What changed in this filing

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Item 1. Financial Statements

2024-11-07 compared with 2024-07-24 · 134 added, 105 removed, 623 unchanged (28% of the section changed)

3 unchanged sentences

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Investment in hotel properties, net $ 5,400,440 $ 5,490,776

15 unchanged sentences

Shareholders’ equity:

Preferred shares of beneficial interest, $ .01 par value (liquidation preference $ 690,000 at June 30, 2024 and December 31, 2023), 100,000,000 shares authorized;

27,600,000 shares issued and outstanding at June 30, 2024 and December 31, 2023

Preferred shares of beneficial interest, $ .01 par value (liquidation preference $ 690,000 at September 30, 2024 and December 31, 2023), 100,000,000 shares authorized;

27,600,000 shares issued and outstanding at September 30, 2024 and December 31, 2023

Common shares of beneficial interest, $ .01 par value, 500,000,000 shares authorized;

120,094,380 shares issued and outstanding at June 30, 2024 and 120,191,349 shares issued and outstanding at December 31, 2023

119,285,394 shares issued and outstanding at September 30, 2024 and 120,191,349 shares issued and outstanding at December 31, 2023

Additional paid-in capital 4,069,808 4,078,912

9 unchanged sentences

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

For the three months ended June 30, For the six months ended June 30,

For the three months ended September 30, For the nine months ended September 30,

2024 2023 2024 2023

11 unchanged sentences

General and administrative 11,814 11,549 35,937 32,739

Impairment 1,908 71,416 1,908 71,416

Gain on sale of hotel properties — — — ( 30,219 )

19 unchanged sentences

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

For the three months ended June 30, For the six months ended June 30,

For the three months ended September 30, For the nine months ended September 30,

2024 2023 2024 2023

11 unchanged sentences

(in thousands, except share data)

For the three months ended June 30, 2024

For the three months ended September 30, 2024

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 March 31, 2024

Balance at June 30, 2024

27,600,000 $ 276 120,094,380 $ 1,201 $ 4,077,360 $ 29,281 $ ( 1,362,359 ) $ 2,745,759 $ 88,676 $ 2,834,435

Repurchase of common shares — — ( 854,993 ) ( 9 ) ( 9,991 ) — — ( 10,000 ) — ( 10,000 )

Share-based compensation — — 46,007 1 2,439 — — 2,440 1,061 3,501

5 unchanged sentences

Net income (loss) — — — — — — 43,657 43,657 1,488 45,145

Balance at June 30, 2024

Balance at September 30, 2024

27,600,000 $ 276 119,285,394 $ 1,193 $ 4,069,808 $ 11,263 $ ( 1,330,539 ) $ 2,752,001 $ 89,897 $ 2,841,898

For the three months ended June 30, 2023

For the three months ended September 30, 2023

Shares Amount Shares Amount

Balance at March 31, 2023

Balance at June 30, 2023

28,600,000 $ 286 120,057,744 $ 1,201 $ 4,094,680 $ 43,956 $ ( 1,225,748 ) $ 2,914,375 $ 89,737 $ 3,004,112

Repurchase of common shares — — ( 3,574,923 ) ( 35 ) ( 49,973 ) — — ( 50,008 ) — ( 50,008 )

Share-based compensation — — — — 2,450 — — 2,450 870 3,320

5 unchanged sentences

Net income (loss) — — — — — — ( 57,142 ) ( 57,142 ) 658 ( 56,484 )

Balance at June 30, 2023

Balance at September 30, 2023

28,600,000 $ 286 120,057,744 $ 1,201 $ 4,097,130 $ 45,834 $ ( 1,295,089 ) $ 2,849,362 $ 90,106 $ 2,939,468

2 unchanged sentences

(in thousands, except share data)

