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Section 1: 8-K (8-K)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): October 29, 2020

PEBBLEBROOK HOTEL TRUST
(Exact name of registrant as specified in its charter)
Maryland 001-34571 27-1055421
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
4747 Bethesda Avenue,Suite 1100 
Bethesda,Maryland20814
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (240507-1300
Not Applicable
Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Shares, $0.01 par value per sharePEBNew York Stock Exchange
Series C Cumulative Redeemable Preferred Shares, $0.01 par valuePEB-PCNew York Stock Exchange
Series D Cumulative Redeemable Preferred Shares, $0.01 par valuePEB-PDNew York Stock Exchange
Series E Cumulative Redeemable Preferred Shares, $0.01 par valuePEB-PENew York Stock Exchange
Series F Cumulative Redeemable Preferred Shares, $0.01 par valuePEB-PFNew York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



Item 2.02. Results of Operations and Financial Condition.

On October 29, 2020, Pebblebrook Hotel Trust (the “Company”) issued a press release announcing the Company’s results of operations for the three and nine months ended September 30, 2020.

A copy of the press release is furnished as Exhibit 99.1 to this report.

Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Description
Press release, issued October 29, 2020, providing the results of operations for the three and nine months ended September 30, 2020.
101.SCHInline XBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
101.LABInline XBRL Taxonomy Extension Label Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 PEBBLEBROOK HOTEL TRUST 
  
October 29, 2020By:/s/ Raymond D. Martz
 Name:  Raymond D. Martz
  Title:  Executive Vice President, Chief Financial Officer, Treasurer and Secretary


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Section 2: EX-99.1 (EX-99.1)

Document
Exhibit 99.1

405787250_image0a251a.jpg
4747 Bethesda Avenue, Suite 1100, Bethesda, MD 20814
NYSE symbol: PEB
www.pebblebrookhotels.com

PEBBLEBROOK HOTEL TRUST
REPORTS THIRD QUARTER 2020 RESULTS
REOPENING OF
HOTELS AND
RESORTS
§ 39 hotels and resorts currently open, which is approximately three-fourths of the Company’s portfolio; these 39 properties accounted for 76% of Pebblebrook’s 2019 Hotel EBITDA
§ Demand in the third quarter continued to increase from the second quarter’s all-time low, with healthy leisure business throughout the quarter and a modest post-Labor Day improvement in business travel
§ In October, the Company reopened Hotel Vintage Portland, Hotel Zena Washington DC, The Heathman in Portland, and Hotel Vintage Seattle
AVERAGE
MONTHLY CASH
BURN
§ Monthly cash burn at the Company’s hotels continues to be reduced as the demand recovery continues, additional properties reopen and operating performance ramps up
§ Monthly hotel portfolio cash burn is currently running at $5 to $8 million; a $10 million reduction to the Company’s early May midpoint estimate
§ Total monthly corporate cash burn is now running at $16 to $21 million; a $9 million reduction to the Company’s early May midpoint estimate
BALANCE SHEET &
LIQUIDITY
§ As of September 30, 2020, cash on hand of $217.0 million and liquidity of $570.2 million, which includes $353.2 million available on the Company’s $650.0 million credit facility
§ Net debt to depreciated book value at the end of Q3 2020: 38%
2020 OUTLOOK
§ Given the uncertainties related to the pandemic, its impact on travel, and variable government restrictions, the Company is unable to provide a 2020 Outlook at this time
(1) See tables later in this press release for a description of Same-Property information and reconciliations from net income (loss) to non-GAAP financial measures.






Throughout the summer, leisure demand continued to improve across the travel and hotel industries and remained unseasonably healthy post-Labor Day, benefitting our properties and particularly our drive-to resorts and urban getaway hotels. Furthermore, business travel began a modest improvement, indicative of more companies and businesses choosing to get back on the road. Finally, we’ve seen some modest pickup in small group business. This steady but slow recovery in hotel demand has led to improved operating performance and a continuing reduction in our hotel and corporate cash burn from the historic lows in the second quarter. Although we do not expect to eliminate our cash burn before year-end, we are incrementally more optimistic as our improved, efficient hotel operating models materially enhance our bottom-line results. However, we remain cautious about operating trends as we head into winter, due to the recent rise in COVID-19 cases and the predicted second wave.”

