Group 1 - Pebblebrook Hotel reported quarterly funds from operations (FFO) of $0.65 per share, exceeding the Zacks Consensus Estimate of $0.58 per share, but down from $0.69 per share a year ago, representing an FFO surprise of +12.07% [1] - The company achieved revenues of $407.54 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 0.72% and up from $397.11 million year-over-year [2] - Pebblebrook Hotel has consistently surpassed consensus FFO estimates over the last four quarters [2] Group 2 - The stock has underperformed, losing about 21.9% since the beginning of the year, while the S&P 500 has gained 8.6% [3] - The future performance of Pebblebrook Hotel's stock will depend on management's commentary during the earnings call and the outlook for FFO [3][4] - The current consensus FFO estimate for the upcoming quarter is $0.52 on revenues of $404.6 million, and for the current fiscal year, it is $1.42 on revenues of $1.48 billion [7] Group 3 - The Zacks Industry Rank places the REIT and Equity Trust - Other sector in the top 34% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research shows a strong correlation between near-term stock movements and trends in estimate revisions, which can impact Pebblebrook Hotel's stock performance [5][6]

PEBBLEBROOK HOTEL TRUST REPORTS SECOND QUARTER 2025 RESULTS | | ▪ Net income: $19.3 million | | --- | --- | | Q2 FINANCIAL | ▪ Same-Property Hotel EBITDA: $115.8 million, exceeded the midpoint of the Company's outlook operating efficiencies across the portfolio | | | by $1.8 million, driven by robust demand in San Francisco and continued success driving | | HIGHLIGHTS | ▪ Adjusted EBITDAre: $117.0 million, exceeded the midpoint of the Company's outlook by $6.5 | | | million, driven in part by Newport Harbor ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements.](index=4&type=section&id=Item%201.%20Financial%20Statements.) The unaudited consolidated financial statements detail the company's financial position, performance, and cash flows [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets and equity slightly decreased while liabilities marginally increased from year-end 2024 to mid-2025 Consolidated Balance Sheets (Unaudited) | Metric | June 30, 2025 (Unaudited) (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------- | :-------------------------- | :------------------ | | **ASSETS** | | | | Investment in hotel properties, net | $5,249,485 | $5,319,029 | | Cash and cash equivalents | $256,130 | $206,650 | | Hotel receivables (net) | $49,691 | $39,125 | | Total assets | $5,653,310 | $5,693,338 | | **LIABILITIES AND EQUITY** | | | | Debt | $2,248,135 | $2,246,732 | | Total liabilities | $2,922,209 | $2,905,464 | | Total equity | $2,731,101 | $2,787,874 | | Total liabilities and equity | $5,653,310 | $5,693,338 | [Consolidated Statements of Operations and Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) Revenues grew year-over-year, but higher expenses led to a significant decline in net income and a net loss for H1 2025 Consolidated Statements of Operations and Comprehensive Income (Unaudited) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues | $407,537 | $397,110 | $727,803 | $711,179 | | Total operating expenses | $355,149 | $336,139 | $682,652 | $651,587 | | Operating income (loss) | $52,388 | $60,971 | $45,151 | $59,592 | | Net income (loss) | $19,285 | $32,239 | $(12,895) | $4,719 | | Net income (loss) attributable to common shareholders | $7,424 | $20,304 | $(36,154) | $(18,677) | | Net income (loss) per share, basic | $0.06 | $0.17 | $(0.30) | $(0.16) | | Comprehensive income (loss) attributable to the Company | $14,034 | $29,150 | $(24,607) | $7,493 | [Consolidated Statements of Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Equity) Total equity declined from year-end 2024 due to distributions and share repurchases exceeding net income Consolidated Statements of Equity (Unaudited) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :------------ | :---------------- | | Total Shareholders' Equity | $2,638,604 | $2,697,424 | | Non-Controlling Interests | $92,497 | $90,450 | | Total Equity | $2,731,101 | $2,787,874 | Key Changes (Six Months Ended June 30, 2025) * Repurchase of common shares: **$(15,612) thousand** * Distributions on common shares/units: **$(2,380) thousand** * Distributions on preferred shares/units: **$(21,263) thousand** * Net income (loss): **$(12,895) thousand** [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow increased while financing cash outflow decreased, resulting in a positive net change in cash Consolidated Statements of Cash Flows (Unaudited) | Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $140,883 | $129,671 | | Net cash provided by (used in) investing activities | $(47,504) | $(61,703) | | Net cash provided by (used in) financing activities | $(43,832) | $(150,431) | | Net change in cash and cash equivalents and restricted cash | $49,547 | $(82,463) | | Cash and cash equivalents and restricted cash, end of period | $267,138 | $111,178 | [Notes to the Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) The notes detail accounting policies, property investments, debt, revenue, equity, and commitments [Note 1. Organization](index=11&type=section&id=Note%201.