For the six months ended June 30, 2024

For the nine months ended September 30, 2024

11 unchanged sentences

Net income (loss) — — — — — — 46,243 46,243 3,621 49,864

Balance at June 30, 2024

Balance at September 30, 2024

27,600,000 $ 276 119,285,394 $ 1,193 $ 4,069,808 $ 11,263 $ ( 1,330,539 ) $ 2,752,001 $ 89,897 $ 2,841,898

For the six months ended June 30, 2023

For the nine months ended September 30, 2023

11 unchanged sentences

Net income (loss) — — — — — — ( 35,345 ) ( 35,345 ) 2,999 ( 32,346 )

Balance at June 30, 2023

Balance at September 30, 2023

28,600,000 $ 286 120,057,744 $ 1,201 $ 4,097,130 $ 45,834 $ ( 1,295,089 ) $ 2,849,362 $ 90,106 $ 2,939,468

3 unchanged sentences

(in thousands)

For the six months ended June 30,

For the nine months ended September 30,

Operating activities:

2 unchanged sentences

Depreciation and amortization 172,051 179,598

Benefit for deferred income taxes ( 26,976 ) —

Share-based compensation 10,084 9,231

1 unchanged sentence

Gain on sale of hotel properties — ( 30,219 )

Impairment 1,908 71,416

Non-cash ground rent 7,385 7,426

14 unchanged sentences

Payment of deferred financing costs ( 6,379 ) ( 2,423 )

Proceeds from debt — 140,000

Repayments of debt ( 111,377 ) ( 162,988 )

12 unchanged sentences

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 June 30, 2024, the Company owned interests in 46 hotels with a total of 11,933 gue st rooms .

As of September 30, 2024, the Company owned interests in 46 hotels with a total of 11,933 gue st rooms .

The hotel properties are located in:

16 unchanged sentences

The Company is the sole general partner of the Operating Partnership.

As of June 30, 2024, the Company owned 99.2 % of the common limited partnership units issued by the Operating Partnership ("common units").

As of September 30, 2024, the Company owned 99.2 % of the common limited partnership units issued by the Operating Partnership ("common units").

The remaining 0.8 % of the common units are owned by the other limited partners of the Operating Partnership.

60 unchanged sentences

Early adoption is permitted.

The amendments should be applied either retrospectively to all prior periods presented in the financial statements, or prospectively to profits interests and similar awards granted or modified on or after the adoption date.

The amendments should be applied either retrospectively to all prior periods presented in the financial statements, or prospectively to profits interest and similar awards granted or modified on or after the adoption date.

The Company is currently assessing the impacts of adopting ASU 2024-01 on its consolidated financial statements and disclosures.

Acquisition and Disposition of Hotel Properties

There were no acquisitions of hotel properties during the six months ended June 30, 2024.

There were no dispositions of hotel properties during the six months ended June 30, 2024.

There were no acquisitions of hotel properties during the nine months ended September 30, 2024.

There were no dispositions of hotel properties during the nine months ended September 30, 2024.

The following table summarizes disposition transactions during 2023 (in thousands):

9 unchanged sentences

Chicago, IL December 21, 2023 30,000

For the three and six months ended June 30, 2023, the accompanying consolidated statements of operations and comprehensive income included operating loss of $ 0.5 million and $ 1.8 million, respectively, excluding impairment loss and gain on sale of hotel properties related to the hotel properties sold or held for sale.

There was no impact for the three and six months ended June 30, 2024.

For the three and nine months ended September 30, 2023, the accompanying consolidated statements of operations and comprehensive income included operating income (loss) of $ 0.9 million and $( 0.8 ) million, respectively, excluding impairment loss and gain on sale of hotel properties related to the hotel properties sold or held for sale.

There was no impact for the three and nine months ended September 30, 2024.

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.