- Jon E. Bortz, Chairman, President and Chief Executive Officer of Pebblebrook Hotel Trust

Third Quarter and Year-to-Date Highlights
Third Quarter
Nine Months Ended September 30,
2020201920202019
($ in millions except per share and RevPAR data)
Net income (loss)($130.6)$30.0($219.4)$96.2
Same-Property Room Revenues(1)
$51.3 $279.6 $231.7 $784.7
Same-Property Room Revenues growth rate(81.6%)(70.5%)
Same-Property Total Revenues(1)
$77.0 $398.5 $355.1 $1,137.3
Same-Property Total Revenues growth rate(80.7%)(68.8%)
Same-Property Total Expenses(1)
$96.2 $261.5 $374.5 $762.7
Same-Property Total Expense growth rate(63.2%)(50.9%)
Same-Property EBITDA(1)
($19.3)$137.0($19.4)$374.5
Same-Property EBITDA growth rate(114.1%)(105.2%)
Adjusted EBITDAre(1)
($27.6)$136.5 ($41.8) $378.5
Adjusted EBITDAre growth rate
(120.2%)(111.1%)
Adjusted FFO(1)
($66.6) $100.5 ($125.9) $272.9
Adjusted FFO per diluted share(1)
($0.51) $0.77 ($0.96) $2.08
Adjusted FFO per diluted share growth rate(166.2%)(146.2%)
(1) See tables later in this press release for a description of same-property information and reconciliations from net income (loss) to non-GAAP financial measures, including Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), EBITDA for Real Estate ("EBITDAre"), Adjusted EBITDAre, Funds from Operations ("FFO"), FFO per share, Adjusted FFO and Adjusted FFO per share.

For the details as to which hotels are included in Same-Property Room Revenues, Total Revenues, Expenses and EBITDA appearing in the table above and elsewhere in this press release, refer to the Same-Property Statistical Data table footnotes later in this press release.




"Our hotels experienced improved operating and financial performance each month during the third quarter, and October appears to be tracking in line with September’s results,” noted Mr. Bortz. “Combined with our revised hotel operating models following COVID-19, our hotels are running with lower operating expenses, which is enabling them to achieve profitability sooner than we would have anticipated several months ago. Our zero-based budgeting has been embraced by our hotel teams working closely with our asset managers. This is encouraging and will enable our hotels to drive more EBITDA to the bottom line and outperform other hotels in their markets as the recovery accelerates in 2021. We appreciate all the sacrifices that our hotel teams, operating companies and corporate staff have made to get through this unprecedented period, as we get through this together.”

During the third quarter, occupancy at our open hotels improved from 28.4 percent in July with 23 hotels open, to 30.4 percent in August with 34 hotels open, to 38.3 percent in September with 35 hotels open. The Company’s open hotels generated $700 thousand of Hotel EBITDA in the quarter, even after the negative impact of $2.1 million of retail rent write-offs and straight-line rent adjustments. The Company’s resort portfolio, of which all 8 hotels were open throughout the quarter, generated $12.6 million of Hotel EBITDA, with an occupancy of 51.3 percent and an ADR of $302.78, a rate that was 10.3 percent higher than last year’s third quarter.

Estimated Monthly Cash Use

The Company estimates that its monthly cash use for the third quarter averaged approximately $18.0 million (excluding capital investments) based on the following:

Average hotel-level monthly cash use of approximately $6.0 million, excluding one-time expenses;
Corporate-level monthly G&A cash use of $2.0 million; and
Corporate finance-related monthly cash use of $10.0 million, which includes interest payments on the Company’s outstanding debt as well as both common and preferred dividend payments.

If the recovery continues, demand gradually improves, recently reopened hotel performance ramps up and additional hotels reopen, monthly cash use should continue to be reduced.

Capital Investments and Strategic Property Redevelopments

In the third quarter of 2020, the Company completed $20.8 million of capital investments throughout its portfolio. The Company has completed $110.4 million of capital investments and projects year to date through September 2020. The Company expects to invest an additional $15.0 to $20.0 million during the remainder of 2020.

The Company is excited to announce the redevelopment, transformation, and opening of Hotel Zena Washington DC on October 8, 2020. This groundbreaking hotel, dedicated to female empowerment, is the first of its kind. Hotel Zena Washington DC also marks the Company’s seventh hotel in its proprietary Unofficial Z Collection and the first on the East Coast. In addition to celebrating women’s accomplishments on the 100th anniversary of the Women’s Right to Vote, Hotel Zena Washington DC showcases a spectacular diverse art collection with over 60 gallery-quality art pieces commissioned specifically for this unique and powerful hotel.

Since the beginning of 2020, the Company has completed the transformational redevelopments of a number of hotels and resorts that were part of the LaSalle legacy portfolio acquired in late 2018, including Chaminade Resort & Spa, San Diego Mission Bay Resort (formerly Hilton San Diego Resort & Spa), Viceroy Washington DC (formerly Mason & Rook Hotel), Hotel Zena Washington DC (formerly Donovan Hotel), Viceroy Santa Monica Hotel and Le Parc Suite Hotel.

