facility - (1) October 2026 — — Revolving credit facilities $ — $ — Unsecured term loans Term Loan 2024 5.78 % (1)(5) October 2024 460,000 460,000 Term Loan 2025 5.13 % (1)(6) October 2025 460,000 460,000 Term Loan 2027 5.61 % (1) October 2027 460,000 460,000 Term loan principal $ 1,380,000 $ 1,380,000 Convertible senior notes principal 1.75 % December 2026 $ 750,000 $ 750,000 Senior unsecured notes Series A Notes - (3) December 2023 — 47,600 Series B Notes 4.93 % December 2025 2,400 2,400 Senior unsecured notes principal $ 2,400 $ 50,000 Mortgage loans Margaritaville Hollywood Beach Resort 7.04 % (4) September 2026 140,000 161,500 Estancia La Jolla Hotel & Spa 5.07 % September 2028 57,497 59,485 Mortgage loans principal $ 197,497 $ 220,985 Total debt principal $ 2,329,897 $ 2,400,985 Unamortized debt premiums, discount and deferred financing costs, net ( 10,096 ) ( 13,692 ) Debt, Net $ 2,319,801 $ 2,387,293 ______________________ (1) Borrowings bear interest at floating rates. Interest rate at December 31, 2023 gives effect to interest rate hedges. (2) The Company has the option to extend the maturity date for up to two six-month periods, pursuant to certain terms and conditions and payment of an extension fee. (3) The Company paid off the Series A Notes using available cash. (4) This loan was refinanced during the third quarter of 2023 and now bears interest at a floating rate equal to daily SOFR plus of 3.75 %. The interest rate at December 31, 2023 gives effect to an interest rate swap. The Company has the option to extend the maturity date for up to two one -year periods, pursuant to certain terms and conditions and payment of an extension fee. (5) On January 3, 2024, the Company entered into the First Amendment to the Credit Agreement which extended the maturity date of $ 356.7 million borrowed under Term Loan 2024 to January 2028. In connection with the extension, the Company also repaid $ 60.0 million of its outstanding Term Loan 2024 obligation with available cash. The remaining $ 43.3 million of Term Loan 2024's balance will continue to mature in October 2024 and will be paid with available cash or borrowings under the revolving credit facility at maturity. (6) On January 3, 2024, the Company repaid $ 50.0 million of its outstanding Term Loan 2025 obligation with available cash. F-19 Table of Contents Unsecured Revolving Credit Facilities 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) the Secured Overnight Financing Rate ("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, 2023, the Company had no outstanding borrowings, $ 13.6 million of outstanding letters of credit and a borrowing capacity of $ 636.4 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. Under the terms of the Credit Agreement, 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 senior unsecured revolving facility. The Company pays a fee for outstanding standby letters of credit 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 $ 13.6 million and $ 12.6 million were outstanding as of December 31, 2023 and 2022, respectively. As of December 31, 2023, 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, 2023, 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, 2023, 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 three $ 460.0 million term loans provided for in the Credit Agreement mature in October 2024, October 2025 and October 2027, respectively as of December 31, 2023. After adjusting for the aforementioned January 3, 2024 term loan amendment and repayments, the term loans will mature as follows: $ 43.3 million in October 2024 (Term Loan 2024), $ 410.0 million in October 2025 (Term Loan 2025), $ 460.0 million in October 2027 (Term Loan 2027) and $ 356.7 million in January 2028 (Term Loan 2024). 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, 2023, 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. Convertible Senior Notes In December 2020, the Company issued $ 500.0 million aggregate principal amount of 1.75 % Convertible Senior Notes due December 2026 (the "Convertible Notes"). The net proceeds from this offering of the Convertible Notes were approximately $ 487.3 million after deducting the underwriting fees and other expenses paid by the Company. In February 2021, the Company issued an additional $ 250.0 million aggregate principal amount of Convertible Notes. These additional Convertible Notes were sold at a 5.5 % premium to par and generated net proceeds of approximately $ 257.2 million after deducting the underwriting fees and other expenses paid by the Company of $ 6.5 million, which was offset by a premium received in the amount of $ 13.8 million. F-20 Table of Contents The Convertible Notes are governed by an indenture (the “Base Indenture”) between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee. The Convertible Notes bear interest at a rate of 1.75 % per annum, payable semi-annually in arrears on June 15th and December 15th of each year, beginning on June 15, 2021. The Convertible Notes will mature on December 15, 2026. The Company separated the Convertible Notes issued in December 2020 into liability and equity components. The initial carrying amount of the liability component was $ 386.1 million and was calculated using a discount rate of 6.25 %. The discount rate was based on the terms of debt instruments that were similar to the Convertible Notes. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the principal amount of the Convertible Notes, or $ 113.9 million. The amount recorded in equity was not subject to remeasurement or amortization. The $ 113.9 million also represented the initial discount recorded on the Convertible Notes. As a result of the Company's early adoption of ASU 2020-06 on January 1, 2021, the Convertible Notes are now recorded as a single liability with no portion recorded in equity. The Company also ceased recording non-cash interest expense associated with the amortization of the debt discount. Prior to June 15, 2026, the Convertible Notes will be convertible upon certain circumstances. On and after June 15, 2026, holders may convert any of their Convertible Notes into the Company’s common shares of beneficial interest (“common shares”) at the applicable conversion rate at any time at their election two days prior to the maturity date. The initial conversion rate is 39.2549 common shares per $1,000 principal amount of Convertible Notes, which represents an initial conversion price of approximately $ 25.47 per share. The conversion rate is subject to adjustment in certain circumstances. As of December 31, 2023 and 2022, the if-converted value of the Convertible Notes did not exceed the principal amount. The Company may redeem for cash all or a portion of the Convertible Notes, at its option, on or after December 20, 2023 upon certain circumstances. The redemption price will be equal to 100 % of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. If certain make-whole fundamental changes occur, the conversion rate for the Convertible Notes may be increased. In connection with the Convertible Notes issuances, the Company entered into privately negotiated capped call transactions (the “Capped Call Transactions”) with certain of the underwriters of the offerings of the Convertible Notes or their respective affiliates