Investment in Hotel Properties

Investment in hotel properties as of June 30, 2024 and December 31, 2023 consisted of the following (in thousands):

June 30, 2024 December 31, 2023

Investment in hotel properties as of September 30, 2024 and December 31, 2023 consisted of the following (in thousands):

September 30, 2024 December 31, 2023

Land $ 810,951 $ 810,633

11 unchanged sentences

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 and was substantially complete 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 six months ended June 30, 2024 and 2023, the Company incurred $ 0.2 million and $ 4.1 million, respectively, of costs 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 June 30, 2024, the Company received a total of $ 117.5 million in preliminary advances from the insurance providers.

In 2023, LaPlaya began reopening in stages as its buildings and facilities were repaired and repairs were substantially complete in the first quarter of 2024.

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

The Company has an insurance receivable for amounts it anticipates to collect from the insurance providers in excess of the applicable deductibles.

For the nine months ended September 30, 2024 and 2023, the Company incurred $ 0.2 million and $ 5.1 million, respectively, of costs 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 September 30, 2024, the Company received a total of $ 118.0 million in preliminary advances from the insurance providers.

The Company continues to work with the insurance providers on the settlement of the property and business interruption claims.

Hurricane Helene

On September 26, 2024, LaPlaya was impacted by the effects of Hurricane Helene.

Two of its three guestroom buildings, Gulf Tower and Bay Tower, reopened and were operational.

However, the Beach House was closed for repairs, with initial assessments indicating the primary impact was to the ground floor.

The Company’s insurance policies provide coverage for property damage, business interruption and other costs that were incurred relating to damages sustained during Hurricane Helene in excess of the applicable deductibles.

For the nine months ended September 30, 2024, the Company recognized a loss of $ 1.9 million for damage to LaPlaya, which is included in impairment on the Company’s consolidated statement of operations and comprehensive income.

The Company recorded an insurance receivable for the remediation costs incurred and the estimate of the book value of the property and equipment written off in excess of the applicable deductibles.

The Company is continuing to evaluate the financial impact of Hurricane Helene and its ability to recover, through insurance policies, any loss due to business interruption or damage to the hotel property.

The Company reviews its investment in hotel properties for impairment whenever events or circumstances indicate potential impairment.

1 unchanged sentence

As a result of this review, the Company may identify an impairment trigger has occurred and assess its investment in hotel properties for recoverability.

During the six months ended June 30, 2024 and 2023, no impairment losses were incurred.

During the nine months ended September 30, 2024, no impairment losses were incurred.

During the nine months ended September 30, 2023, the Company recognized an impairment loss of $ 71.4 million related to three hotels as a result of their fair values being lower than their carrying values.

Right-of-use Assets and Lease Liabilities

4 unchanged sentences

The right-of-use assets and liabilities are amortized to ground rent expense over the term of the underlying lease agreements.

As of June 30, 2024, the Company's lease liabilities consisted of operating lease liabilities of $ 320.7 million and financing lease liabilities of $ 43.7 million.

As of September 30, 2024, the Company's lease liabilities consisted of operating lease liabilities of $ 320.7 million and financing lease liabilities of $ 43.8 million.

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.

6 unchanged sentences

In connection with the extension, the Company also repaid $ 60.0 million of its borrowings under Term Loan 2024 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.

The remaining $ 43.3 million of Term Loan 2024's balance remained outstanding.

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 June 30, 2024 and December 31, 2023 (dollars in thousands):

On October 3, 2024, the Company issued $ 400.0 million aggregate principal amount of its 6.375 % senior notes due October 15, 2029.

The net proceeds were approximately $ 390.0 million after deducting discounts and offering expenses paid by the Company, of which $ 353.3 million was used to repay all $ 43.3 million of its borrowings under Term Loan 2024, $ 210.0 million of its borrowings under Term Loan 2025 and $ 100.0 million of its borrowings under Term Loan 2027.

On November 1, 2024, the Company entered into the Third Amendment to the Credit Agreement which extended the maturity date of $ 185.2 million borrowed under Term Loan 2025 to January 2029.