As a result of the Company’s extensive and comprehensive capital investments, redevelopments and transformations completed over the last few years, its portfolio is currently in outstanding condition. Over the last five years, 40 of the Company’s 53 hotels and resorts have completed transformational redevelopments or comprehensive renovations.

Balance Sheet and Liquidity

As of September 30, 2020, the Company had $217.0 million of consolidated cash, cash equivalents, and restricted cash in addition to $353.2 million of additional undrawn availability on its senior unsecured revolving credit facility, for a total of $570.2 million of liquidity. The Company had $2.4 billion in consolidated unsecured debt at an effective weighted-average interest rate of 3.8 percent. Approximately $1.7 billion, or 73 percent of the Company's total outstanding debt, was at a weighted-average fixed interest rate of 4.2 percent, and approximately $0.6 billion, or 27 percent, was at a weighted-average floating interest rate of 2.4 percent. Of the Company's outstanding debt, $2.0 billion was in the form of unsecured term loans, and $290.0 million was outstanding on its $650.0 million senior unsecured revolving credit facility. The Company has no material debt maturities until November 2022.




Common and Preferred Dividends

On September 15, 2020, the Company declared a quarterly cash dividend of $0.01 per share on its common shares as well as a regular quarterly cash dividend for the following preferred shares of beneficial interest:

$0.40625 per 6.50% Series C Cumulative Redeemable Preferred Share;;
$0.39844 per 6.375% Series D Cumulative Redeemable Preferred Share;
$0.39844 per 6.375% Series E Cumulative Redeemable Preferred Share; and
$0.39375 per 6.30% Series F Cumulative Redeemable Preferred Share.

Update on Strategic Dispositions

During the third quarter, the Company completed the sale of Union Station Hotel Nashville, Autograph Collection in Nashville, Tennessee for $56.0 million. In combination with the $331.0 million of hotel property sales from the first quarter of 2020, the Company has sold a total of $387.0 million of hotel properties year to date.

2020 Outlook

The Company continues to be unable to provide an outlook due to the uncertainties caused by the COVID-19 pandemic. It intends to issue new guidance when it has more clarity on government restrictions, advances in health solutions, the economy, travel demand, and more predictable overall operating fundamentals and trends.

Third Quarter 2020 Earnings Call

The Company will conduct its quarterly analyst and investor conference call on Friday, October 30, 2020, at 9:00 AM ET. Please dial (877) 705-6003 approximately ten minutes before the call begins to participate in the conference call. Additionally, a live webcast of the conference call will be available through the Company's website. To access the webcast, log on to www.pebblebrookhotels.com ten minutes before the conference call. A replay of the conference call webcast will be archived and available online through the Investor Relations section of www.pebblebrookhotels.com.

About Pebblebrook Hotel Trust

Pebblebrook Hotel Trust (NYSE: PEB) is a publicly traded real estate investment trust ("REIT") and the largest owner of urban and resort lifestyle hotels in the United States. The Company owns 53 hotels, totaling approximately 13,200 guestrooms across 14 urban and resort markets, with a focus on the west coast gateway cities. For more information, visit www.pebblebrookhotels.com and follow us at @PebblebrookPEB.

This press release contains certain “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Reform Act of 1995. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “seek,” “anticipate,” “estimate,” “approximately,” “believe,” “could,” “project,” “predict,” “forecast,” “continue,” “assume,” “plan,” references to “outlook” or other similar words or expressions. Forward-looking statements are based on certain assumptions and can include future expectations, future plans and strategies, financial and operating projections and forecasts and other forward-looking information and estimates. Examples of forward-looking statements include the following: projections and forecasts of the Company’s cash burn rate; descriptions of the Company’s plans or objectives for future capital investment projects, operations or services; forecasts of the Company’s future economic performance; forecasts of hotel industry performance; and descriptions of assumptions underlying or relating to any of the foregoing expectations including assumptions regarding the timing of their occurrence. These forward-looking statements are subject to various risks and uncertainties, many of which are beyond the Company’s control, which could cause actual results to differ materially from such statements. These risks and uncertainties include, but are not limited to, the state of the U.S. economy and the supply of hotel properties, and other factors as are described in greater detail in the Company’s filings with the SEC, including, without limitation, the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and Current Report on Form 8-K filed with the SEC on March 24, 2020. Unless legally required, the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

For further information about the Company's business and financial results, please refer to the "Management's Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of the Company’s filings with the U.S. Securities and Exchange Commission (“SEC”), including, but not limited to, its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, copies of which may be obtained at the Investor Relations section of the Company’s website at www.pebblebrookhotels.com.

All information in this press release is as of October 29, 2020. The Company undertakes no duty to update the statements in this press release to conform the statements to actual results or changes in the Company’s expectations.