%20Organization) Pebblebrook is a REIT owning 46 hotel properties in major U.S. markets, operating through an Operating Partnership - Pebblebrook Hotel Trust is a Maryland REIT that invests in hotel properties, primarily in major U.S. cities and resort markets[29](index=29&type=chunk) - As of June 30, 2025, the Company owned interests in **46 hotels** with a total of **11,937 guest rooms** across various U.S. locations[30](index=30&type=chunk) - The Company operates through Pebblebrook Hotel, L.P. (Operating Partnership), owning **99.0% of common units**, and utilizes a taxable REIT subsidiary (PHL) to lease and manage hotels via third-party contractors to maintain REIT qualification[31](index=31&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=11&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the basis of presentation, use of estimates, and the impact of new accounting pronouncements - The financial statements are prepared in accordance with **U.S. GAAP** and SEC rules for interim information, with certain disclosures omitted[32](index=32&type=chunk) - Management's estimates and assumptions are crucial, and **actual results may differ**[35](index=35&type=chunk) - New accounting pronouncements include ASU 2023-09 (Income Taxes), ASU 2024-01 (Stock Compensation), ASU 2024-03 (Expense Disaggregation Disclosures), and ASU 2024-04 (Induced Conversions of Convertible Debt Instruments)[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk) - ASU 2023-09 (Income Taxes) is effective for fiscal years beginning after December 15, 2024, and is **not expected to have a material impact**[37](index=37&type=chunk) - ASU 2024-01 (Stock Compensation) was adopted on January 1, 2025, with **no impact** on financial statements[38](index=38&type=chunk) - ASU 2024-03 (Expense Disaggregation Disclosures) is effective for annual periods beginning after December 15, 2026, and its impact is **currently being assessed**[39](index=39&type=chunk) - ASU 2024-04 (Induced Conversions of Convertible Debt Instruments) is effective for annual periods beginning after December 15, 2025, and its impact is **currently being assessed**[40](index=40&type=chunk) [Note 3. Acquisition and Disposition of Hotel Properties](index=12&type=section&id=Note%203.%20Acquisition%20and%20Disposition%20of%20Hotel%20Properties) No hotel properties were acquired or disposed of during the first six months of 2025 or 2024 - **No hotel properties were acquired or disposed of** during the six months ended June 30, 2025, or 2024[41](index=41&type=chunk)[42](index=42&type=chunk) [Note 4. Investment in Hotel Properties](index=13&type=section&id=Note%204.%20Investment%20in%20Hotel%20Properties) Net investment in hotel properties decreased due to depreciation, with hurricane impacts affecting one property Investment in Hotel Properties, Net (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Investment in hotel properties | $6,895,044 | $6,849,883 | | Less: Accumulated depreciation | $(1,645,559) | $(1,530,854) | | Investment in hotel properties, net | $5,249,485 | $5,319,029 | - LaPlaya Beach Resort & Club was impacted by Hurricanes Helene and Milton in late 2024, resulting in **$7.5 million of business interruption insurance income** for the six months ended June 30, 2025[44](index=44&type=chunk)[45](index=45&type=chunk) - The Company received **$18.2 million in preliminary insurance advances** through June 30, 2025, related to hurricane damages[45](index=45&type=chunk) - **No impairment losses** were incurred on hotel properties during the six months ended June 30, 2025, or 2024[47](index=47&type=chunk) - As of June 30, 2025, operating lease liabilities were **$320.7 million** and financing lease liabilities were **$44.3 million**[49](index=49&type=chunk) [Note 5. Debt](index=13&type=section&id=Note%205.%20Debt) Total debt remained stable at $2.26 billion, with recent refinancing activities and use of interest rate swaps Debt Principal (in thousands) | Debt Type | June 30, 2025 (Principal) | December 31, 2024 (Principal) | | :-------------------------- | :-------------------------- | :---------------------------- | | Unsecured term loans | $916,652 | $916,652 | | Convertible senior notes | $750,000 | $750,000 | | Unsecured senior notes | $402,400 | $402,400 | | Mortgage loans | $194,315 | $195,413 | | Total debt principal | $2,263,367 | $2,264,465 | | Debt, net | $2,248,135 | $2,246,732 | - The Company extended **$356.7 million** of Term Loan 2024 to January 2028 (Term Loan 2028) and repaid **$110 million** of other term loans in January 2024[51](index=51&type=chunk) - In October 2024, the Company issued **$400 million of 6.375% Senior Notes** due October 2029, using proceeds to repay **$353.3 million** of existing term loans[52](index=52&type=chunk) - In November 2024, **$185.2 million** of Term Loan 2025 was extended to January 2029 (Term Loan 2029), and **$602.0 million** of the senior unsecured revolving credit facility was extended to October 2028[53](index=53&type=chunk) - As of June 30, 2025, the Company had **no outstanding borrowings** on its $650.0 million senior unsecured revolving credit facility, with **$642.1 million borrowing capacity** remaining[55](index=55&type=chunk) - Interest expense for the three months ended June 30, 2025, was **$27.3 million**, down from **$27.9 million** in the prior year, primarily due to lower unsecured term loan interest[71](index=71&type=chunk) - Interest expense for the six months ended June 30, 2025, was **$54.4 million**, slightly up from **$54.36 million** in the prior year, with a significant increase in unsecured senior notes interest[71](index=71&type=chunk) - The Company uses interest rate swap agreements as cash flow hedges, with an aggregate notional value of **$955.0 million** as of June 30, 2025, up from **$855.0 million** at December 31, 2024[74](index=74&type=chunk) [Note 6. Revenue](index=18&type=section&id=Note%206.%20Revenue) Total revenues increased, with San Diego and Southern Florida/Georgia as top contributors showing growth Total Revenues by Geographic Location (in thousands) | Geographic Location | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | San Diego, CA | $86,700 | $84,983 | $161,911 | $156,478 | | Southern Florida/Georgia | $70,951 | $68,934 | $156,406 | $149,891 | | Boston, MA | $80,956 | $79,958 | $127,729 | $125,878 | | Los Angeles, CA | $44,630 | $48,599 | $78,927 | $92,808 | | San Francisco, CA | $37,309 | $32,874 | $71,050 | $63,419 | | Washington, D.C. | $20,425 | $22,102 | $35,425 | $36,904 | | Total Revenues | $407,537 | $397,110 | $727,803 | $711,179 | [Note 7. Equity](index=18&type=section&id=Note%207.