The Company also extended the maturity date of $ 602.0 million of its senior unsecured revolving credit facility from October 2026 to October 2028, with the option to extend the new maturity date for two six-month periods.

The Company's debt consisted of the following as of September 30, 2024 and December 31, 2023 (dollars in thousands):

Balance Outstanding as of

Interest Rate at June 30, 2024

Maturity Date June 30, 2024 December 31, 2023

Interest Rate at September 30, 2024

Maturity Date September 30, 2024 December 31, 2023

Revolving credit facilities

26 unchanged sentences

(1) Borrowings bear interest at floating rates.

Interest rate at June 30, 2024 gives effect to interest rate hedges.

Interest rate at September 30, 2024 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) This loan bears interest at a floating rate equal to daily SOFR plus a spread of 3.75 %.

The interest rate at June 30, 2024 gives effect to an interest rate swap.

The interest rate at September 30, 2024 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.

(4) Term Loan 2024 was repaid in October 2024 from proceeds of the senior notes offering.

Unsecured Revolving Credit Facilities

2 unchanged sentences

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 June 30, 2024, the Company had no outstanding borrowings, $ 13.7 million of outstanding letters of credit and a borrowing capacity of $ 636.3 million remaining on the senior unsecured revolving credit facility.

As of September 30, 2024, the Company had no outstanding borrowings, $ 13.7 million of outstanding letters of credit and a borrowing capacity of $ 636.3 million remaining on the 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 senior unsecured revolving credit facility, depending on the amount of borrowings outstanding.

3 unchanged sentences

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 $ 13.7 million and $ 13.6 million were outstanding as of June 30, 2024 and December 31, 2023, respectively.

As of June 30, 2024, 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.

Standby letters of credit of $ 13.7 million and $ 13.6 million were outstanding as of September 30, 2024 and December 31, 2023, respectively.

As of September 30, 2024, 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.

2 unchanged sentences

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 June 30, 2024, 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 June 30, 2024, the Company was in compliance with all debt covenants of the credit agreements that govern the unsecured revolving credit facilities.

As of September 30, 2024, 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 September 30, 2024, the Company was in compliance with all debt covenants of the credit agreements that govern the unsecured revolving credit facilities.

Unsecured Term Loan Facilities

As of June 30, 2024, the term loans provided for in the Credit Agreement 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 2028).

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 term loan facilities provided for in the Credit Agreement 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 June 30, 2024, the Company was in compliance with all debt covenants of its term loans.

As of September 30, 2024, 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.

12 unchanged sentences

The conversion rate is subject to adjustment in certain circumstances.

As of June 30, 2024 and December 31, 2023, the if-converted value of the Convertible Notes did not exceed the principal amount.

As of September 30, 2024 and December 31, 2023, 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, after December 20, 2023, upon certain circumstances.

8 unchanged sentences

The debt covenants of these notes are substantially similar to those of the Company's senior unsecured revolving credit facility.

As of June 30, 2024, the Company was in compliance with all such debt covenants.

As of September 30, 2024, 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").

On September 7, 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 an extension fee.

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").

1 unchanged sentence

The loan matures on September 1, 2028.

On September 7, 2023, the Company entered into a $ 140.0 million first-lien mortgage on the leasehold interest of Margaritaville Hollywood Beach Resort ("Margaritaville"), which 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 an extension fee.

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.

4 unchanged sentences

Interest Expense

The components of the Company's interest expense consisted of the following for the three and six months ended June 30, 2024 and 2023 (in thousands):

For the three months ended June 30, For the six months ended June 30,

The components of the Company's interest expense consisted of the following for the three and nine months ended September 30, 2024 and 2023 (in thousands):

For the three months ended September 30, For the nine months ended September 30,

2024 2023 2024 2023

8 unchanged sentences

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 June 30, 2024 and December 31, 2023 was $ 691.6 million and $ 686.3 million, respectively.