and other financial institutions. The Capped Call Transactions initially cover, subject to anti-dilution adjustments substantially similar to those applicable to the Convertible Notes, the number of common shares underlying the Convertible Notes. The Capped Call Transactions are expected generally to reduce the potential dilution to holders of common shares upon conversion of the Convertible Notes and/or offset the potential cash payments that the Company could be required to make in excess of the principal amount of any converted Convertible Notes upon conversion thereof, with such reduction and/or offset subject to a cap. The upper strike price of the Capped Call Transactions is $ 33.0225 per share. Senior Unsecured Notes The Company has $ 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"). The debt covenants of the Series B Notes are substantially similar to those of the Company's senior unsecured revolving credit facility. As of December 31, 2023, the Company was in compliance with all such debt covenants. Mortgage Loans On September 23, 2021, the Company assumed a $ 161.5 million loan secured by a first-lien mortgage on the leasehold interest of Margaritaville Hollywood Beach Resort ("Margaritaville"). During the third quarter of 2023, the Company paid down $ 21.5 million of this loan and refinanced the remaining $ 140.0 million balance. The new loan requires interest-only payments based on a floating rate equal to daily SOFR plus a spread of 3.75 %. This loan matures on September 7, 2026 and may be extended for up to two one -year periods, subject to certain terms and conditions and payment of extension fees. On December 1, 2021, the Company assumed a $ 61.7 million loan secured by a first-lien mortgage on the leasehold interest of Estancia La Jolla Hotel & Spa ("Estancia"). The loan requires both principal and interest monthly payments based on a fixed interest rate of 5.07 %. The loan matures on September 1, 2028. The Company's mortgage loans associated with Margaritaville and Estancia are non-recourse to the Company except for customary carve-outs to the general non-recourse liability. The loans contain customary provisions regarding events of default, as well as customary cash management, cash trap and lockbox provisions. Cash trap provisions are triggered if the hotel's performance is below a certain threshold. Once triggered, all of the cash flow generated by the hotel is deposited directly into lockbox accounts and then swept into cash management accounts for the benefit of our lender. These properties are not in a cash trap and no event of default has occurred under the loan documents. F-21 Table of Contents Interest Expense The components of the Company's interest expense consisted of the following for the years ended December 31, 2023, 2022, and 2021 (in thousands): For the year ended December 31, 2023 2022 2021 Unsecured revolving credit facilities $ 2,074 $ 2,531 $ 2,092 Unsecured term loan facilities 73,151 52,355 61,529 Convertible senior notes 13,125 13,125 12,662 Senior unsecured notes 2,169 2,525 3,562 Mortgage debt 14,704 9,788 1,375 Amortization of deferred financing fees, (premiums) and discounts 8,104 16,465 9,741 Other 2,333 3,199 5,672 Total interest expense $ 115,660 $ 99,988 $ 96,633 Fair Value The Company estimates the fair value of its fixed rate debt by discounting the future cash flows of each instrument at estimated market rates, taking into consideration general market conditions and maturity of the debt with similar credit terms and is classified within Level 2 of the fair value hierarchy. The estimated fair value of the Company’s fixed rate debt (unsecured senior notes, convertible senior notes and the Estancia mortgage loan) as of December 31, 2023 and 2022 was $ 686.3 million and $ 700.5 million, respectively. Future Minimum Principal Payments As of December 31, 2023, the future minimum principal payments for the Company's debt, assuming all extension options available in the Company's debt agreements are exercised, are as follows (in thousands): 2024 $ 461,910 2025 464,592 2026 752,308 2027 462,429 2028 188,658 Total debt principle payments $ 2,329,897 Deferred financing costs, net ( 10,096 ) Total debt $ 2,319,801 Derivative and Hedging Activities The Company enters into interest rate swap agreements to hedge against interest rate fluctuations. All of the Company's interest rate swaps are cash flow hedges. All unrealized gains and losses on these hedging instruments are reported in accumulated other comprehensive income (loss) and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The Company's interest rate swaps at December 31, 2023 and 2022 consisted of the following, by maturity date (dollars in thousands): Aggregate Notional Value as of Hedge Type Interest Rate Range (SOFR) (1) Maturity December 31, 2023 December 31, 2022 Swap-cash flow 0.05 % - 0.07 % January 2023 $ — $ 200,000 Swap-cash flow 1.84 % - 1.87 % November 2023 — 250,000 Swap-cash flow 2.47 % - 2.50 % January 2024 300,000 300,000 Swap-cash flow 3.22 % - 3.25 % October 2025 200,000 — Swap-cash flow 1.33 % - 1.36 % February 2026 290,000 290,000 Swap-cash flow 3.02 % - 3.03 % October 2026 200,000 — Swap-cash flow 3.29 % October 2027 165,000 — Total $ 1,155,000 $ 1,040,000 F-22 Table of Contents The Company records all derivative instruments at fair value in the accompanying consolidated balance sheets. Fair values of interest rate swaps and caps are determined using the standard market methodology of netting the discounted future fixed cash receipts/payments and the discounted expected variable cash payments/receipts. Variable interest rates used in the calculation of projected receipts and payments on the swaps are based on an expectation of future interest rates derived from observable market interest rate curves (Overnight Index Swap curves) and volatilities (Level 2 inputs). Derivatives expose the Company to credit risk in the event of non-performance by the counterparties under the terms of the interest rate hedge agreements. The Company incorporates these counterparty credit risks in its fair value measurements. The Company believes it minimizes the credit risk by transacting with major creditworthy financial institutions. As of December 31, 2023, the Company's derivative instruments were in an asset position with an aggregate fair value of $ 24.5 million. None of the Company's derivative instruments was in a liability position as of December 31, 2023. 