###

Contacts:

Raymond D. Martz, Chief Financial Officer, Pebblebrook Hotel Trust - (240) 507-1330
For additional information or to receive press releases via email, please visit our website at
www.pebblebrookhotels.com





Pebblebrook Hotel Trust
Consolidated Balance Sheets
($ in thousands, except share and per-share data)
September 30, 2020December 31, 2019
(Unaudited)
ASSETS
Assets:
Investment in hotel properties, net$5,980,580 $6,332,587 
Cash and cash equivalents204,553 30,098 
Restricted cash12,422 26,777 
Hotel receivables (net of allowance for doubtful accounts of $388 and $738, respectively)11,312 49,619 
Prepaid expenses and other assets56,922 59,474 
Total assets$6,265,789 $6,498,555 
LIABILITIES AND EQUITY
Liabilities:
Unsecured revolving credit facilities$290,000 $165,000 
Term loans, net of unamortized deferred financing costs1,964,501 1,964,657 
Senior unsecured notes, net of unamortized deferred financing costs99,565 99,563 
Accounts payable, accrued expenses and other liabilities247,623 260,166 
Lease liabilities - operating leases255,177 256,271 
Deferred revenues33,965 57,704 
Accrued interest5,533 4,694 
Distribution payable9,306 58,564 
Total liabilities2,905,670 2,866,619 
Commitments and contingencies
Shareholders' Equity:
Preferred shares of beneficial interest, $0.01 par value (liquidation preference $510,000 at September 30, 2020 and December 31, 2019), 100,000,000 shares authorized; 20,400,000 shares issued and outstanding at September 30, 2020 and December 31, 2019204 204 
Common shares of beneficial interest, $0.01 par value, 500,000,000 shares authorized; 130,673,300 shares issued and outstanding at September 30, 2020 and 130,484,956 shares issued and outstanding at December 31, 20191,307 1,305 
Additional paid-in capital4,092,602 4,069,410 
Accumulated other comprehensive income (loss)(69,663)(24,715)
Distributions in excess of retained earnings(671,667)(424,996)
Total shareholders' equity3,352,783 3,621,208 
Non-controlling interests7,336 10,728 
Total equity3,360,119 3,631,936 
Total liabilities and equity$6,265,789 $6,498,555 




Pebblebrook Hotel Trust
Consolidated Statements of Operations
($ in thousands, except share and per-share data)
(Unaudited)
 Three months ended
September 30,
Nine months ended
September 30,
 2020201920202019
Revenues:
Room$51,337 $296,622 $239,279 $851,899 
Food and beverage12,454 90,088 82,635 274,803 
Other operating13,189 36,842 46,765 106,102 
Total revenues$76,980 $423,552 $368,679 $1,232,804 
Expenses:
Hotel operating expenses:
Room$15,835 $71,878 $75,390 $209,707 
Food and beverage10,578 64,690 66,144 194,981 
Other direct and indirect44,538 110,922 171,456 330,617 
Total hotel operating expenses70,951 247,490 312,990 735,305 
Depreciation and amortization56,696 69,775 168,044 177,376 
Real estate taxes, personal property taxes, property insurance, and ground rent27,947 31,588 85,173 94,009 
General and administrative7,466 8,315 38,259 25,753 
Transaction costs10,339 4,035 10,474 7,576 
Impairment loss— — 20,570 — 
(Gain) loss on sale of hotel properties47 — (117,401)— 
(Gain) loss and other operating expenses917 1,529 3,753 6,219 
Total operating expenses174,363 362,732 521,862 1,046,238 
Operating income (loss)(97,383)60,820 (153,183)186,566 
Interest expense(27,514)(26,465)(75,196)(84,512)
Other115 442 23 
Income (loss) before income taxes(124,782)34,362 (227,937)102,077 
Income tax (expense) benefit (5,778)(4,382)8,531 (5,924)
Net income (loss)(130,560)29,980 (219,406)96,153 
Net income (loss) attributable to non-controlling interests(253)89 (535)254 
Net income (loss) attributable to the Company(130,307)29,891 (218,871)95,899 
Distributions to preferred shareholders(8,139)(8,139)(24,417)(24,417)
Net income (loss) attributable to common shareholders$(138,446)$21,752 $(243,288)$71,482 
Net income (loss) per share available to common shareholders, basic$(1.06)$0.17 $(1.86)$0.55 
Net income (loss) per share available to common shareholders, diluted$(1.06)$0.17 $(1.86)$0.55 
Weighted-average number of common shares, basic130,645,990 130,484,956 130,588,765 130,467,193 
Weighted-average number of common shares, diluted130,645,990 130,622,130 130,588,765 130,690,342 