The estimated fair value of the Company’s fixed rate debt (unsecured senior notes, convertible senior notes and the Estancia mortgage loan) as of September 30, 2024 and December 31, 2023 was $ 711.0 million and $ 686.3 million, respectively.

The fair value of the Company's variable rate debt approximates its carrying value .

Derivative and Hedging Activities

2 unchanged sentences

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 June 30, 2024 and December 31, 2023 consisted of the following, by maturity date (dollars in thousands):

The Company's interest rate swaps at September 30, 2024 and December 31, 2023 consisted of the following, by maturity date (dollars in thousands):

Aggregate Notional Value as of

Hedge Type Interest Rate Range (SOFR) Maturity June 30, 2024 December 31, 2023

Hedge Type Interest Rate Range (SOFR) Maturity September 30, 2024 December 31, 2023

Swap-cash flow 2.47 % - 2.50 %

15 unchanged sentences

The Company believes it minimizes the credit risk by transacting with major creditworthy financial institutions.

As of June 30, 2024, the Company's derivative instruments were in an asset position with an aggregate fair value of $ 29.5 million.

None of the Company's derivative instruments was in a liability position as of June 30, 2024.

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.

As of September 30, 2024, the Company's interest rate swap assets had an aggregate fair value of $ 11.3 million and its interest rate swap liabilities were immaterial.

Interest rate swap assets are included in prepaid expenses and other assets and interest rate swap liabilities are included in accounts payable, accrued expenses and other liabilities in the accompanying consolidated balance sheets.

The Company expects approximately $ 10.5 million will be reclassified from accumulated other comprehensive income (loss) to interest expense within the next 12 months.

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 three and six months ended June 30, 2024 and 2023 (in thousands):

For the three months ended June 30, For the six months ended June 30,

The following table presents revenues by geographic location for the three and nine months ended September 30, 2024 and 2023 (in thousands):

For the three months ended September 30, For the nine months ended September 30,

2024 2023 2024 2023

San Diego, CA $ 101,639 $ 95,885 $ 258,117 $ 239,653

Southern Florida/Georgia 68,934 58,980 149,891 130,009

Boston, MA 77,605 75,650 203,483 194,908

Southern Florida/Georgia 46,390 43,174 196,281 173,183

Los Angeles, CA 49,574 51,303 142,382 144,445

San Francisco, CA 36,291 43,755 99,710 113,084

Washington, D.C.

22,102 21,109 36,904 34,804

Portland, OR 25,574 24,538 60,101 61,510

Chicago, IL 25,513 22,233 57,033 57,036

Washington, D.C.

16,432 16,522 53,336 51,326

Seattle, WA — — — 5,551

18 unchanged sentences

Common shares repurchased by the Company cease to be outstanding and become authorized but unissued common shares.

During the six months ended June 30, 2024, the Company repurchased 318,269 common shares for an aggregate purchase price of $ 5.0 million, or an average of approximately $ 15.71 per share.

As of June 30, 2024, $ 141.0 million of common shares remained available for repurchase under this program.

During the nine months ended September 30, 2024, the Company repurchased 1,127,255 common shares for an aggregate purchase price of $ 15.0 million, or an average of approximately $ 13.31 per share.

As of September 30, 2024, $ 131.0 million of common shares remained available for repurchase under this program.

Common Dividends

The Company declared the following dividends on common shares/units for the six months ended June 30, 2024:

The Company declared the following dividends on common shares/units for the nine months ended September 30, 2024:

Dividend per Share/Unit For the Quarter Ended Record Date Payable Date

1 unchanged sentence

$ 0.01 June 30, 2024 June 28, 2024 July 15, 2024

$ 0.01 September 30, 2024 September 30, 2024 October 15, 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”).

The following preferred shares were outstanding as of June 30, 2024 and December 31, 2023:

Security Type June 30, 2024 December 31, 2023

The following preferred shares were outstanding as of September 30, 2024 and December 31, 2023:

Security Type September 30, 2024 December 31, 2023

6.375 % Series E

18 unchanged sentences

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.