%20Equity) The company repurchased $14.3 million in common shares and maintained consistent preferred dividends - During the six months ended June 30, 2025, the Company repurchased **1,298,396 common shares for $14.3 million** (average $11.04 per share)[79](index=79&type=chunk) - As of June 30, 2025, **$116.6 million** of common shares remained available for repurchase under the $150.0 million program[79](index=79&type=chunk) Common Dividends Declared | Dividend per Share/Unit | For the Quarter Ended | | :---------------------- | :-------------------- | | $0.01 | March 31, 2025 | | $0.01 | June 30, 2025 | Preferred Shares Outstanding | Security Type | June 30, 2025 (Shares Outstanding) | December 31, 2024 (Shares Outstanding) | | :-------------- | :--------------------------------- | :------------------------------------- | | 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 | 8,000,000 | | Total | 27,600,000 | 27,600,000 | - **No preferred shares were repurchased** during the six months ended June 30, 2025, with **$84.2 million** remaining available under the $100.0 million program[85](index=85&type=chunk) - As of June 30, 2025, the Operating Partnership had **1,154,431 LTIP units outstanding**, of which 710,156 were vested[91](index=91&type=chunk)[104](index=104&type=chunk) - The Operating Partnership had **3,104,400 Series Z Preferred Units outstanding** as of June 30, 2025, and December 31, 2024[94](index=94&type=chunk) [Note 8. Share-Based Compensation Plan](index=20&type=section&id=Note%208.%20Share-Based%20Compensation%20Plan) The equity incentive plan was amended to increase available shares, with compensation expense detailed for awards - Shareholders approved an amendment to the 2009 Equity Incentive Plan, increasing available equity-based awards by **3,000,000 shares** and extending the grant period to June 30, 2036[96](index=96&type=chunk) - As of June 30, 2025, **3,838,871 common shares** were available for issuance under the Plan[96](index=96&type=chunk) - For the six months ended June 30, 2025, the Company recognized **$1.5 million** in share-based compensation expense for service condition restricted shares (vs. $1.7 million in 2024)[97](index=97&type=chunk)[98](index=98&type=chunk) - For the six months ended June 30, 2025, the Company recognized **$2.8 million** in share-based compensation expense for performance-based equity awards (vs. $2.9 million in 2024)[100](index=100&type=chunk)[101](index=101&type=chunk) - For the six months ended June 30, 2025, the Company recognized **$2.4 million** in expense related to LTIP units (vs. $2.0 million in 2024)[105](index=105&type=chunk)[106](index=106&type=chunk) [Note 9. Income Taxes](index=21&type=section&id=Note%209.%20Income%20Taxes) As a REIT, the company is generally exempt from federal corporate income tax on distributed income - As a REIT, the Company is generally **not subject to federal corporate income taxes** on distributed taxable income[107](index=107&type=chunk) - Taxable income of TRSs (e.g., PHL) is subject to federal, state, and local corporate income taxes[107](index=107&type=chunk) - Tax years **2020 through 2024 remain open to examination** due to net operating loss carryforwards[108](index=108&type=chunk) [Note 10. Earnings (Loss) Per Share](index=22&type=section&id=Note%2010.%20Earnings%20%28Loss%29%20Per%20Share) Basic and diluted EPS declined year-over-year, reflecting a net loss attributable to common shareholders in H1 2025 Earnings (Loss) Per Share Calculation (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) attributable to common shareholders | $7,424 | $20,304 | $(36,154) | $(18,677) | | Net income (loss) available to common shareholders — basic | $7,371 | $20,147 | $(36,171) | $(18,696) | | Net income (loss) per share available to common shareholders — basic | $0.06 | $0.17 | $(0.30) | $(0.16) | | Net income (loss) per share available to common shareholders — diluted | $0.06 | $0.16 | $(0.30) | $(0.16) | - For the three and six months ended June 30, 2025, **29,441,175 common shares** underlying Convertible Notes were excluded from diluted shares as their effect would have been **anti-dilutive**[110](index=110&type=chunk) [Note 11. Commitments and Contingencies](index=22&type=section&id=Note%2011.%20Commitments%20and%20Contingencies) The company has long-term hotel management agreements and lease obligations but no material litigation - Hotel management agreements have remaining terms up to nine years (excluding renewals) and up to **27 years** (including renewals), with most terminable by the Company under certain conditions[112](index=112&type=chunk) - Combined base and incentive management fees were **$18.8 million** for the six months ended June 30, 2025, slightly down from $19.2 million in 2024[114](index=114&type=chunk) - As of June 30, 2025, restricted cash totaled **$11.0 million**, held for cash management, furniture/fixture reserves, and real estate taxes/ground rent/property insurance[116](index=116&type=chunk) Ground Rent Expense (in thousands) | Ground Rent Type | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------- | :----------------------------- | :----------------------------- | | Fixed ground rent | $9,635 | $9,592 | | Variable ground rent | $9,314 | $9,063 | | Total ground rent | $18,949 | $18,655 | - The Company is **not presently subject to any material litigation**[121](index=121&type=chunk) [Note 12. Supplemental Information to Statements of Cash Flows](index=24&type=section&id=Note%2012.