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 $ 18.2 million will be reclassified from accumulated other comprehensive income (loss) to interest expense within the next 12 months. Note 6. Revenue The Company presents revenue on a disaggregated basis in the accompanying consolidated statements of operations and comprehensive income. The following table presents revenues by geographic location for the years ended December 31, 2023, 2022 and 2021 (in thousands): For the year ended December 31, 2023 2022 2021 San Diego, CA $ 307,003 $ 303,701 $ 165,977 Boston, MA 265,964 243,861 124,440 Southern Florida/Georgia 229,851 271,167 166,310 Los Angeles, CA 187,997 168,310 94,275 San Francisco, CA 145,137 116,022 43,601 Portland, OR 78,948 87,625 53,978 Chicago, IL 75,142 68,402 27,279 Washington, D.C. 68,567 51,937 20,630 Seattle, WA 5,551 17,795 7,946 Other (1) 55,789 63,071 28,608 $ 1,419,949 $ 1,391,891 $ 733,044 ______________________ (1) Other includes: New York, NY, Philadelphia, PA, Newport, RI and Santa Cruz, CA. Payments from customers are primarily made when services are provided. Due to the short-term nature of the Company's contracts and the almost simultaneous receipt of payment, almost all of the contract liability balance at the beginning of the period is expected to be recognized as revenue over the following 12 months. Note 7. Equity Common Shares The Company is authorized to issue up to 500,000,000 common shares. Each outstanding common share entitles the holder to one vote on each matter submitted to a vote of shareholders. Holders of common shares are entitled to receive dividends when authorized by the Board of Trustees. Common Share Repurchase Programs On February 22, 2016, the Company's Board of Trustees authorized a share repurchase program of up to $ 150.0 million of common shares. Under this program, the Company could repurchase common shares from time to time in transactions on the open market or by private agreement. During the year ended December 31, 2022, the Company repurchased $ 56.6 million of common shares under this program, and as of December 31, 2022, no common shares remained available for repurchase under this program. On July 27, 2017, the Company's Board of Trustees authorized a share repurchase program of up to $ 100.0 million of common shares. Under this program, the Company could repurchase common shares from time to time in transactions on the open market or by private agreement. During the year ended December 31, 2023, the Company repurchased $ 87.0 million of common shares under this program, and as of December 31, 2023, no common shares remained available for repurchase under this program. F-23 Table of Contents On February 17, 2023, the Company's Board of Trustees authorized a share repurchase program of up to $ 150.0 million of common shares. Under this program, the Company may repurchase common shares from time to time in transactions on the open market or by private agreement. The Company may suspend or discontinue this program at any time. Common shares repurchased by the Company cease to be outstanding and become authorized but unissued common shares. During the year ended December 31, 2023, the Company repurchased $ 4.0 million of common shares under this program, and as of December 31, 2023, $ 146.0 million of common shares remained available for repurchase under this program. During the year ended December 31, 2023, the Company repurchased 6,498,901 common shares under the 2017 and 2023 repurchase programs, for an aggregate purchase price of $ 91.0 million, or an average of approximately $ 14.01 per share. ATM Program On April 29, 2021, the Company filed a prospectus supplement with the SEC to sell up to $ 200.0 million of common shares under an "at the market" offering program (the "ATM program"). On February 21, 2023, the ATM program expired. No common shares were issued or sold under the ATM program. Common Dividends The Company declared the following dividends on common shares/units for the year ended December 31, 2023: Dividend per Share/Unit For the Quarter Ended Record Date Payable Date $ 0.01 March 31, 2023 March 31, 2023 April 17, 2023 $ 0.01 June 30, 2023 June 30, 2023 July 17, 2023 $ 0.01 September 30, 2023 September 29, 2023 October 16, 2023 $ 0.01 December 31, 2023 December 29, 2023 January 16, 2024 Preferred Shares The Company is authorized to issue up to 100,000,000 preferred shares of beneficial interest, $ 0.01 par value per share (“preferred shares”). In May 2021, the Company issued 9,200,000 6.375 % Series G Cumulative Redeemable Preferred Shares at a public offering price of $ 25.00 per share for net proceeds of $ 222.6 million. In July 2021, the Company issued 10,000,000 5.70 % Series H Cumulative Redeemable Preferred Shares at a public offering price of $ 25.00 per share for net proceeds of $ 242.1 million. In August 2021, the Company redeemed all outstanding shares of 6.50 % Series C Cumulative Redeemable Preferred Shares and 6.375 % Series D Cumulative Redeemable Preferred Shares at the redemption amount of $ 25.00 per share plus accrued and unpaid dividends of $ 0.17 and $ 0.16 per share, respectively. 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, 2023 and 2022: Security Type December 31, 2023 December 31, 2022 6.375 % Series E 4,400,000 4,400,000 6.30 % Series F 6,000,000 6,000,000 6.375 % Series G 9,200,000 9,200,000 5.70 % Series H 8,000,000 9,000,000 27,600,000 28,600,000 F-24 Table of Contents 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 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 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. Preferred Share Repurchase Program On February 17, 2023, the Company's Board of Trustees authorized a share 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 our 6.375 % Series E Cumulative Redeemable Preferred Shares, 6.30 % Series F Cumulative Redeemable Preferred Shares, 6.375 % Series G Cumulative Redeemable Preferred Shares and 5.70 % Series H Cumulative Redeemable Preferred Shares from time to time in transactions on the open market or by private agreement. As of December 31, 2023, $ 84.2 million of preferred shares remained available for repurchase under this program. During the year ended December 31, 2023, the Company repurchased 1,000,000 of Series H Preferred Shares under this repurchase program, for an aggregate purchase price of $ 15.8 million, or an average of approximately $ 15.79 per share. 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 the Company 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 The Company declared the following dividends on preferred shares for the year ended December 31, 2023: Security Type Dividend per Share/Unit For the Quarter Ended Record Date Payable Date 6.375 % Series E $ 0.40 March 31, 2023 March 31, 2023 April 17, 2023 6.375 % Series E $ 0.40 June 30, 2023 June 30, 2023 July 17, 2023 6.375 % Series E $ 0.40 September 30, 2023 September 29, 2023 October 16, 2023 6.375 % Series E $ 0.40 December 31, 2023 December 29, 2023 January 16, 2024 6.30 % Series F $ 0.39 March 31, 2023 March 31, 2023 April 17, 2023 6.30 % Series F $ 0.39 June 30, 2023 June 30, 2023 July 17, 2023 6.30 % Series F $ 0.39 September 30, 2023 September 29, 2023 October 16, 2023 6.30 % Series F $ 0.39 December 31, 2023 December 29, 2023 January 16, 2024 6.375 % Series G $ 0.40 March 31, 2023 March 31, 2023 April 17, 2023 6.375 % Series G $ 0.40 June 30, 2023 June 30, 2023 July 17, 2023 6.375 % Series G $ 0.40 September 30, 2023 September 29, 2023 October 16, 2023 6.375 % Series G $ 0.40 December 31, 2023 December 29, 2023 January 16, 2024 5.70 % Series H $ 0.36 March 31, 2023 March 31, 2023 April 17, 2023 5.70 % Series H $ 0.36 June 30, 2023 June 30, 2023 July 17, 2023 5.70 % Series H $ 0.36 September 30, 2023 September 29, 2023 October 16, 2023 5.70 % Series H $ 0.36 December 31, 2023 December 29, 2023 January 16, 2024 F-25 Table of Contents Non-controlling Interest of Common Units in Operating Partnership Holders of Operating Partnership units ("OP units") have certain redemption rights that enable OP unit holders to cause the Operating Partnership to redeem their units in exchange for, at the Company’s option, cash per unit equal to the market price of common shares at the time of redemption or common shares on a one -for-one basis. The number of shares issuable upon exercise of the redemption rights will be adjusted upon the occurrence of share splits, mergers, consolidations or similar pro-rata share transactions, which otherwise would have the effect of diluting the ownership interests of the Operating Partnership's limited partners or the Company's shareholders. On November 30, 2018, in connection with the merger with LaSalle Hotel Properties ("LaSalle"), the Company issued 133,605 OP units in the Operating Partnership to third-party limited partners of LaSalle's operating partnership. In December 2023, these OP units were redeemed for common shares in accordance with the redemption rights described above. 