During the six months ended June 30, 2024, no Preferred Shares were repurchased under this program.

As of June 30, 2024, $ 84.2 million of Preferred Shares remained available for repurchase under this program.

During the nine months ended September 30, 2024, no Preferred Shares were repurchased under this program.

As of September 30, 2024, $ 84.2 million of Preferred Shares remained available for repurchase under this program.

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.

2 unchanged sentences

Preferred Dividends

The Company declared the following dividends on preferred shares for the six months ended June 30, 2024:

The Company declared the following dividends on preferred shares for the nine months ended September 30, 2024:

Security Type Dividend per Share/Unit For the Quarter Ended Record Date Payable Date

3 unchanged sentences

$ 0.40 June 30, 2024 June 28, 2024 July 15, 2024

6.375 % Series E

$ 0.40 September 30, 2024 September 30, 2024 October 15, 2024

6.30 % Series F

2 unchanged sentences

$ 0.39 June 30, 2024 June 28, 2024 July 15, 2024

6.30 % Series F

$ 0.39 September 30, 2024 September 30, 2024 October 15, 2024

6.375 % Series G

2 unchanged sentences

$ 0.40 June 30, 2024 June 28, 2024 July 15, 2024

6.375 % Series G

$ 0.40 September 30, 2024 September 30, 2024 October 15, 2024

5.70 % Series H

2 unchanged sentences

$ 0.36 June 30, 2024 June 28, 2024 July 15, 2024

5.70 % Series H

$ 0.36 September 30, 2024 September 30, 2024 October 15, 2024

Non-controlling Interest of Common Units in Operating Partnership

4 unchanged sentences

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 June 30, 2024 and December 31, 2023, the Operating Partnership had 16,291 OP units held by third parties, excluding LTIP units.

As of June 30, 2024, the Operating Partnership had two classes of long-term incentive partnership units ("LTIP units"), LTIP Class A units and LTIP Class B units.

As of September 30, 2024 and December 31, 2023, the Operating Partnership had 16,291 OP units held by third parties, excluding LTIP units.

As of September 30, 2024, 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.

1 unchanged sentence

On February 15, 2024, the Board of Trustees granted 136,353 LTIP Class B units to executive officers.

As of June 30, 2024, the Operating Partnership had 994,837 LTIP units outstanding, of which 470,920 LTIP units have vested.

As of September 30, 2024, the Operating Partnership had 994,837 LTIP units outstanding, of which 470,920 LTIP units have vested.

As of December 31, 2023, the Operating Partnership had 858,484 LTIP units outstanding, of which 277,136 LTIP units have vested.

8 unchanged sentences

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 June 30, 2024, the Operating Partnership had 3,104,400 Series Z Preferred Units outstanding.

As of September 30, 2024, the Operating Partnership had 3,104,400 Series Z Preferred Units outstanding.

Share-Based Compensation Plan

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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.

As of June 30, 2024, there were 1,176,163 common shares available for issuance under the Plan.

As of September 30, 2024, there were 1,177,236 common shares available for issuance under the Plan.

Service Condition Share Awards

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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 during the six months ended June 30, 2024:

The following table provides a summary of service condition restricted share activity during the nine months ended September 30, 2024:

Shares Weighted-Average

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Forfeited ( 3,127 ) $ 15.69

Unvested at June 30, 2024

Unvested at September 30, 2024

408,048 $ 18.07

For the three and six months ended June 30, 2024, the Company recognized approximately $ 0.9 million and $ 1.7 million, respectively, of share-based compensation expense related to these awards in the accompanying consolidated statements of operations and comprehensive income.

For the three and six months ended June 30, 2023, the Company recognized approximately $ 0.7 million and $ 1.6 million, respectively, of share-based compensation expense related to these awards in the accompanying consolidated statements of operations and comprehensive income.