%20Supplemental%20Information%20to%20Statements%20of%20Cash%20Flows) This note details supplemental cash flow data, including interest paid, taxes paid, and non-cash activities Supplemental Cash Flow Information (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Interest paid, net of capitalized interest | $51,068 | $53,709 | | Income taxes paid (refunded) | $779 | $370 | | Distributions payable on common shares/units | $1,255 | $1,256 | | Distributions payable on preferred shares/units | $10,601 | $10,601 | | Accrued additions and improvements to hotel properties | $455 | $6,126 | | Write-down of investment | $2,662 | $0 | [Note 13. Operating Segment Information](index=25&type=section&id=Note%2013.%20Operating%20Segment%20Information) Hotel revenues increased, but higher operating expenses led to a decrease in Hotel EBITDA year-over-year Reconciliation of Net Income (Loss) to Hotel EBITDA (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Hotel revenues | $407,328 | $395,746 | $727,216 | $708,097 | | Hotel operating expenses (total) | $253,786 | $247,657 | $481,000 | $463,713 | | Hotel real estate taxes, personal property taxes, property insurance and ground rent | $34,063 | $24,319 | $67,110 | $56,385 | | Hotel EBITDA | $120,979 | $125,467 | $181,806 | $191,571 | | Net income (loss) | $19,285 | $32,239 | $(12,895) | $4,719 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses financial results, highlighting strong performance in certain markets and analyzing key metrics [FORWARD-LOOKING STATEMENTS](index=26&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section outlines future plans and expectations while cautioning about inherent risks and uncertainties - Forward-looking statements cover business strategy, industry trends, estimated revenues/expenses, renovation costs, debt refinancings, insurance recoveries, deferred tax assets, and liquidity[126](index=126&type=chunk) - Key risks include hotel industry competition, changes in travel policies, increased operating costs, decreased demand from external events (e.g., terrorism, natural disasters, pandemics), global economic conditions, financing availability, dependence on third-party managers, and potential failure to qualify as a REIT[128](index=128&type=chunk) [Overview](index=27&type=section&id=Overview) Second-quarter results surpassed expectations, driven by a rebound in San Francisco and redeveloped properties - Second-quarter operating results **exceeded outlook**, primarily due to a strong rebound in San Francisco and momentum from redeveloped properties[129](index=129&type=chunk) - Newport Harbor Island Resort delivered results **well above expectations** in its first full year post-redevelopment[129](index=129&type=chunk) - Los Angeles properties faced challenges from early 2025 wildfires and the ramp-up of Hyatt Centric Delfina Santa Monica after renovation[129](index=129&type=chunk) - During the six months ended June 30, 2025, the Company repurchased **1,298,396 common shares for $14.3 million**, at an average of $11.04 per share[130](index=130&type=chunk) [Key Indicators of Financial Condition and Operating Performance](index=27&type=section&id=Key%20Indicators%20of%20Financial%20Condition%20and%20Operating%20Performance) The company uses metrics like RevPAR, FFO, and EBITDA to measure performance, with occupancy up and ADR down in Q2 - Key performance indicators include RevPAR, Total RevPAR, ADR, Occupancy, FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDAre, and Hotel EBITDA[131](index=131&type=chunk) Same-Property Key Performance Indicators | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Same-Property Occupancy | 78.2 % | 76.3 % | 70.1 % | 68.7 % | | Same-Property ADR | $302.50 | $308.09 | $302.05 | $306.92 | | Same-Property RevPAR | $236.56 | $235.09 | $211.71 | $210.84 | | Same-Property Total RevPAR | $370.93 | $366.10 | $336.27 | $330.58 | [Non-GAAP Financial Measures](index=27&type=section&id=Non-GAAP%20Financial%20Measures) The company uses non-GAAP measures like FFO and EBITDA to provide insight into operating performance - Non-GAAP measures like **FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDAre, and Hotel EBITDA** are used to evaluate operating performance[133](index=133&type=chunk) - FFO is calculated in accordance with Nareit standards, excluding real estate related depreciation, gains/losses from sales, and impairments[134](index=134&type=chunk) - Adjusted FFO includes adjustments for transaction costs, non-cash ground rent, share-based compensation, and other items[135](index=135&type=chunk) Reconciliation of Net Income (Loss) to Non-GAAP Measures (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $19,285 | $32,239 | $(12,895) | $4,719 | | FFO | $76,869 | $89,454 | $102,176 | $119,060 | | FFO available to common share and unit holders | $65,073 | $77,658 | $78,585 | $95,469 | | Adjusted FFO available to common share and unit holders | $77,442 | $83,760 | $96,183 | $108,762 | | EBITDA and EBITDAre | $112,024 | $118,484 | $161,358 | $174,640 | | Adjusted EBITDAre | $116,959 | $123,471 | $173,548 | $184,276 | | Hotel EBITDA | $120,979 | $125,467 | $181,806 | $191,571 | [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Total revenues increased, but higher operating and tax expenses led to a decrease in net income [Comparison of the three months ended June 30, 2025 to the three months ended June 30, 2024](index=29&type=section&id=Comparison%20of%20the%20three%20months%20ended%20June%2030%2C%202025%20to%20the%20three%20months%20ended%20June%2030%2C%202024) Total revenues increased by $10.4 million, but net income fell due to higher operating and tax expenses - Total revenues increased by **$10.4 million**, driven by Newport Harbor Island Resort and demand in San Francisco, offset by Hyatt Centric Delfina Santa Monica[139](index=139&type=chunk) - Total hotel operating expenses increased by **$6.1 million** due to increased operations and higher wage rates/benefits[140](index=140&type=chunk) - Real estate taxes, personal property taxes, property insurance, and ground rent increased by **$9.0 million** due to higher tax assessments[141](index=141&type=chunk) - Income