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, 2023 and 2022, the Operating Partnership had 16,291 and 149,896 OP units, respectively, held by third parties, excluding LTIP units. As of December 31, 2023, 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. On February 18, 2021, the Board of Trustees granted 600,097 LTIP Class B units to executive officers of the Company. These LTIP units will vest ratably on January 1, 2023, 2024, 2025 and 2026, contingent upon continued employment with the Company. The fair value of each award was determined based on the closing price of the Company’s common shares on the grant date of $ 22.69 per unit, with an aggregate grant date fair value of $ 13.6 million. On February 17, 2023, the Board of Trustees granted 131,276 LTIP Class B units to its executive officers. These LTIP units will vest ratably on January 1, 2024, 2025 and 2026, contingent upon continued employment with the Company. The fair value of each award was determined based on the closing price of the Company’s common shares on the grant date of $ 15.04 per unit with an aggregate grant date fair value of $ 2.0 million. As of December 31, 2023, the Operating Partnership had 858,484 LTIP units outstanding, of which 277,136 LTIP units have vested. As of December 31, 2022, the Operating Partnership had 727,208 LTIP units outstanding, of which 127,111 LTIP units have vested. Only vested LTIP units may be converted to OP units, 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, 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 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, 2023, the Operating Partnership had 3,104,400 Series Z Preferred Units outstanding. Note 8. Share-Based Compensation Plan Available Shares The Company maintains the 2009 Equity Incentive Plan, as amended and restated (as amended, the "Plan"), to attract and retain independent trustees, executive officers and other key employees and service providers. The Plan provides for the grant of options to purchase common shares, share awards, share appreciation rights, performance units and other equity-based awards. Share awards under the Plan vest over a period determined by the Board of Trustees, generally over three to five years . The Company pays or accrues for dividends on share-based awards. All outstanding share awards are subject to full or partial accelerated vesting upon a change in control and upon death or disability or certain other employment termination events as set forth in the award agreements. F-26 Table of Contents As of December 31, 2023, there were 1,499,388 common shares available for issuance under the Plan. Service Condition Share Awards From time to time, the Company awards restricted common shares under the Plan to members of the Board of Trustees, officers and employees. These shares generally vest over three to five years based on continued service or employment. The following table provides a summary of service condition restricted share activity for the years ended December 31, 2023, 2022 and 2021: Shares Weighted-Average Grant Date Fair Value Unvested at January 1, 2021 242,727 $ 24.94 Granted 415,531 $ 22.69 Vested ( 81,591 ) $ 30.41 Forfeited ( 9,236 ) $ 23.37 Unvested at December 31, 2021 567,431 $ 22.53 Granted 143,795 $ 21.72 Vested ( 107,303 ) $ 26.23 Forfeited ( 36,606 ) $ 22.80 Unvested at December 31, 2022 567,317 $ 21.60 Granted 113,084 $ 15.04 Vested ( 183,721 ) $ 23.14 Forfeited ( 53,131 ) $ 16.72 Unvested at December 31, 2023 443,549 $ 19.88 The fair value of each of these service condition restricted share awards is determined based on the closing price of the Company’s common shares on the grant date and compensation expense is recognized on a straight-line basis over the vesting period. For the years ended December 31, 2023, 2022 and 2021, the Company recognized approximately $ 3.5 million, $ 3.8 million and $ 4.1 million, respectively, of share-based compensation expense related to these awards in the accompanying consolidated statements of operations and comprehensive income. As of December 31, 2023, there was $ 4.6 million of total unrecognized share-based compensation expense related to unvested restricted shares. The unrecognized share-based compensation expense is expected to be recognized over the weighted-average remaining vesting period of 1.8 years. Performance-Based Equity Awards On February 14, 2018, the Board of Trustees approved a target award of 78,918 performance-based equity awards to officers and employees of the Company. In January 2021, none of these awards vested and the Company issued no common shares to officers or employees. The actual number of common shares that vested was based on the two performance criteria defined in the award agreements for the period of performance from January 1, 2018 through December 31, 2020. On February 13, 2019, the Board of Trustees approved a target award of 126,891 performance-based equity awards to officers and employees of the Company. 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. In January 2023, these awards vested and the Company issued 51,686 common shares to officers and 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, 2020 through December 31, 2022. On February 18, 2021, the Board of Trustees approved a target award of 189,348 performance-based equity awards to officers and employees of the Company. These awards will vest, if at all, in 2024. The actual number of common shares that ultimately vest will be from 0 % to 200 % of the target award and will be determined in 2024 based on the performance criteria defined in the award agreements for the period of performance from January 1, 2021 through December 31, 2023. 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. F-27 Table of Contents On February 17, 2023, the Board of Trustees approved a target award of 314,235 performance-based equity awards to officers and employees of the Company. These awards will vest, if at all, in 2026. The actual number of common shares that ultimately vest will be from 0 % to 200 % of the target award and will be determined in 2026 based on the performance criteria defined in the award agreements for the period of performance from January 1, 2023 through December 31, 2025. 