Pebblebrook Hotel Trust
Reconciliation of Net Income (Loss) to FFO and Adjusted FFO
($ in thousands, except share and per-share data)
(Unaudited)
 Three months ended
September 30,
Nine months ended
September 30,
2020201920202019
Net income (loss)$(130,560)$29,980 $(219,406)$96,153 
Adjustments:
Depreciation and amortization56,587 69,712 167,716 177,195 
(Gain) loss on sale of hotel properties47 — (117,401)— 
Impairment loss— — 20,570 — 
FFO$(73,926)$99,692 $(148,521)$273,348 
Distribution to preferred shareholders(8,139)(8,139)(24,417)(24,417)
FFO available to common share and unit holders$(82,065)$91,553 $(172,938)$248,931 
Transaction costs10,339 4,035 10,474 7,576 
Non-cash ground rent921 1,318 2,820 3,274 
Management/franchise contract transition costs136 810 618 4,783 
Interest expense adjustment for acquired liabilities322 216 776 689 
Capital lease adjustment805 810 2,405 2,193 
Non-cash amortization of acquired intangibles(290)(315)(929)(1,050)
Gain on insurance settlement— — — (672)
Business interruption proceeds— — — 672 
Non-cash interest expense1,379 1,379 4,122 4,761 
One-time operation suspension expenses1,844 — 10,704 — 
Non-cash canceled share-based compensation— — 16,001 — 
Early extinguishment of debt— 726 — 1,698 
Adjusted FFO available to common share and unit holders$(66,609)$100,532 $(125,947)$272,855 
FFO per common share - basic$(0.63)$0.70 $(1.32)$1.90 
FFO per common share - diluted$(0.63)$0.70 $(1.32)$1.90 
Adjusted FFO per common share - basic$(0.51)$0.77 $(0.96)$2.09 
Adjusted FFO per common share - diluted$(0.51)$0.77 $(0.96)$2.08 
Weighted-average number of basic common shares and units130,906,706 130,854,912 130,849,481 130,837,149 
Weighted-average number of fully diluted common shares and units130,906,706 130,992,086 130,849,481 131,060,298 



This press release includes certain non-GAAP financial measures. These measures are not in accordance with, or an alternative to, measures prepared in accordance with GAAP and may be different from similarly titled non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with the Company’s results of operations determined in accordance with GAAP.

Funds from Operations (“FFO”) - FFO represents net income (computed in accordance with GAAP), excluding gains or losses from sales of properties, plus real estate-related depreciation and amortization and after adjustments for unconsolidated partnerships. The Company considers FFO a useful measure of performance for an equity REIT because it facilitates an understanding of the Company's operating performance without giving effect to real estate depreciation and amortization, which assume that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, the Company believes that FFO provides a meaningful indication of its performance. The Company also considers FFO an appropriate performance measure given its wide use by investors and analysts. The Company computes FFO in accordance with standards established by the Board of Governors of Nareit in its March 1995 White Paper (as amended in November 1999 and April 2002), which may differ from the methodology for calculating FFO utilized by other equity REITs and, accordingly, may not be comparable to that of other REITs. Further, FFO does not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments and uncertainties, nor is it indicative of funds available to fund the Company’s cash needs, including its ability to make distributions. The Company presents FFO per diluted share calculations that are based on the outstanding dilutive common shares plus the outstanding Operating Partnership units for the periods presented.

The Company also evaluates its performance by reviewing Adjusted FFO because it believes that adjusting FFO to exclude certain recurring and non-recurring items described below provides useful supplemental information regarding the Company's ongoing operating performance and that the presentation of Adjusted FFO, when combined with the primary GAAP presentation of net income (loss), more completely describes the Company's operating performance. The Company adjusts FFO available to common share and unit holders for the following items, which may occur in any period, and refers to this measure as Adjusted FFO:

- Transaction costs: The Company excludes transaction costs expensed during the period because it believes that including these costs in FFO does not reflect the underlying financial performance of the Company and its hotels.
- Non-cash ground rent: The Company excludes the non-cash ground rent expense, which is primarily made up of the straight-line rent impact from a ground lease.
- Management/franchise contract transition costs: The Company excludes one-time management and/or franchise contract transition costs expensed during the period because it believes that including these costs in FFO does not reflect the underlying financial performance of the Company and its hotels.
- Interest expense adjustment for acquired liabilities: The Company excludes interest expense adjustment for acquired liabilities assumed in connection with acquisitions, because it believes that including these non-cash adjustments in FFO does not reflect the underlying financial performance of the Company.
- Capital lease adjustment: The Company excludes the effect of non-cash interest expense from capital leases because it believes that including these non-cash adjustments in FFO does not reflect the underlying financial performance of the Company.
- Non-cash amortization of acquired intangibles: The Company excludes the non-cash amortization of acquired intangibles, which includes but is not limited to the amortization of favorable and unfavorable leases or management agreements and above/below market real estate tax reduction agreements because it believes that including these non-cash adjustments in FFO does not reflect the underlying financial performance of the Company.
- Gain on insurance settlement: The Company excludes the gain on insurance settlement because the Company believes that including this adjustment in FFO does not reflect the underlying financial performance of the Company and its hotels.
- Business interruption proceeds: The Company includes business interruption proceeds because the Company believes that including these proceeds reflects the underlying financial performance of the Company and its hotels.
- Non-cash interest expense, one-time operation suspension expenses, non-cash canceled share-based compensation and early extinguishment of debt: The Company excludes these items because the Company believes that including these adjustments in FFO does not reflect the underlying financial performance of the Company and its hotels.