tax (expense) benefit increased by **$6.8 million** due to taxable income of Pebblebrook Hotel Lessee, Inc[143](index=143&type=chunk) [Comparison of the six months ended June 30, 2025 to the six months ended June 30, 2024](index=30&type=section&id=Comparison%20of%20the%20six%20months%20ended%20June%2030%2C%202025%20to%20the%20six%20months%20ended%20June%2030%2C%202024) Revenues rose by $16.6 million, but higher operating, tax, and G&A expenses drove a net loss - Total revenues increased by **$16.6 million**, driven by Newport Harbor Island Resort, LaPlaya Beach Resort & Club, Estancia La Jolla Hotel & Spa, 1 Hotel San Francisco, and The Westin Copley Place, Boston[145](index=145&type=chunk) - Total hotel operating expenses increased by **$17.3 million** due to increased operations and higher wage rates/benefits[146](index=146&type=chunk) - Real estate taxes, personal property taxes, property insurance, and ground rent increased by **$9.8 million** due to higher tax assessments[147](index=147&type=chunk) - General and administrative expenses increased by **$1.6 million**, primarily due to legal costs[148](index=148&type=chunk) - Income tax (expense) benefit increased by **$3.6 million** due to increased taxable income of Pebblebrook Hotel Lessee, Inc[149](index=149&type=chunk) [Critical Accounting Policies](index=30&type=section&id=Critical%20Accounting%20Policies) Financial statements are prepared under U.S. GAAP, requiring management estimates that may differ from actual results - Financial statements rely on management estimates and assumptions, which **may differ from actual results**[151](index=151&type=chunk) - Significant accounting policies are disclosed in the **Annual Report on Form 10-K** for December 31, 2024[151](index=151&type=chunk) [New Accounting Pronouncements](index=30&type=section&id=New%20Accounting%20Pronouncements) Details on new accounting pronouncements are available in Note 2 of the financial statements - Details on new accounting pronouncements are provided in **Note 2. Summary of Significant Accounting Policies**[152](index=152&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains sufficient liquidity to cover short-term needs, with total debt at $2.26 billion - Primary liquidity sources: cash from operations, credit facilities, equity/debt offerings, and property sales[153](index=153&type=chunk) - Short-term cash requirements: property lease obligations, debt interest/principal, capital improvements, common/preferred dividends, and working capital[153](index=153&type=chunk) - As of June 30, 2025, total liquidity (cash, restricted cash, and credit facility capacity) was **$909.2 million**, sufficient for short-term needs[153](index=153&type=chunk) - To maintain REIT qualification, the Company must distribute at least **90% of taxable income**, necessitating external capital for long-term funding[154](index=154&type=chunk) Total Debt (in thousands) | Debt Type | June 30, 2025 (Face Value) | | :-------------------------- | :------------------------- | | Unsecured revolving credit facilities | $0 | | Unsecured term loans | $916,652 | | Convertible senior notes | $750,000 | | Unsecured senior notes | $402,400 | | Mortgage loans | $194,315 | | Total debt at face value | $2,263,367 | - Expected future principal and interest payments on debt total **$2.6 billion** through maturity, with **$19.2 million principal** and **$99.3 million interest** due by June 30, 2026[157](index=157&type=chunk) - The Company is in **compliance with all debt covenants**[158](index=158&type=chunk) - **None of the mortgage loans were in a cash trap** as of June 30, 2025[159](index=159&type=chunk) - Future fixed minimum payments for long-term operating and finance leases total **$1.8 billion**, with **$23.5 million** payable by June 30, 2026[161](index=161&type=chunk) - Outstanding purchase commitments for capital and renovation projects totaled **$1.3 million** as of June 30, 2025, all due by June 30, 2026[162](index=162&type=chunk) - Expected annual dividends and distributions on preferred shares and Series Z preferred units are approximately **$47.2 million**[163](index=163&type=chunk) - Net cash provided by operating activities was **$140.9 million** for the six months ended June 30, 2025 (vs. $129.7 million in 2024)[165](index=165&type=chunk) - Net cash used in investing activities was **$47.5 million** for the six months ended June 30, 2025 (vs. $61.7 million in 2024)[166](index=166&type=chunk) - Net cash used in financing activities was **$43.8 million** for the six months ended June 30, 2025 (vs. $150.4 million in 2024)[167](index=167&type=chunk) [Capital Investments](index=32&type=section&id=Capital%20Investments) The company invested $49.5 million in capital improvements in H1 2025 and plans to invest $65-75 million for the full year - For the six months ended June 30, 2025, **$49.5 million** was invested in capital improvements, including renovations at several properties[170](index=170&type=chunk) - Excluding the repair and remediation of LaPlaya Beach Resort & Club, capital investments for the six months ended June 30, 2025, were **$41.1 million**[170](index=170&type=chunk) - The Company expects to invest **$65.0 million to $75.0 million** in capital investments in 2025, excluding LaPlaya's repair and remediation[171](index=171&type=chunk) [Common Share Repurchase Programs and Preferred Share Repurchase Program](index=32&type=section&id=Common%20Share%20Repurchase%20Programs%20and%20Preferred%20Share%20Repurchase%20Program) The company repurchased $14.3 million of common shares in H1 2025, with significant capacity remaining in both common and preferred programs - During the six months ended June 30, 2025, **1,298,396 common shares were repurchased for $14.3 million** (average $11.04 per share)[173](index=173&type=chunk) - As of June 30, 2025, **$116.6 million remained available** under the $150.0 million common share repurchase program[173](index=173&type=chunk) - **No preferred shares were repurchased** during the six months ended June 30, 2025[177](index=177&type=chunk) - As of June 30, 2025, **$84.2 million remained available** under the $100.0 million preferred share repurchase program[177](index=177&type=chunk) [Inflation](index=33&type=section&id=Inflation) The company's hotel operators can adjust room rates to mitigate inflation, though competitive pressures may limit increases - Hotel operators can adjust room rates daily to keep pace with inflation, but **competitive pressures may limit rate increases**[179](index=179&type=chunk) [Seasonality](index=33&type=section&id=Seasonality) The lodging industry is seasonal, with company performance typically lowest in Q1 and highest in Q3 - Hotel operations are seasonal, with **lower performance in Q1 and higher in Q3**, influenced by economic cycles, geography, weather, and customer mix[180](index=180&type=chunk) [Derivative Instruments](index=33&type=section&id=Derivative%20Instruments) The company uses interest rate swaps with a notional value of $955.0 million to hedge against interest rate risk - The Company uses **interest rate swap agreements** to hedge interest rate risk on variable rate debt[181](index=181&type=chunk) - As of June 30, 2025, interest rate swap agreements had an aggregate notional amount of **$955.0 million**[182](index=182&type=chunk) - Derivative instruments are subject to fair value reporting and expose the Company to counterparty credit risk, which is mitigated by transacting with **major creditworthy financial institutions**[181](index=181&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk.](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) The company is exposed to interest rate risk, with 4.5% of its debt subject to unhedged variable rates - The Company is exposed to market risk from interest rate changes and uses derivative instruments to manage this risk[183](index=183&type=chunk) - As of June 30, 2025, **$101.7 million (4.5%)** of aggregate indebtedness was subject to variable interest rates, excluding effectively swapped amounts[183](index=183&type=chunk) - A **0.1% change in interest rates** on unhedged variable rate debt would impact annual interest expense by approximately **$0.1 million**[183](index=183&type=chunk) [Item 4. Controls and Procedures.](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures.) Disclosure controls and procedures were deemed effective, with no material changes to internal controls - Disclosure controls and procedures were evaluated and **deemed effective** as of June 30, 2025[184](index=184&type=chunk) - **No material changes** to internal control over financial reporting occurred during the most recent fiscal quarter[185](index=185&type=chunk) [PART II. OTHER INFORMATION](index=35&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings.](index=35&type=section&id=Item%201.%20Legal%20Proceedings.) The company is not currently subject to any material litigation - The Company is **not currently subject to any material litigation**, nor is any material litigation threatened[187](index=187&type=chunk) - Routine claims and administrative proceedings are expected to be covered by liability insurance and are **not anticipated to have a material adverse effect**[187](index=187&type=chunk) [Item 1A. Risk Factors.](index=35&type=section&id=Item%201A.%20Risk%20Factors.) There have been no material changes to the risk factors disclosed in the 2024 Annual Report - **No material changes** to risk factors from the Annual Report on Form 10-K for December 31, 2024[188](index=188&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) The company repurchased common shares in April 2025, with significant capacity remaining in its repurchase programs Common Share Repurchases | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value of Shares that May Yet Be Purchased (in millions) | | :----------------------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------------- | | April 1, 2025 - April 30, 2025 | 111,599 | $8.96 | $116.6 | | May 1, 2025 - May 31, 2025 | — | $— | $116.6 | | June 1, 2025 - June 30, 2025 | — | $— | $116.6 | | Total (Common Shares) | 111,599 | $8.96 | $116.6 | Preferred Share Repurchases | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value of Shares that May Yet Be Purchased (in millions) | | :----------------------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------------- | | April 1, 2025 - April 30, 2025 | — | $— | $84.2 | | May 1, 2025 - May 31, 2025 | — | $— | $84.2 | | June 1, 2025 - June 30, 2025 | — | $— | $84.2 | | Total (Preferred Shares) | — | $— | $84.2 | [Item 3. Defaults Upon Senior Securities.](index=35&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) No defaults upon senior securities occurred during the period - **No defaults** upon senior securities occurred[191](index=191&type=chunk) [Item 4. Mine Safety Disclosures.](index=35&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to the company - Mine Safety Disclosures are **not applicable** to the Company[192](index=192&type=chunk) [Item 5. Other Information.](index=36&type=section&id=Item%205.%20Other%20Information.) No officers or trustees adopted or terminated Rule 10b5-1 trading arrangements during the quarter - **No officers or trustees** adopted or terminated any Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[194](index=194&type=chunk) [Item 6. Exhibits.](index=37&type=section&id=Item%206.%20Exhibits.) This section lists all exhibits filed with the Form 10-Q, including organizational documents and certifications - Exhibits include organizational documents (Declaration of Trust, Bylaws, Partnership Agreements), debt indentures (Indenture, Supplemental Indenture), equity incentive plan amendments, and certifications (CEO, CFO)[195](index=195&type=chunk) - Financial statements and cover page are submitted electronically in **XBRL format**[195](index=195&type=chunk)