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 February 14, 2018 Relative and Absolute Total Shareholder Return 65.00 % / 35.00 % $ 3.5 28.00 % 2.37 % 4.70 % February 13, 2019 Relative and Absolute Total Shareholder Return 65.00 % / 35.00 % $ 4.5 26.00 % 2.52 % 4.20 % February 12, 2020 Relative Total Shareholder Return 100.00 % $ 4.9 23.40 % 1.41 % — % February 18, 2021 Relative Total Shareholder Return 100.00 % $ 6.0 56.00 % 0.19 % — % May 16, 2022 Relative Total Shareholder Return 100.00 % $ 5.3 58.70 % 2.72 % — % February 17, 2023 Relative and Absolute Total Shareholder Return 70.00 % / 30.00 % $ 6.0 61.60 % 4.31 % — % In the table above, the Relative Total Shareholder Return and Absolute Total Shareholder Return components are market conditions as defined by ASC 718. Dividends on unvested performance-based equity awards accrue over the vesting period and will be paid on the actual number of shares that vest at the end of the applicable period. The Company recognizes compensation expense on a straight-line basis through the vesting date. For the years ended December 31, 2023, 2022 and 2021, the Company recognized approximately $ 5.6 million, $ 4.8 million and $ 4.9 million, respectively, of share-based compensation expense related to performance-based equity awards in the accompanying consolidated statements of operations and comprehensive income. As of December 31, 2023, there was approximately $ 6.1 million of unrecognized compensation expense related to these performance-based equity awards which will be recognized over the weighted-average remaining vesting period of 1.7 years. Long-Term Incentive Partnership Units LTIP units, which are also referred to as profits interest units, may be issued to eligible participants for the performance of services to or for the benefit of the Operating Partnership. LTIP units are a class of partnership unit in the Operating Partnership and receive, whether vested or not, the same per-unit profit distributions as the other outstanding units in the Operating Partnership, which equal per-share distributions on common shares. LTIP units are allocated their pro-rata share of the Company's net income (loss). Vested LTIP units may be converted by the holder, at any time, into an equal number of common Operating Partnership units and thereafter will possess all of the rights and interests of a common Operating Partnership unit, including the right to redeem the common Operating Partnership unit for a common share in the Company or cash, at the option of the Operating Partnership. As of December 31, 2023, the Operating Partnership had two classes of LTIP units, LTIP Class A units and LTIP Class B units. All of the outstanding LTIP units are held by officers of the Company. On February 18, 2021, the Board of Trustees granted 600,097 LTIP Class B units to executive officers of the Company. These LTIP units will vest ratably on January 1, 2023, 2024, 2025 and 2026, contingent upon continued employment with the Company. The fair value of each award was determined based on the closing price of the Company’s common shares on the grant date of $ 22.69 per unit, with an aggregate grant date fair value of $ 13.6 million. On February 17, 2023, the Board of Trustees granted 131,276 LTIP Class B units to executive officers of the Company. These LTIP units will vest ratably on January 1, 2024, 2025 and 2026, contingent upon continued employment with the Company. The fair value of each award was determined based on the closing price of the Company’s common shares on the grant date of $ 15.04 per unit, with an aggregate grant date fair value of $ 2.0 million. F-28 Table of Contents As of December 31, 2023, the Operating Partnership had 858,484 LTIP units outstanding, of which 277,136 LTIP units have vested. As of December 31, 2022, the Operating Partnership had 727,208 LTIP units outstanding, of which 127,111 LTIP units have vested. Only vested LTIP units may be converted to OP units, which in turn can be tendered for redemption as described in Note 7. Equity . For the years ended December 31, 2023, 2022 and 2021, the Company recognized approximately $ 3.4 million, $ 2.8 million and $ 2.4 million, respectively, in expense related to these LTIP units. As of December 31, 2023, there was $ 7.0 million of unrecognized share-based compensation expense related to LTIP units. The aggregate expense related to the LTIP unit grants is presented as non-controlling interest in the Company’s accompanying consolidated balance sheets. Note 9. Income Taxes The Company has elected to be taxed as a REIT under Sections 856 through 860 of the Code. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its REIT taxable income (determined without regard to the deduction for dividends paid and excluding net capital gains) to its shareholders. It is the Company's current intention to adhere to these requirements and maintain the Company's qualification for taxation as a REIT. As a REIT, the Company generally is not subject to federal corporate income tax on that portion of its taxable income that is currently distributed to shareholders. However, as a REIT, the Company is still subject to certain state and local taxes on its income and property, and to federal income and excise taxes on its undistributed taxable income. In addition, taxable income of TRSs, including our TRS lessees, are subject to federal, state and local income taxes. For federal income tax purposes, the cash distributions paid to the Company’s common shareholders and preferred shareholders may be characterized as ordinary income, return of capital (generally non-taxable) or capital gains. Tax law permits certain characterization of distributions which could result in differences between cash basis and tax basis distribution amounts. F-29 Table of Contents The following characterizes distributions paid per common share and preferred share on a tax basis for the years ended December 31, 2023, 2022 and 2021: 2023 2022 2021 Amount % Amount % Amount % Common Shares: Ordinary non-qualified income $ 0.0400 100.00 % $ 0.0419 83.80 % $ — — % Qualified dividend — — % — — % — — % Capital gain — — % 0.0081 16.20 % 0.0128 32.00 % Return of capital — — % — — % 0.0272 68.00 % Total $ 0.0400 100.00 % $ 0.0500 100.00 % $ 0.0400 100.00 % Series C Preferred Shares: Ordinary non-qualified income $ — — % $ — — % $ — — % Qualified dividend — — % — — % — — % Capital gain — — % — — % 0.1725 12.45 % Return of capital — — % — — % 1.2133 87.55 % Total $ — — % $ — — % $ 1.3858 100.00 % Series D Preferred Shares: Ordinary non-qualified income $ — — % $ — — % $ — — % Qualified dividend — — % — — % — — % Capital gain — — % — — % 0.1692 12.49 % Return of capital — — % — — % 1.1855 87.51 % Total $ — — % $ — — % $ 1.3547 100.00 % Series E Preferred Shares: Ordinary non-qualified income $ 1.5938 100.00 % $ 1.6684 83.75 % $ — — % Qualified dividend — — % — — % — — % Capital gain — — % 0.3238 16.25 % 0.5118 32.11 % Return of capital — — % — — % 1.0819 67.89 % Total $ 1.5938 100.00 % $ 1.9922 100.00 % $ 1.5937 100.00 % Series F Preferred Shares: Ordinary non-qualified income $ 1.5750 100.00 % $ 1.6488 83.75 % $ — — % Qualified dividend — — % — — % — — % Capital gain — — % 0.3200 16.25 % 0.5058 32.11 % Return of capital — — % — — % 1.0692 67.89 % Total $ 1.5750 100.00 % $ 1.9688 100.00 % $ 1.5750 100.00 % Series G Preferred Shares: Ordinary non-qualified income $ 1.5938 100.00 % $ 1.6684 83.75 % $ — — % Qualified dividend — — % — — % — — % Capital gain — — % 0.3238 16.25 % 0.5787 86.00 % Return of capital — — % — — % 0.0942 14.00 % Total $ 1.5938 100.00 % $ 1.9922 100.00 % $ 0.6729 100.00 % Series H Preferred Shares: Ordinary non-qualified income $ 1.4250 100.00 % $ 1.4917 83.75 % $ — — % Qualified dividend — — % — — % — — % Capital gain — — % 0.2895 16.25 % 0.2655 86.01 % Return of capital — — % — — % 0.0432 13.99 % Total $ 1.4250 100.00 % $ 1.7812 100.00 % $ 0.3087 100.00 % Of the common distribution declared on December 15, 2020 and paid on January 15, 2021, $ 0.0100 was treated as a 2021 distribution for tax purposes. The preferred share distributions declared on December 15, 2020 and paid on January 15, 2021 were treated as 2021 distributions for tax purposes. The common and preferred distributions declared on December 15, 2021 and paid on January 18, 2022 were treated as 2022 distributions for tax purposes. F-30 Table of Contents The common and preferred distributions declared on December 15, 2022 and paid on January 17, 2023 were treated as 2022 distributions for tax purposes. The common and preferred distributions declared on December 15, 2023 and paid on January 16, 2024 will be treated as 2023 distributions for tax purposes. The Company's provision (benefit) for income taxes consists of the following (in thousands): For the year ended December 31, 2023 2022 2021 Federal Current $ 237 $ 253 $ — Deferred — — — State and local Current 418 24 61 Deferred — — — Income tax expense (benefit) $ 655 $ 277 $ 61 A reconciliation of the statutory federal tax expense (benefit) to the Company's income tax expense (benefit) is as follows (in thousands): For the year ended December 31, 2023 2022 2021 Statutory federal tax expense (benefit) $ 16,808 $ 17,906 $ ( 38,251 ) State income tax expense (benefit), net of federal tax expense (benefit) 409 4 ( 6,990 ) REIT income not subject to tax ( 16,536 ) ( 17,402 ) 22,235 Change in valuation allowance 973 ( 495 ) 23,077 Other ( 999 ) 264 ( 10 ) Income tax expense (benefit), net $ 655 $ 277 $ 61 The Company has provided a valuation allowance against its federal and state deferred tax asset at December 31, 2023 and 2022 due to the uncertainty of realizing the loss in future years. As of December 31, 2023, the Company had a receivable of $ 0.8 million representing the portion of taxable losses that were carried back to prior years in which the Company had taxable income. The significant components of the Company's deferred tax assets as of December 31, 2023 and 2022 consisted of the following (in thousands): December 31, 2023 December 31, 2022 Deferred Tax Assets: Net operating loss carryover $ 39,385 $ 38,822 State taxes and other 5,596 3,071 Depreciation 99 193 Total deferred tax asset before valuation allowance $ 45,080 $ 42,086 Valuation allowance ( 45,080 ) ( 42,086 ) Deferred tax asset net of valuation allowance $ — $ — As of December 31, 2023 and 2022, 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. In the normal course of business, the Company is subject to examination by federal, state and local jurisdictions, where applicable. As of December 31, 2023 and 2022, the statute of limitations remains open for all major jurisdictions for tax years dating back to 2020 and 2019, respectively. F-31 Table of Contents Note 10. Earnings Per Share The following is a reconciliation of basic and diluted earnings per common share (in thousands, except share and per-share data): For the year ended December 31, 2023 2022 2021 Numerator: Net income (loss) attributable to common shareholders $ ( 113,270 ) $ ( 124,059 ) $ ( 235,018 ) Less: dividends paid on unvested share-based compensation ( 41 ) ( 45 ) ( 47 ) Net income (loss) available to common shareholders — basic and diluted $ ( 113,311 ) $ ( 124,104 ) $ ( 235,065 ) Denominator: Weighted-average number of common shares — basic and diluted 121,813,042 130,453,944 130,804,354 Net income (loss) per share available to common shareholders — basic $ ( 0.93 ) $ ( 0.95 ) $ ( 1.80 ) Net income (loss) per share available to common shareholders — diluted $ ( 0.93 ) $ ( 0.95 ) $ ( 1.80 ) For the years ended December 31, 2023, 2022 and 2021, 1,108,816 , 1,079,474 and 1,033,747 , 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, 2023, 2022 and 2021, 29,441,175 , 29,441,175 and 29,441,175 , respectively, of common shares underlying the Convertible Notes have been excluded from diluted shares as their effect would have been anti-dilutive. The LTIP and OP units held by the non-controlling interest holders have been excluded from the denominator of the diluted earnings per share as there would be no effect on the amounts since the limited partners' share of income (loss) would also be added or subtracted to derive net income (loss) available to common shareholders. Note 11. Commitments and Contingencies Hotel Management Agreements The Company’s hotel properties are operated pursuant to management agreements with various management companies. The remaining terms of these management agreements are up to 10 years, not including renewals, and up to 29 years, including renewals. The majority of the Company’s management agreements are terminable at will by the Company upon paying a termination fee and some are terminable by the Company upon sale of the property, with, in some cases, the payment of termination fees. Most of the agreements also provide the Company the ability to terminate based on failure to achieve defined operating performance thresholds. Termination fees range from zero to up to three times the annual base management and incentive management fees, depending on the agreement and the reason for termination. Certain of the Company’s management agreements are non-terminable except upon the manager’s breach of a material representation or the manager’s failure to meet performance thresholds as defined in the management agreement. The management agreements require the payment of a base management fee generally between 1 % and 4 % of hotel revenues. Under certain management agreements, the management companies are also eligible to receive an incentive management fee if hotel operating income, cash flows or other performance measures, as defined in the agreements, exceed certain performance thresholds. The incentive management fee is generally calculated as a percentage of hotel operating income after the Company has received a priority return on its investment in the hotel. For the years ended December 31, 2023, 2022 and 2021, com bined base and incentive management fees we re $ 39.3 million, $ 39.6 million and $ 18.4 million, respectively. Base and incentive management fees are included in other direct and indirect expenses in the Company's accompanying consolidated statements of operations and comprehensive income. Reserve Funds Certain of the Company’s agreements with its hotel managers, franchisors, ground lessors and lenders have provisions for the Company to provide funds, typically 4.0 % of hotel revenues, sufficient to cover the cost of (a) certain non-routine repairs and maintenance to the hotels and (b) replacements and renewals to the hotels’ furniture, fixtures and equipment. Restricted Cash At December 31, 2023 and 2022, the Company had $ 9.9 million and $ 