The Company’s presentation of FFO in accordance with the Nareit White Paper, and as adjusted by the Company, should not be considered as an alternative to net income (computed in accordance with GAAP) as an indicator of the Company’s financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of its liquidity.



Pebblebrook Hotel Trust
Reconciliation of Net Income (Loss) to EBITDA, EBITDAre and Adjusted EBITDAre
($ in thousands)
(Unaudited)
Three months ended
September 30,
Nine months ended
September 30,
2020201920202019
Net income (loss)$(130,560)$29,980 $(219,406)$96,153 
Adjustments:
Interest expense27,514 26,465 75,196 84,512 
Income tax expense (benefit)5,778 4,382 (8,531)5,924 
Depreciation and amortization56,696 69,775 168,044 177,376 
EBITDA $(40,572)$130,602 $15,303 $363,965 
(Gain) loss on sale of hotel properties47 — (117,401)— 
Impairment loss— — 20,570 — 
EBITDAre
$(40,525)$130,602 $(81,528)$363,965 
Transaction costs10,339 4,035 10,474 7,576 
Non-cash ground rent921 1,318 2,820 3,274 
Management/franchise contract transition costs136 810 618 4,783 
Non-cash amortization of acquired intangibles(290)(315)(929)(1,050)
Gain on insurance settlement— — — (672)
Business interruption proceeds— — — 672 
One-time operation suspension expenses1,844 — 10,704 — 
Non-cash canceled share-based compensation— — 16,001 — 
Adjusted EBITDAre
$(27,575)$136,450 $(41,840)$378,548 



This press release includes certain non-GAAP financial measures. These measures are not in accordance with, or an alternative to, measures prepared in accordance with GAAP and may be different from similarly titled non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with the Company’s results of operations determined in accordance with GAAP.

Earnings before Interest, Taxes, and Depreciation and Amortization ("EBITDA") - The Company believes that EBITDA provides investors a useful financial measure to evaluate its operating performance, excluding the impact of our capital structure (primarily interest expense) and our asset base (primarily depreciation and amortization).

Earnings before Interest, Taxes, and Depreciation and Amortization for Real Estate ("EBITDAre") - The Company believes that EBITDAre provides investors a useful financial measure to evaluate its operating performance, and the Company presents EBITDAre in accordance with the National Association of Real Estate Investment Trusts ("Nareit") guidelines, as defined in its September 2017 white paper "Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate." EBITDAre adjusts EBITDA for the following items, which may occur in any period, and refers to these measures as Adjusted EBITDAre: (1) gains or losses on the disposition of depreciated property, including gains or losses on change of control; (2) impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate; and (3) adjustments to reflect the entity's share of EBITDAre of unconsolidated affiliates.

The Company also evaluates its performance by reviewing Adjusted EBITDAre because it believes that adjusting EBITDAre to exclude certain recurring and non-recurring items described below provides useful supplemental information regarding the Company's ongoing operating performance and that the presentation of Adjusted EBITDAre, when combined with the primary GAAP presentation of net income (loss), more completely describes the Company's operating performance. The Company adjusts EBITDAre for the following items, which may occur in any period, and refers to these measures as Adjusted EBITDAre:

- Transaction costs: The Company excludes transaction costs expensed during the period because it believes that including these costs in EBITDAre does not reflect the underlying financial performance of the Company and its hotels.
- Non-cash ground rent: The Company excludes the non-cash ground rent expense, which is primarily made up of the straight-line rent impact from a ground lease.
- Management/franchise contract transition costs: The Company excludes one-time management and/or franchise contract transition costs expensed during the period because it believes that including these costs in EBITDAre does not reflect the underlying financial performance of the Company and its hotels.
- Non-cash amortization of acquired intangibles: The Company excludes the non-cash amortization of acquired intangibles, which includes but is not limited to the amortization of favorable and unfavorable leases or management agreements and above/below market real estate tax reduction agreements because it believes that including these non-cash adjustments in EBITDAre does not reflect the underlying financial performance of the Company and its hotels.
- Gain on insurance settlement: The Company excludes the gain on insurance settlement because the Company believes that including this adjustment in EBITDAre does not reflect the underlying financial performance of the Company and its hotels.
- Business interruption proceeds: The Company includes business interruption proceeds because the Company believes that including these proceeds reflects the underlying financial performance of the Company and its hotels.
- One-time operation suspension expenses and non-cash canceled share-based compensation: The Company excludes these items because it believes that including these costs in EBITDAre does not reflect the underlying financial performance of the Company and its hotels.