Core Viewpoint - Analysts project that Pebblebrook Hotel (PEB) will report quarterly earnings of $0.58 per share, reflecting a year-over-year decline of 15.9%, while revenues are expected to reach $404.62 million, an increase of 1.9% from the same quarter last year [1]. Earnings Estimates - The consensus EPS estimate has been revised 1.2% lower over the last 30 days, indicating a collective reevaluation by analysts [2]. - Revisions to earnings projections are crucial for predicting investor behavior and have a strong correlation with short-term stock price performance [3]. Revenue Projections - Analysts estimate 'Revenues- Food and beverage' will reach $105.82 million, a change of +4.2% from the previous year [5]. - 'Revenues- Other operating' is projected at $43.40 million, indicating a +3.8% change year-over-year [5]. - The estimated 'Revenues- Room' is $255.41 million, reflecting a +0.6% change from the prior-year quarter [5]. Key Metrics - The consensus estimate for 'Total Guest Rooms' is 11,925, down from 12,000 reported in the same quarter last year [6]. - 'Depreciation and amortization' is projected to reach $54.84 million [6]. Market Performance - Shares of Pebblebrook Hotel have returned +5.8% over the past month, outperforming the Zacks S&P 500 composite's +4.9% change [6]. - Pebblebrook Hotel holds a Zacks Rank 3 (Hold), suggesting it is expected to mirror overall market performance in the near future [6].

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Financial Data and Key Metrics Changes - The company reported a strong first quarter performance, exceeding expectations despite economic uncertainty, driven by improved hotel operating efficiencies and cost reductions [4][5] - Same property hotel EBITDA totaled $62.3 million, surpassing the midpoint of the outlook by $4.3 million, while adjusted EBITDA was $56.6 million, exceeding the midpoint by $4.1 million [5][6] - Adjusted FFO was $0.16 per share, $0.05 above the midpoint, reflecting strong operational execution [6] Business Line Data and Key Metrics Changes - Same property total RevPAR rose 2.1% year over year, with resorts seeing an 8.2% increase, while urban total RevPAR declined 2.2% due to disruptions from the LA fires and renovations [6][7] - Excluding Los Angeles, same property total RevPAR increased by 6%, and same property non-room revenues climbed 6.6% [7][12] - Group room nights rose 5.4% year over year, contributing 28.2% of room revenue, indicating resilience in business group demand [12] Market Data and Key Metrics Changes - Washington DC posted a 14.7% RevPAR increase, benefiting from inauguration-related activities, while San Francisco saw a 13% increase due to strong business and leisure travel [8][9] - Portland and Chicago also showed solid results with RevPAR growth of 7.5% and 7.1%, respectively [9] - The company experienced a softening in demand in March, particularly from government-related segments and international inbound travel, leading to a decline in overall RevPAR [8][17] Company Strategy and Development Direction - The company is focused on operational efficiencies and cost control, which contributed to the strong performance in Q1 [13][27] - The capital plan for the year remains unchanged, with expected investments between $65 million and $75 million, while the balance sheet remains strong with $218 million in cash [15] - The company is cautious about the second half of the year due to economic uncertainty and reduced government travel, adjusting its outlook accordingly [31][33] Management's Comments on Operating Environment and Future Outlook - Management noted that the economic environment is uncertain, with expectations of a slowdown impacting demand, particularly in the second half of the year [32][33] - There are concerns about the impact of tariffs on costs, particularly for new construction and renovation projects, but the company has not yet seen significant material impacts [46][97] - The company remains optimistic about its ability to adapt and generate free cash flow, maintaining flexibility in its operations [35][57] Other Important Information - The company recorded $4.3 million in business interruption income for the quarter, raising its total forecast for the year to $8.5 million [14] - The company is actively monitoring demand trends and has not yet seen significant cancellations outside of government-related groups [22][23] Q&A Session Summary Question: Impact of second half outlook on bookings - Management indicated that the second half outlook is influenced by potential demand pullback due to economic slowdown and reduced government travel [39][40] Question: Trends in corporate travel spending - So far, corporate travel has not shown a downturn, but there are indications that companies may reduce discretionary travel as uncertainty persists [41][42] Question: Expected cost impacts from tariffs - Management expects some impact on new construction and renovation costs due to tariffs, particularly for items sourced outside the U.S. [46][47] Question: Washington D.C. market performance - The D.C. market is experiencing positive demand due to increased congressional activity and a healthy convention calendar, despite some negative impacts from government travel freezes [64][66] Question: Summer performance expectations - Management is optimistic about summer performance, particularly for stabilized resorts, but acknowledges potential challenges due to economic conditions [108]

Financial Data and Key Metrics Changes - The company reported a same property hotel EBITDA of $62.3 million for Q1 2025, exceeding the midpoint of the outlook by $4.3 million [4] - Adjusted EBITDA was $56.6 million, which was $4.1 million above the outlook midpoint, and adjusted FFO was $0.16 per share, $0.05 above the midpoint [5] - Same property total revenues increased by 1% for the quarter, driven by a 7.1% increase at resorts [10] - Same property hotel expenses rose only 3.7% year over year, significantly below the low end of the expense growth outlook [12] Business Line Data and Key Metrics Changes - Same property total RevPAR rose 2.1% year over year, with an 8.2% increase at resorts, while urban total RevPAR declined by 2.2% [5] - Excluding Los Angeles, same property total RevPAR increased by 6%, and same property RevPAR grew by 4.9% [5] - Group room nights rose 5.4% year over year, contributing 28.2% of room revenue, a 190 basis point increase over last year [11] Market Data and Key Metrics Changes - Washington DC posted a 14.7% RevPAR increase, while San Francisco saw a 13% increase due to strong business group and transient travel [6] - Portland achieved a 7.5% RevPAR increase, and Chicago reported a 7.1% growth [8] - The company experienced a decline in RevPAR in March, primarily due to LA fires and a pullback in government-related travel [9] Company Strategy and Development Direction - The company is focused on operational efficiencies and cost control, which contributed to the strong Q1 performance [26] - There is a cautious outlook for the second half of the year due to economic uncertainty and reduced government and international inbound demand [32] - The company plans to continue investing in capital projects, with a full-year capital plan of $65 million to $75 million [14] Management's Comments on Operating Environment and Future Outlook - Management noted that the first quarter performance exceeded expectations despite economic uncertainty [3] - There are concerns about a potential economic slowdown impacting demand, particularly in the second half of the year [32] - Preliminary numbers for April indicate a 3.5% gain in RevPAR, with a stronger performance expected in markets like San Francisco and Chicago [25] Other Important Information - The company has $218 million in cash and over $640 million of available capacity on its unsecured revolver, providing significant liquidity [14] - The company is experiencing a negative EBITDA impact from LA properties due to the wildfires, but the forecast for Q2 is less severe than previously expected [19] Q&A Session Summary Question: Impact of the second half outlook on bookings - Management indicated that the second half impact is related to potential demand pullback due to economic slowdown and reduced government travel [38][40] Question: Trends in corporate travel spending - Currently, there is no downturn in business transient travel, but caution is expected if economic uncertainty continues [42] Question: Expected cost impacts from tariffs - Tariffs are expected to impact new construction and renovation projects, particularly for items sourced outside the U.S. [46][48] Question: Recovery indicators for Los Angeles - Key indicators include bookings from traditional industry groups and the return of entertainment and tech companies to normal travel policies [80][82] Question: Expectations for summer performance - There is uncertainty regarding summer performance, particularly for leisure business which is often booked short-term [108]

Portfolio Repositioning - Pebblebrook has strategically shifted its portfolio towards leisure-oriented and group-focused properties, reducing exposure to urban and corporate transient markets since 2019[15] - Resort EBITDA contribution increased from 17% to 45%, while Urban EBITDA contribution decreased from 83% to 55%[19] - East Coast properties now contribute 54% of EBITDA, up from 38%[19] - San Francisco's EBITDA contribution declined by 19%, and West Coast properties now contribute 43% of EBITDA, down from 56%[19] Financial Performance and Growth Opportunities - The company estimates a Hotel EBITDA upside of approximately $71 million, translating to $0.46 per share of Adjusted FFO (AFFO) upside[11, 23] - Urban markets recovery is expected to contribute $45+ million in Hotel EBITDA upside[23, 37] - ROI from redevelopment projects is expected to contribute $10 million in Hotel EBITDA upside[23] - LaPlaya EBITDA growth opportunity is estimated at $16 million[23, 24] Valuation and Balance Sheet - Pebblebrook's recent public market valuation reflects an approximate 65% discount to its recently calculated private market valuation of $2500 per share[11, 56] - As of March 31, 2025, the company had $2182 million in cash and $6426 million of undrawn availability on its senior unsecured revolving credit facility[69] - The company's weighted-average interest rate is 42%, and its weighted-average debt maturity is approximately 28 years[69]

Core Insights - Pebblebrook Hotel (PEB) reported revenue of $320.27 million for Q1 2025, a 2% year-over-year increase, with an EPS of $0.16 compared to -$0.32 a year ago, indicating a significant turnaround [1] - The revenue exceeded the Zacks Consensus Estimate by 0.75%, while the EPS surprise was 23.08% above the consensus estimate of $0.13 [1] Financial Performance Metrics - Same-Property RevPAR growth rate was 0%, below the average estimate of 2.2% from three analysts [4] - Food and beverage revenue reached $86.31 million, surpassing the average estimate of $83.15 million, reflecting a year-over-year increase of 6.4% [4] - Other operating revenue was $36.95 million, slightly above the estimated $36.15 million, marking a 5.9% year-over-year increase [4] - Room revenue was reported at $197.01 million, slightly below the estimated $198.58 million, showing a 0.6% decline compared to the previous year [4] - Net Earnings Per Share (Diluted) was -$0.37, slightly worse than the estimated -$0.36 [4] Stock Performance - Pebblebrook Hotel's shares have returned -13.7% over the past month, contrasting with the Zacks S&P 500 composite's -0.7% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]