11.2 million, respectively, in restricted cash, which consisted of funds held in cash management accounts held by a lender, reserves for replacement of furniture and fixtures, and reserves to pay for real estate taxes, ground rent or property insurance under certain hotel management agreements or loan agreements. F-32 Table of Contents Hotel, Ground and Finance Leases As of December 31, 2023, the following hotels were subject to leases as follows: Lease Properties Lease Type Lease Expiration Date Restaurant at Southernmost Beach Resort Operating lease April 2029 Paradise Point Resort & Spa Operating lease May 2050 Hotel Monaco Washington DC Operating lease November 2059 Argonaut Hotel Operating lease December 2059 Hotel Zephyr Fisherman's Wharf Operating lease February 2062 Viceroy Santa Monica Hotel Operating lease September 2065 Estancia La Jolla Hotel & Spa Operating lease January 2066 San Diego Mission Bay Resort Operating lease July 2068 1 Hotel San Francisco Operating lease March 2070 (1) Hyatt Regency Boston Harbor Operating lease April 2077 The Westin Copley Place, Boston Operating lease December 2077 (2) The Liberty, a Luxury Collection Hotel, Boston Operating lease May 2080 Jekyll Island Club Resort and Restaurant Operating lease January 2089 Hotel Zelos San Francisco Operating lease June 2097 Hotel Palomar Los Angeles Beverly Hills Operating lease January 2107 (3) Margaritaville Hollywood Beach Resort Operating lease July 2112 Hotel Zeppelin San Francisco Operating and finance lease June 2089 (4) Harbor Court Hotel San Francisco Finance lease August 2052 ______________________ (1) The expiration date assumes the exercise of a 14 -year extension option. (2) No payments are required through maturity. (3) The expiration date assumes the exercise of all 19 five-year extension options. (4) The expiration date assumes the exercise of a 30-year extension option. The Company's leases may require minimum fixed rent payments, percentage rent payments based on a percentage of revenues in excess of certain thresholds or rent payments equal to the greater of a minimum fixed rent or percentage rent. Minimum fixed rent may be adjusted annually by increases in the consumer price index and may be subject to minimum and maximum increases. Some leases also contain certain restrictions on modifications that can be made to the hotel structures due to their status as national historic landmarks. The Company records expense on a straight-line basis for leases that provide for minimum rental payments that increase in pre-established amounts over the remaining terms of the leases. Ground rent expense is included in real estate taxes, personal property taxes, property insurance and ground rent in the Company's accompanying consolidated statements of operations and comprehensive income. The components of ground rent expense for the years ended December 31, 2023, 2022 and 2021 are as follows (in thousands): For the year ended December 31, 2023 2022 2021 Fixed ground rent $ 19,133 $ 18,538 $ 16,825 Variable ground rent 20,252 18,931 9,616 Total ground rent $ 39,385 $ 37,469 $ 26,441 F-33 Table of Contents Future maturities of lease liabilities for the Company's operating leases at December 31, 2023 were as follows (in thousands): 2024 $ 20,606 2025 20,735 2026 21,031 2027 20,983 2028 21,077 Thereafter 1,563,613 Total lease payments $ 1,668,045 Less: Imputed interest ( 1,347,428 ) Present value of lease liabilities $ 320,617 Litigation The nature of the operations of hotels exposes the Company's hotels, the Company and the Operating Partnership to the risk of claims and litigation in the normal course of their business. The Company has insurance to cover certain potential material losses. The Company is not presently subject to any material litigation nor, to the Company’s knowledge, is any material litigation threatened against the Company. Note 12. Supplemental Information to Statements of Cash Flows (in thousands) For the year ended December 31, 2023 2022 2021 Interest paid, net of capitalized interest $ 105,519 $ 82,851 $ 84,453 Interest capitalized $ 1,825 $ 1,434 $ 1,391 Income taxes paid (refunded) $ ( 2,549 ) $ ( 2,303 ) $ ( 258 ) Non-Cash Investing and Financing Activities: Convertible debt discount adjustment $ — $ — $ 113,099 Distributions payable on common shares/units $ 1,261 $ 1,316 $ 1,537 Distributions payable on preferred shares/units $ 10,601 $ 10,902 $ 10,219 Issuance of common shares for Board of Trustees compensation $ 754 $ 738 $ 516 Issuance of common shares for executive and employee bonuses $ — $ — $ 1,446 Issuance of common shares for OP units redemption $ 3,515 $ — $ — Issuance of common units in connection with hotel acquisition $ — $ 390 $ — Issuance of preferred units in connection with hotel acquisition $ — $ 77,610 $ — Change in accrued additions and improvements to hotel properties $ 65 $ ( 2,759 ) $ 3,110 Right of use assets obtained in exchange for lease liabilities $ — $ 1,005 $ 65,599 Write-off of fully depreciated building, furniture, fixtures and equipment $ 7,267 $ 72,532 $ — Write-off of fully amortized deferred financing costs $ 1,199 $ 19,595 $ 6,574 Mortgage loans assumed in connection with acquisition of hotel properties $ — $ — $ 223,177 Below (above) market contracts assumed in connection with acquisition of hotel properties $ — $ — $ 3,071 Note 13. Subsequent Events The Company repurchased an aggregate of 318,269 of its common shares at an average price of $ 15.71 per share subsequent to December 31, 2023. F-34 Table of Contents Pebblebrook Hotel Trust Schedule III--Real Estate and Accumulated Depreciation As of December 31, 2023 (in thousands) Initial Costs Gross Amount at End of Year Description Encumbrances Land Building and Improvements Furniture, Fixtures and Equipment Cost Capitalized Subsequent to Acquisition (1) Land Building and Improvements Furniture, Fixtures and Equipment Total Accumulated Depreciation Net Book Value Year of Original Construction Date of Acquisition Depreciation Life Hotel Monaco Washington DC $ — $ — $ 60,630 $ 2,441 $ 23,928 $ — $ 79,533 $ 7,466 $ 86,999 $ 35,732 $ 51,267 1839 9/9/2010 3 - 40 years Skamania Lodge — 7,130 44,987 3,523 46,549 11,671 79,854 10,664 102,189 32,415 69,774 1993 11/3/2010 3 - 40 years Le Meridien Delfina Santa Monica — 18,784 81,580 2,295 16,158 18,783 95,751 4,283 118,817 37,539 81,278 1972 11/19/2010 3 - 40 years Argonaut Hotel — — 79,492 4,247 2,933 — 84,106 2,566 86,672 30,618 56,054 1907 2/16/2011 3 - 40 years The Westin San Diego Gaslamp Quarter — 25,537 86,089 6,850 33,554 25,537 117,161 9,332 152,030 46,902 105,128 1987 4/6/2011 1 - 40 years Mondrian Los Angeles — 20,306 110,283 6,091 25,797 20,306 130,134 12,037 162,477 53,163 109,314 1959 5/3/2011 3 - 40 years W Boston — 19,453 63,893 5,887 20,188 19,453 79,243 10,725 109,421 33,881 75,540 2009 6/8/2011 2 - 40 years Hotel Zetta San Francisco — 7,294 22,166 290 18,153 7,294 35,507 5,102 47,903 16,700 31,203 1913 4/4/2012 3 - 40 years W Los Angeles - West Beverly Hills — 24,403 93,203 3,600 33,122 24,403 119,507 10,418 154,328 49,034 105,294 1969 8/23/2012 3 - 40 years Hotel Zelos San Francisco — — 63,430 3,780 13,834 — 74,993 6,051 81,044 28,290 52,754 1907 10/25/2012 3 - 40 years Embassy Suites San Diego Bay - Downtown — 20,103 90,162 6,881 30,249 20,103 118,380 8,912 147,395 43,671 103,724 1988 1/29/2013 3 - 40 years The Hotel Zags — 8,215 37,874 1,500 ( 1,876 ) 5,197 37,029 3,487 45,713 15,582 30,131 1962 8/28/2013 3 - 40 years Hotel Zephyr Fisherman's Wharf — — 116,445 3,550 42,113 — 153,970 8,138 162,108 55,992 106,116 1964 12/9/2013 3 - 40 years Hotel Zeppelin San Francisco — 12,561 43,665 1,094 37,769 12,561 76,277 6,251 95,089 32,671 62,418 1913 5/22/2014 1 - 45 years The Nines, a Luxury Collection Hotel, Portland — 18,493 92,339 8,757 17,456 18,493 101,482 17,070 137,045 39,787 97,258 1909 7/17/2014 3 - 40 years Hotel Palomar Los Angeles Beverly Hills — — 90,675 1,500 15,243 — 100,806 6,612 107,418 31,210 76,208 1972 11/20/2014 3 - 40 years Revere Hotel Boston Common — 41,857 207,817 10,596 ( 38,621 ) 17,367 185,057 19,225 221,649 66,793 154,856 1972 12/18/2014 3 - 40 years LaPlaya Beach Resort & Club — 112,575 82,117 6,733 42,732 112,929 121,535 9,693 244,157 32,641 211,516 1968 5/21/2015 3 - 40 years 1 Hotel San Francisco — — 105,693 3,896 38,786 — 133,840 14,535 148,375 27,391 120,984 2005 11/30/2018 3 - 40 years Chaminade Resort & Spa — 22,590 37,114 6,009 18,037 22,638 52,055 9,057 83,750 16,174 67,576 1985 11/30/2018 3 - 40 years F-35 Table of Contents Pebblebrook Hotel Trust Schedule III--Real Estate and Accumulated Depreciation As of December 31, 2023 (in thousands) Initial Costs Gross Amount at End of Year Description Encumbrances Land Building and Improvements Furniture, Fixtures and Equipment Cost Capitalized Subsequent to Acquisition (1) Land Building and Improvements Furniture, Fixtures and Equipment Total Accumulated Depreciation Net Book Value Year of Original Construction Date of Acquisition Depreciation Life Harbor Court Hotel San Francisco — — 79,009 6,190 1,932 — 80,156 6,975 87,131 15,290 71,841 1926/1991 11/30/2018 3 - 40 years Viceroy Santa Monica Hotel — — 91,442 5,257 19,194 — 105,213 10,680 115,893 22,252 93,641 1967/2002 11/30/2018 3 - 40 years Le Parc Suite Hotel — 17,876 65,515 2,496 13,367 17,902 74,999 6,353 99,254 15,744 83,510 1970 11/30/2018 3 - 40 years Montrose West Hollywood — 16,842 58,729 6,499 2,863 16,842 60,104 7,987 84,933 13,304 71,629 1976 11/30/2018 3 - 40 years Chamberlain West Hollywood Hotel — 14,462 43,157 5,983 2,200 14,481 44,519 6,802 65,802 10,601 55,201 1970/2005 11/30/2018 3 - 40 years Hotel Ziggy — 12,440 36,932 3,951 7,264 12,440 42,229 5,918 60,587 10,375 50,212 1954 11/30/2018 3 - 40 years The Westin Copley Place, Boston — — 291,754 35,780 16,227 — 304,255 39,506 343,761 65,970 277,791 1983 11/30/2018 3 - 40 years The Liberty, a Luxury Collection Hotel, Boston — — 195,797 15,126 6,972 — 200,521 17,374 217,895 37,773 180,122 1851/2007 11/30/2018 3 - 40 years Hyatt Regency Boston Harbor — — 122,344 6,862 9,355 — 130,282 8,279 138,561 24,857 113,704 1993 11/30/2018 3 - 40 years George Hotel — 15,373 65,529 4,489 1,058 15,373 66,122 4,954 86,449 13,044 73,405 1928 11/30/2018 3 - 40 years Viceroy Washington DC — 18,686 60,927 2,838 ( 5,467 ) 14,035 56,527 6,422 76,984 14,507 62,477 1962 11/30/2018 3 - 40 years Hotel Zena Washington DC — 19,035 60,402 2,066 28,947 19,035 85,366 6,049 110,450 17,083 93,367 1972 11/30/2018 3 - 40 years Paradise Point Resort & Spa — — 199,304 22,032 16,194 236 208,661 28,633 237,530 46,592 190,938 1962 11/30/2018 3 - 40 years Hilton San Diego Gaslamp Quarter — 33,017 131,926 7,741 26,081 33,017 152,059 13,689 198,765 27,789 170,976 2000 11/30/2018 3 - 40 years Margaritaville Hotel San Diego Gaslamp Quarter — — 74,768 8,830 56,689 23,472 97,702 19,113 140,287 22,903 117,384 2005 11/30/2018 3 - 40 years L'Auberge Del Mar — 33,304 92,297 5,393 15,285 33,316 103,565 9,398 146,279 19,899 126,380 1989 11/30/2018 3 - 40 years San Diego Mission Bay Resort — — 80,733 9,458 28,234 95 100,399 17,931 118,425 29,141 89,284 1962 11/30/2018 3 - 40 years Southernmost Beach Resort — 90,396 253,954 8,676 37,903 91,859 280,837 18,233 390,929 46,767 344,162 1958-2008 11/30/2018 3 - 40 years The Marker Key West Harbor Resort — 25,463 66,903 2,486 1,633 25,463 67,200 3,822 96,485 12,614 83,871 2014 11/30/2018 3 - 40 years Hotel Chicago Downtown, Autograph Collection — 39,576 114,014 7,608 ( 55,897 ) 25,181 71,541 8,579 105,301 17,347 87,954 1998 11/30/2018 3 - 40 years The Westin Michigan Avenue Chicago — 44,983 103,160 23,744 ( 14,645 ) 37,123 94,197 25,922 157,242 30,932 126,310 1963/1972 11/30/2018 3 - 40 years F-36 Table of Contents Pebblebrook Hotel Trust Schedule III--Real Estate and Accumulated Depreciation As of December 31, 2023 (in thousands) Initial Costs Gross Amount at End of Year Description Encumbrances Land Building and Improvements Furniture, Fixtures and Equipment Cost Capitalized Subsequent to Acquisition (1) Land Building and Improvements Furniture, Fixtures and Equipment Total Accumulated Depreciation Net Book Value Year of Original Construction Date of Acquisition Depreciation Life Jekyll Island Club Resort — — 88,912 5,031 21,281 — 102,975 12,249 115,224 14,314 100,910 1886/1986 7/22/2021 2 - 40 years Margaritaville Hollywood Beach Resort (2) 140,000 — 244,230 22,288 7,899 — 248,537 25,880 274,417 25,822 248,595 2015 9/23/2021 3 - 40 years Estancia La Jolla Hotel & Spa (3) 57,497 — 104,280 3,646 22,826 237 119,610 10,905 130,752 11,696 119,056 2004 12/1/2021 2 - 40 years Inn on Fifth — 50,503 95,826 7,989 1,841 50,503 96,937 8,719 156,159 6,885 149,274 1960 5/11/2022 3 - 40 years Newport Harbor Island Resort — 43,287 118,227 12,817 21,877 43,288 126,342 26,578 196,208 16,580 179,628 1969 6/23/2022 3 - 40 years $ 197,497 $ 834,544 $ 4,549,725 $ 334,796 $ 727,217 $ 810,633 $ 5,097,075 $ 538,574 $ 6,446,282 $ 1,316,267 $ 5,130,015 ______________________ (1) Disposals are reflected as reductions to cost capitalized subsequent to acquisition. (2) Encumbrance on Margaritaville Hollywood Beach Resort is presented at face value, which excludes unamortized deferred financing costs of $ 2.1 million at December 31, 2023. (3) Encumbrance on Estancia La Jolla Hotel & Spa is presented at face value, which excludes unamortized deferred financing costs of $ 0.2 million at December 31, 2023. F-37 Table of Contents Pebblebrook Hotel Trust Schedule III--Real Estate and Accumulated Depreciation - Continued As of December 31, 2023 (in thousands) Reconciliation of Real Estate and Accumulated Depreciation: Reconciliation of Real Estate: Balance at December 31, 2020 $ 6,459,745 Acquisitions 488,447 Capital expenditures 86,936 Disposal of Assets ( 253,469 ) Other ( 14,856 ) Balance at December 31, 2021 $ 6,766,803 Acquisitions 331,249 Capital expenditures 105,626 Disposal of Assets ( 359,083 ) Other ( 115,214 ) Balance at December 31, 2022 $ 6,729,381 Capital expenditures 188,520 Disposal of Assets ( 400,705 ) Other ( 70,914 ) Balance at December 31, 2023 $ 6,446,282 Reconciliation of Accumulated Depreciation: Balance at December 31, 2020 $ 898,287 Depreciation 223,225 Disposal of Assets ( 55,103 ) Balance at December 31, 2021 $ 1,066,409 Depreciation 238,278 Disposal of Assets ( 124,253 ) Balance at December 31, 2022 $ 1,180,434 Depreciation 239,422 Disposal of Assets ( 103,589 ) Balance at December 31, 2023 $ 1,316,267 The aggregate cost of properties for federal income tax purposes is approximately $ 6.0 billion as of December 31, 2023. F-38