The Company’s presentation of EBITDAre, and as adjusted by the Company, should not be considered as an alternative to net income (computed in accordance with GAAP) as an indicator of the Company’s financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of its liquidity.



Pebblebrook Hotel Trust
Strategic Disposition Program Summary
(Unaudited)
Date of disposition
Sales price
($ in millions)
EBITDA multipleNet operating capitalization rate
Sales price
per key
($ in thousands)
Hotel dispositions:
Park Central San Francisco and Park Central New York / WestHouse New York
11/30/2018$715.0 16.5 x5.1 %$443 
Gild Hall, New York11/30/201838.8 15.8 x5.3 %298 
Embassy Suites Philadelphia Center City11/30/201867.0 11.0 x8.1 %233 
The Grand Hotel Minneapolis12/4/201830.0 8.5 x10.4 %214 
The Liaison Capitol Hill2/14/2019111.0 16.9 x4.9 %324 
Hotel Palomar Washington, DC2/22/2019141.5 14.9 x5.9 %422 
Onyx Hotel5/29/201958.3 15.3 x5.9 %521 
Hotel Amarano Burbank7/16/201972.9 15.8 x5.7 %552 
Rouge Hotel9/12/201942.0 17.4 x5.0 %307 
Hotel Madera9/26/201923.3 14.3 x5.7 %284 
Topaz Hotel11/22/201933.1 19.5 x4.4 %334 
InterContinental Buckhead Atlanta / Sofitel Washington DC Lafayette Square3/6/2020331.0 14.2 x6.1 %502 
Union Station Hotel Nashville, Autograph Collection7/29/202056.0 8.1 x11.1 %448 
Total / Average$1,720 14.8 x5.82 %$410 
The EBITDA multiple and net operating capitalization rate are based on the applicable hotel's estimated trailing twelve-month operating performance for 2018. The net operating income capitalization rate is based on an assumed annual capital reserve of 4.0% of total hotel revenues. The EBITDA Multiple and net operating capitalization rate for Hotel Amarano Burbank reflect an estimated adjustment for the annualized impact of real estate taxes for California's Proposition 13 because the Company believes the adjusted hotel results for this period provide investors and analysts with an understanding of the hotel-level operating performance.

These hotel results for the respective periods may include information reflecting operational performance prior to the Company's ownership of the hotels. Any differences are a result of rounding.

The information above has not been audited and is presented only for comparison purposes.



Pebblebrook Hotel Trust
Same-Property Statistical Data
(Unaudited)
Three months ended
September 30,
Nine months ended
September 30,
2020201920202019
Same-Property Occupancy19.5 %87.5 %26.5 %83.3 %
Increase/(Decrease)(77.7 %)(68.2 %)
Same-Property ADR$215.95 $262.63 $242.19 $261.61 
Increase/(Decrease)(17.8 %)(7.4 %)
Same-Property RevPAR$42.17 $229.75 $64.15 $218.01 
Increase/(Decrease)(81.6 %)(70.6 %)
Same-Property Total RevPAR$63.22 $327.44 $98.28 $315.98 
Increase/(Decrease)(80.7 %)(68.9 %)
Notes:
While the operations of many of the Company's hotels were temporarily suspended beginning in March 2020, this schedule of hotel results for the three months ended September 30 includes information from all of the hotels the Company owned as of September 30, 2020. This schedule of hotel results for the nine months ended September 30 includes information from all of the hotels the Company owned as of September 30, 2020 but excludes Hotel Zena Washington DC, formerly known as Donovan Hotel, for Q1 and Q2 in both 2020 and 2019 because it was closed during the first and second quarters of 2020 for renovation and also excludes Union Station Hotel Nashville, Autograph Collection for Q3 in both 2020 and 2019 due to its sale in the third quarter of 2020.

Any differences are a result of rounding.

The information above has not been audited and is presented only for comparison purposes.






Pebblebrook Hotel Trust
Same-Property Statistical Data - by Market
(Unaudited)
Three months ended
September 30,
Nine months ended
September 30,
20202020
Same-Property RevPAR variance to prior-year period:
Southern Florida(31.6 %)(37.8 %)
San Diego(53.4 %)(58.9 %)
Other(79.2 %)(73.1 %)
Portland(84.1 %)(74.1 %)
Los Angeles(84.5 %)(70.2 %)
Boston(85.1 %)(77.4 %)
Washington DC(95.4 %)(81.6 %)
Chicago(96.3 %)(84.4 %)
Seattle(97.9 %)(83.5 %)
San Francisco(98.4 %)(75.2 %)
East Coast(80.0 %)(69.5 %)
West Coast(81.0 %)(69.9 %)
Notes:
While the operations of many of the Company's hotels were temporarily suspended beginning in March 2020, this schedule of hotel results for the three months ended September 30 includes information from all of the hotels the Company owned as of September 30, 2020. This schedule of hotel results for the nine months ended September 30 includes information from all of the hotels the Company owned as of September 30, 2020 but excludes Hotel Zena Washington DC, formerly known as Donovan Hotel, for Q1 and Q2 in both 2020 and 2019 because it was closed during the first and second quarters of 2020 for renovation and also excludes Union Station Hotel Nashville, Autograph Collection for Q3 in both 2020 and 2019 due to its sale in the third quarter of 2020.

"Other" includes Nashville, TN; New York City, NY; Philadelphia, PA; and Santa Cruz, CA.

Any differences are a result of rounding.

The information above has not been audited and is presented only for comparison purposes.






Pebblebrook Hotel Trust
Hotel Operational Data
Schedule of Same-Property Results
($ in thousands)
(Unaudited)
Three months ended
September 30,
Nine months ended
September 30,
2020201920202019
Same-Property Revenues:
Room$51,337 $279,618 $231,745 $784,668 
Food and beverage12,460 83,497 77,200 251,640 
Other13,161 35,401 46,108 100,968 
Total hotel revenues76,958 398,516 355,053 1,137,276 
Same-Property Expenses:
Room$15,839 $67,178 $72,953 $192,149 
Food and beverage10,565 60,152 62,976 179,182 
Other direct3,010 6,353 8,975 17,831 
General and administrative11,724 29,068 45,318 86,265 
Information and telecommunication systems3,284 5,291 11,580 15,811 
Sales and marketing8,038 28,525 37,383 83,201 
Management fees1,868 12,116 8,792 34,161 
Property operations and maintenance6,657 12,051 22,736 35,685 
Energy and utilities6,272 9,663 17,873 26,344 
Property taxes18,914 18,185 57,353 55,720 
Other fixed expenses10,073 12,926 28,547 36,399 
Total hotel expenses96,244 261,508 374,486 762,748 
Same-Property EBITDA$(19,286)$137,008 $(19,433)$374,528 
Same-Property EBITDA Margin(25.1 %)34.4 %(5.5 %)32.9 %
Notes:
While the operations of many of the Company's hotels were temporarily suspended beginning in March 2020, this schedule of hotel results for the three months ended September 30 includes information from all of the hotels the Company owned as of September 30, 2020. This schedule of hotel results for the nine months ended September 30 includes information from all of the hotels the Company owned as of September 30, 2020 but excludes Hotel Zena Washington DC, formerly known as Donovan Hotel, for Q1 and Q2 in both 2020 and 2019 because it was closed during the first and second quarters of 2020 for renovation and also excludes Union Station Hotel Nashville, Autograph Collection for Q3 in both 2020 and 2019 due to its sale in the third quarter of 2020.

Any differences are a result of rounding.

The information above has not been audited and is presented only for comparison purposes.






Pebblebrook Hotel Trust
Historical Operating Data
($ in millions except ADR and RevPAR data)
(Unaudited)
Historical Operating Data:
First QuarterSecond QuarterThird QuarterFourth QuarterFull Year
20192019201920192019
Occupancy75 %87 %87 %79 %82 %
ADR$251 $268 $263 $247 $258 
RevPAR$189 $233 $230 $194 $211 
Hotel Revenues$331.5 $406.0 $398.5 $355.0 $1,491.0 
Hotel EBITDA$90.0 $147.1 $137.0 $102.0 $476.0 
Hotel EBITDA Margin27.2 %36.2 %34.4 %28.7 %31.9 %
First QuarterSecond QuarterThird Quarter
202020202020
Occupancy56 %%20 %
ADR$250 $266 $216 
RevPAR$139 $$42 
Hotel Revenues$252.8 $22.3 $77.0 
Hotel EBITDA$39.0 $(40.6)$(19.3)
Hotel EBITDA Margin15.4 %(182.2)%(25.1)%
Notes:
These historical hotel operating results include information for all of the hotels the Company owned as of September 30, 2020 as if they were owned as of January 1, 2019. The information above does not reflect the Company's corporate general and administrative expense, interest expense, property acquisition costs, depreciation and amortization, taxes and other expenses. Any differences are a result of rounding.

The information above has not been audited and is presented only for comparison purposes.












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