For the three and nine months ended September 30, 2024, the Company recognized approximately $ 0.9 million and $ 2.6 million, respectively, of share-based compensation expense related to these awards in the accompanying consolidated statements of operations and comprehensive income.

For the three and nine months ended September 30, 2023, the Company recognized approximately $ 0.9 million and $ 2.6 million, respectively, of share-based compensation expense related to these awards in the accompanying consolidated statements of operations and comprehensive income.

Performance-Based Equity Awards

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The actual number of common shares that ultimately vest will be from 0 % to 200 % of the target award and will be determined in 2027 based on the performance criteria defined in the award agreements for the period of performance from January 1, 2024 through December 31, 2026.

For the three and six months ended June 30, 2024, the Company recognized approximately $ 1.6 million and $ 2.9 million, respectively, of share-based compensation expense related to performance-based equity awards in the accompanying consolidated statements of operations and comprehensive income.

For the three and six months ended June 30, 2023, the Company recognized approximately $ 1.4 million and $ 2.6 million, respectively, of share-based compensation expense related to performance-based equity awards in the accompanying consolidated statements of operations and comprehensive income.

For the three and nine months ended September 30, 2024, the Company recognized approximately $ 1.5 million and $ 4.4 million, respectively, of share-based compensation expense related to performance-based equity awards in the accompanying consolidated statements of operations and comprehensive income.

For the three and nine months ended September 30, 2023, the Company recognized approximately $ 1.5 million and $ 4.1 million, respectively, of share-based compensation expense related to performance-based equity awards in the accompanying consolidated statements of operations and comprehensive income.

Long-Term Incentive Partnership Units

As of June 30, 2024, the Operating Partnership had two classes of LTIP units, LTIP Class A units and LTIP Class B units.

As of September 30, 2024, 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.

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The fair value of each award was determined based on the closing price of the Company’s common shares on the grant date of $ 16.13 per unit with an aggregate grant date fair value of $ 2.2 million.

As of June 30, 2024, the Operating Partnership had 994,837 LTIP units outstanding, of which 470,920 LTIP units have vested.

As of September 30, 2024, the Operating Partnership had 994,837 LTIP units outstanding, of which 470,920 LTIP units have vested.

As of December 31, 2023, the Operating Partnership had 858,484 LTIP units outstanding, of which 277,136 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.

For the three and six months ended June 30, 2024, the Company recognized approximately $ 1.0 million and $ 2.0 million, respectively, in expense related to these LTIP units.

For the three and nine months ended September 30, 2024, the Company recognized approximately $ 1.1 million and $ 3.1 million, respectively, in expense related to these 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.

For the three and six months ended June 30, 2023, the Company recognized approximately $ 0.9 million and $ 1.7 million, respectively, in expense related to these LTIP units.

For the three and nine months ended September 30, 2023, the Company recognized approximately $ 0.9 million and $ 2.5 million, respectively, in expense related to these 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.

PHL is subject to federal and state corporate income taxes at statutory tax rates.

Given the continued uncertainties about the Company's ability to utilize its net operating loss in future years, the Company has recorded a valuation allowance on all deferred tax assets.

As a REIT, the Company generally is not subject to federal corporate income taxes on the portion of its taxable income that is distributed to shareholders.

However, the Company is still subject to certain state and local taxes on its revenues, income and property, and to federal income and excise taxes on its undistributed taxable income.

In addition, taxable income of TRSs, including PHL, is subject to federal, state and local corporate income taxes at statutory tax rates.

A valuation allowance on deferred tax assets is recorded when the Company has determined it more likely than not that future results will not generate sufficient taxable income to realize the deferred tax assets for each jurisdiction.

The Company evaluates its deferred tax assets each reporting period to determine if it is more likely than not that those assets will be realized or if a valuation allowance is needed.

During the third quarter of 2024, due to continued improvement in the Company's financial results coming out of the COVID-19 pandemic and the projected future taxable income of its TRS, the Company determined that the release of a significant portion of its federal and state valuation allowance was appropriate and was recorded as an income tax benefit in the consolidated statement of operations.

The release of the valuation allowance of $ 32.8 million is partially offset by current income tax expense of $ 7.6 million and $ 8.7 million for the three and nine months ended September 30, 2024, respectively.

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 June 30, 2024 and December 31, 2023, the statute of limitations remains open for all major jurisdictions for tax years dating back to 2020.

As of September 30, 2024 and December 31, 2023, the statute of limitations remains open for all major jurisdictions for tax years dating back to 2021 and 2020, respectively.

Earnings (Loss) Per Share

The following is a reconciliation of basic and diluted earnings (loss) per common share (in thousands, except share and per-share data):

For the three months ended June 30, For the six months ended June 30,

For the three months ended September 30, For the nine months ended September 30,

2024 2023 2024 2023

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Net income (loss) per share available to common shareholders — diluted $ 0.24 $ ( 0.57 ) $ 0.12 $ ( 0.56 )

For the three and six months ended June 30, 2024, 617,561 and 1,217,668 , respectively, of unvested service condition restricted shares and performance-based equity awards were excluded from diluted weighted-average number of common shares, as their effect would have been anti-dilutive.

For the three and six months ended June 30, 2023, 893,194 and 1,110,184 , respectively, of unvested service condition restricted shares and performance-based equity awards were excluded from diluted weighted-average number of common shares, as their effect would have been anti-dilutive.

For the three and six months ended June 30, 2024, zero 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.

For the three and six months ended June 30, 2023, zero 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.

For the three and nine months ended September 30, 2024, 467,452 and 157,010 , respectively, unvested service condition restricted shares and performance-based equity awards were excluded from diluted weighted-average number of common shares, as their effect would have been anti-dilutive.

For the three and nine months ended September 30, 2023, 1,110,184 unvested service condition restricted shares and performance-based equity awards were excluded from diluted weighted-average number of common shares, as their effect would have been anti-dilutive.

For the nine months ended September 30, 2024, 29,441,175 common shares underlying the Convertible Notes were excluded from diluted shares as their effect would have been anti-dilutive.

For the three and nine months ended September 30, 2023, 29,441,175 common shares underlying the Convertible Notes were excluded from diluted shares as their effect would have been anti-dilutive.

The LTIP units 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.

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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 three and six months ended June 30, 2024, combined base and incentive management fees were $ 11.2 million and $ 19.2 million, respectively.

For the three and six months ended June 30, 2023, combined base and incentive management fees were $ 10.8 million and $ 18.8 million, respectively.

For the three and nine months ended September 30, 2024, combined base and incentive management fees were $ 11.8 million and $ 31.0 million, respectively.

For the three and nine months ended September 30, 2023, combined base and incentive management fees were $ 11.1 million and $ 29.9 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.

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Restricted Cash

At June 30, 2024 and December 31, 2023, the Company had $ 9.5 million and $ 9.9 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.

At September 30, 2024 and December 31, 2023, the Company had $ 10.3 million and $ 9.9 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.

Hotel, Ground and Finance Leases

As of June 30, 2024, the following hotels were subject to leases as follows:

As of September 30, 2024, the following hotels were subject to leases as follows:

Lease Properties Lease Type Lease Expiration Date

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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 three and six months ended June 30, 2024 and 2023 are as follows (in thousands):

For the three months ended June 30, For the six months ended June 30,

The components of ground rent expense for the three and nine months ended September 30, 2024 and 2023 are as follows (in thousands):

For the three months ended September 30, For the nine months ended September 30,

2024 2023 2024 2023

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Supplemental Information to Statements of Cash Flows (in thousands)

For the six months ended June 30,

For the nine months ended September 30,

Interest paid, net of capitalized interest $ 76,703 $ 74,111

8 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements