PEB 10-K & 10-Q changes, risk factors and insider trading
Pebblebrook Hotel Trust (also PEB-PF, PEB-PE, PEB-PG, PEB-PH) · NYSE · Real Estate Investment Trusts · CIK 1474098 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “We are subject to counterparty risk with respect to our capped calls.”
New heading “Further issuances of equity securities or debt securities convertible into our common shares, including in connection with conversions of notes, may be dilutive to current shareholders and convertible noteholders or materially and adversely affect the price of our common shares.”
New heading “We may face challenges managing rapidly advancing artificial intelligence in our business which could adversely affect our competitive position.”
Removed heading “Further issuances of equity securities may be dilutive to current shareholders.”
Removed heading “We could face adverse tax consequences if LaSalle failed to qualify as a REIT prior to the merger.”
Largest changes
“We may face challenges managing rapidly advancing artificial intelligence in our business which could adversely affect our competitive position.”see in full comparison
“In connection with our offering in September 2025 of 1.625% Convertible Senior Notes due 2030, we have entered into capped call transactions with certain option counterparties. The option counterparties are financial institutions, and we are subject to the risk that any or all of them might default under the capped call transactions. Our exposure to the credit risk of the option counterparties is not secured by any collateral. Past global economic conditions have resulted in the actual or perceived failure or financial difficulties of many financial institutions. …”see in full comparison
“Further issuances of equity securities or debt securities convertible into our common shares, including in connection with conversions of notes, may be dilutive to current shareholders and convertible noteholders or materially and adversely affect the price of our common shares.”see in full comparison
“We could face adverse tax consequences if LaSalle failed to qualify as a REIT prior to the merger.”see in full comparison
“Further issuances of equity securities may be dilutive to current shareholders.”see in full comparison
“We are subject to counterparty risk with respect to our capped calls.”see in full comparison
Full comparison: every changed paragraph (42)
Risks Related to DebtDebt, Financing and FinancingFuture Securities Issuances
•Risks related to ourfinancial existing indebtednesscovenants
•Risks related to our capped call transactions
•Risks related to changing technologytechnology, andincluding itsartificial effects on the lodging industryintelligence, and cyber-attacks
•Risks related to terroristterrorism attacksand disruptive geopolitical activity
•Risks related to compliance with federalfederal, lawstate and local environmental laws and other legislative changes
•Risks related to potential failures to qualify as a REIT, whether by us or by LaSalle prior to the mergerREIT
Our primary business is hotel-related. Therefore, a downturn in the lodging industry, in general, and markets (especially West Coast major gateway metropolitan markets) in which we operate, in particular, would have a material adverse effect on our financial condition, results of operations, the market price of our common shares and our ability to make distributions to our shareholders.
Risks Related to DebtDebt, Financing and FinancingFuture Securities Issuances
The credit agreements that govern our existing senior unsecured revolving credit facilities and unsecured term loan facilities contain financial covenants, such as net worth requirements, fixed charge coverage, debt ratios and other limitations that restrict our ability to make distributions or other payments to our shareholders, sell all or substantially all of our assets and engage in mergers, consolidations and certain acquisitions without the consent of the lenders. Similarly, the indenture that governs our senior notes contains customary covenants that limit our Operating Partnership’sPartnership's ability and, in certain instances, the ability of its subsidiaries, to encumber assets; incur additional indebtedness; create liens securing indebtedness; make restricted payments; enter into agreements that restrict dividends or other payments; issue guarantees; sell assets; engage in transactions with affiliates; or merge, consolidate or transfer all or substantially all of its assets. In addition, our mortgage loan agreementsagreement containcontains restrictions (including cash management provisions) that may under circumstances specified in the loan agreementsagreement prohibit our subsidiaries that own our hotels from making distributions or paying dividends, repaying loans to us or other subsidiaries or transferring any of their assets to us or another subsidiary which could adversely affect our ability to make distributions to our shareholders. Failure to meet our covenants could result from, among other things, changes in our results of operations, the incurrence of additional debt or changes in general economic conditions. Such failures could cause one or more of our lenders to accelerate the timing of payments and could have a material adverse effect on our business, financial condition, results of operations and our ability to make distributions to our shareholders. The terms of our debt may restrict our ability to engage in transactions that we believe would otherwise be in the best interests of our shareholders.
Our existing mortgage loan agreementsagreement contain,contains, and mortgage loan agreements we may enter into in the future may contain, “"cash trap”" provisions that could limit our ability to make distributions to our shareholders.
Our existing mortgage loan agreementsagreement contain,contains, and mortgage loan agreements we may enter into in the future may contain, cash trap provisions that may be triggered if the performance of the hotels securing the loans declines below a threshold. If these provisions are triggered, substantially all of the profit generated by the hotel will be deposited directly into a lockbox account and then swept into a cash management account for the benefit of the lender. In that event, cash would be distributed to us only after certain items are paid, including deposits into leasing and maintenance reserves and the payment of debt service, insurance, taxes, operating expenses and extraordinary capital expenditures and leasing expenses. This could adversely affect our liquidity and our ability to make distributions to our shareholders.
Our mortgage loan is, and mortgage loans arewe may have in the future may be, secured by either single property first mortgage liens or leasehold interests under the ground leases on the applicable hotel. If we default on a secured loan, the applicable lender will be able to foreclose on the property pledged to secure the loan.
We are subject to counterparty risk with respect to our capped calls.
In connection with our offering in September 2025 of 1.625% Convertible Senior Notes due 2030, we have entered into capped call transactions with certain option counterparties. The option counterparties are financial institutions, and we are subject to the risk that any or all of them might default under the capped call transactions. Our exposure to the credit risk of the option counterparties is not secured by any collateral. Past global economic conditions have resulted in the actual or perceived failure or financial difficulties of many financial institutions. If an option counterparty becomes subject to insolvency proceedings, then we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under the capped call transaction with such option counterparty or the capped call transaction may be transferred to another financial institution. Our exposure will depend on many factors, but, generally, an increase in our exposure will be correlated to an increase in the market price and volatility of our common shares. In addition, upon a default by an option counterparty, we may suffer adverse tax consequences and more dilution than we currently anticipate with respect to our common shares. We can provide no assurance as to the financial stability or viability of the option counterparties.
Further issuances of equity securities or debt securities convertible into our common shares, including in connection with conversions of notes, may be dilutive to current shareholders and convertible noteholders or materially and adversely affect the price of our common shares.
We expect to issue additional common shares or preferred shares or issue additional debt securities convertible into our common shares to raise the capital necessary to finance hotel acquisitions or improvements, refinance debt or pay portions of future dividends. In addition, we may issue units in our Operating Partnership, which are redeemable on a one-for-one basis for our common shares, to acquire hotels. Such issuances could result in dilution of our shareholders' equity interests. Furthermore, the anticipated issuance and sale of substantial amounts of our common shares or the anticipated or actual conversion of securities into our common shares could adversely affect the market price of our common shares.
In the future, we may increase our capital resources by making debt or equity securities offerings, including senior or subordinated notes, additional series of preferred shares and common shares. We will be able to issue additional common shares or preferred shares without shareholder approval, unless shareholder approval is required by applicable law or the rules of any stock exchange or automated quotation system on which our securities may be listed or traded. Upon liquidation, holders of our debt securities and preferred shares and lenders with respect to other borrowings will receive a distribution of our available assets prior to the holders of our common shares. Additional equity offerings could significantly dilute the holdings of our existing shareholders or reduce the market price of our common shares, or both. Holders of our common shares are not entitled to preemptive rights or other protections against dilution. Preferred shares and debt have a preference on liquidating distributions or a preference on dividend or interest payments that could limit our ability to make a distribution to the holders of our common shares. Because our decision to issue securities will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, our shareholders bear the risk of our future securities issuances reducing the market price of our common shares and diluting their interest.
•unforeseen events beyond our control, such as terrorist attacks, rumors or threats of war, cyber-attacks, travel-related health concerns and restrictions as a result of pandemics and epidemics such asas, without limitation, COVID-19, H1N1 influenza (swine flu), avian bird flu, Zika virus, SARS and MERS, political instability, regional hostilities, imposition of taxes or surcharges by regulatory authorities, travel-related accidents and unusual weather patterns, including natural disasters such as hurricanes, tsunamis orand earthquakes;
•construction cost overruns and delays, including those caused by supply chain disruptions and tariffs;
We may face challenges managing rapidly advancing artificial intelligence in our business which could adversely affect our competitive position.
The development and evolution of artificial intelligence is occurring at a rapid pace. Artificial intelligence may present an opportunity to create meaningful efficiencies and improve our business performance, but it could present similar opportunities for our competitors, and the use of artificial intelligence by us or our hotel managers, franchisors or vendors may pose new and more severe cybersecurity challenges. The use of artificial intelligence by hotel guests may change the way they find and purchase lodging or other hotel services. If we or our hotel managers, franchisors or vendors are unable to apply artificial intelligence to our business successfully or our competitors gain competitive advantages over us through their application of artificial intelligence, our financial condition, results of operations, the market price of our common shares and our ability to make distributions to our shareholders may be adversely affected.
We are subject to operational risks associated with complying with increased environmental-related regulations, aligning with investor requirements concerning environmental issues and meeting shifting consumer preferences with regard to the environment. In an effort to mitigate the impact of climate change, our hotels could become subject to increased governmental regulations (whether federal, state, county or local) mandating energy efficiency standards, the usage of sustainable energy sources andsources, updated equipment specifications, additional disclosure requirements (and potentially additional monitoring systems) and limits on carbon emissions, which may require additional capital investments or increased operating costs. Climate change may also affect our business by causing a shift in consumer preferences for sustainable travel. Our hotels may be subject to additional costs to manage consumer expectations for sustainable buildings and hotel operations.
TerroristTerrorism, attacksterror alerts, rumors or changesthreats inof terrorwar alertand levelsother disruptive geopolitical activity could adversely affect travel and hotel demand.
TerroristTerrorism, attacksterror alerts, rumors or threats of war and terrorother alertsdisruptive geopolitical activity have adversely affected the U.S. travel and hospitality industries in the pastlast several,several years, often disproportionately to their effect on the overall economy. The impact that terrorist attacksincreases in thesuch U.S. or elsewhereevents could have on domestic and international travel and our business in particular cannot be definitively determined,determined. butThe occurrence of any such attacks or the threat of such attacksevents could have a material adverse effect on our business, our ability to finance our business, our ability to insure our properties and our results of operations and financial condition.
The delay in approving a budget and continuing appropriation legislation to fund the federal government's operations caused many federal agencies to cease or curtail some activities during the fourth quarter of 2013 and for an even longer period of time beginning in the fourth quarter of 2018.2018 and the third quarter of 2025. There can be no assurance that similar action or inaction by federal or state government agencies, or other efforts to reduce government expenditures or growth, will not occur again in future periods, resulting in difficulties and discouraging travel or meetings and conferences. The reduction in income from both businesses and federal government employees and the possibility of another federal government impasse may adversely affect consumer confidence or may discourage both business and leisure travel, resulting in the deferral or cancellation of travel and a negative effect on our group and transient revenues in the future. Such impacts could have a material adverse impact on our consolidated financial statements.
If states and localities in which we own material amounts of property or conduct material amounts of business raise their transfer taxes, income andor property tax rates or amend their tax regimes in a manner that increases our state and local tax liabilities, we would have less cash available for distribution to our shareholders and the market price of our shares could be adversely affected.
We and our subsidiaries are subject to income tax and other taxes by states and localities in which we conduct business. Additionally, we are and will continue to be subject to property taxes in states and localities in which we own property, and our TRS lessees are and will continue to be subject to federal, state and local corporate income tax. States and localities may seek additional sources of revenue to reduce budget deficits and otherwise improve their financial condition or provide more services, they may, among other steps, increase transfer taxes, raise income and property tax rates and/or amend their tax regimes to eliminate for state income tax purposes the favorable tax treatment REITs enjoy for U.S. federal income tax purposes. We cannot predict when or if any states or localities would make any such changes, or what form those changes would take. If states and localities in which we own material amounts of property or conduct material amounts of business make changes to their tax rates or tax regimes that increase our state and local tax liabilities, such increases would reduce the amount of cash available for distribution to our shareholders and could adversely affect the market price of our shares.
Additionally, Title 8, Subtitle 3 of the MGCL permits our board of trustees, without shareholder approval and regardless of what is currently provided in our declaration of trust or bylaws, to implement certain takeover defenses, such as a classified board. These provisions may have the effect of inhibiting a third party from making an acquisition proposal for us or of delaying, deferring or preventing a change inof control of us under the circumstances that otherwise could provide our common shareholders with the opportunity to realize a premium over the then current market price. In October 2015, we opted out of the classified board provision of Title 8, Subtitle 3 of the MGCL and prohibited ourselves from opting back into that provision without prior approval of our shareholders.
Our declaration of trust provides that a trustee may be removed only for cause (as defined in our declaration of trust) and then only by the affirmative vote of at least two-thirds of the votes entitled to be cast generally in the election of trustees. Our declaration of trust also provides that vacancies on our board of trustees may be filled only by a majority of the remaining trustees in office, even if less than a quorum. These requirements prevent shareholders from removing trustees except for cause and with a substantial affirmative vote and from replacing trustees with their own nominees and may prevent a change inof control of our company that is in the best interests of our shareholders.
Further issuances of equity securities may be dilutive to current shareholders.
We expect to issue additional common shares or preferred shares to raise the capital necessary to finance hotel acquisitions or improvements, refinance debt or pay portions of future dividends. In addition, we may issue units in our Operating Partnership, which are redeemable on a one-for-one basis for our common shares, to acquire hotels. Such issuances could result in dilution of our shareholders' equity interests.
We have issued eight series of preferred shares, of which we repurchased four and four remain outstanding, three series of senior unsecured notes, of which we repaid one and two remain outstanding, and one series of convertible senior notes. In the future, we may increase our capital resources by making debt or equity securities offerings, including senior or subordinated notes, additional series of preferred shares and common shares. We will be able to issue additional common shares or preferred shares without shareholder approval, unless shareholder approval is required by applicable law or the rules of any stock exchange or automated quotation system on which our securities may be listed or traded. Upon liquidation, holders of our debt securities and preferred shares and lenders with respect to other borrowings will receive a distribution of our available assets prior to the holders of our common shares. Additional equity offerings could significantly dilute the holdings of our existing shareholders or reduce the market price of our common shares, or both. Holders of our common shares are not entitled to preemptive rights or other protections against dilution. Preferred shares and debt have a preference on liquidating distributions or a preference on dividend or interest payments that could limit our ability to make a distribution to the holders of our common shares. Because our decision to issue securities will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, our shareholders bear the risk of our future securities issuances reducing the market price of our common shares and diluting their interest.
We could face adverse tax consequences if LaSalle failed to qualify as a REIT prior to the merger.
In connection with the closing of the merger, we received an opinion of counsel to the effect that LaSalle qualified as a REIT for U.S. federal income tax purposes through the time of the merger. However, we did not request a ruling from the IRS that LaSalle qualified as a REIT. Notwithstanding the opinion of counsel, if the IRS successfully challenged LaSalle’s REIT status prior to the merger, we could face adverse tax consequences, including:
•succeeding to LaSalle’s liability for U.S. federal income taxes at regular corporate rates for the periods in which LaSalle failed to qualify as a REIT (without regard to the deduction for dividends paid for such periods);
•succeeding to any built-in gain on LaSalle’s assets, for which we could be liable for U.S. federal income tax at regular corporate rates, if we were to recognize such gain in the five-year period following the merger; and
•succeeding to LaSalle’s earnings and profits accumulated during the periods in which LaSalle failed to qualify as a REIT, which we would be required to distribute to our shareholders in order to satisfy the REIT distribution requirements and avoid the imposition of any excise tax.
As a result, we would have less cash available for operations and distributions to our shareholders, which could require us to raise capital on unfavorable terms or pay deficiency dividends.
In particular, we must ensure that at the end of each calendar quarter, at least 75 percent of the value of our assets consists of cash, cash items, government securities and qualified real estate assets. The remainder of our investment in securities (other than government securities and qualified real estate assets) generally cannot include more than 10 percent of the outstanding voting securities of any one issuer or more than 10 percent of the total value of the outstanding securities of any one issuer. In addition, in general, no more than 5 percent of the value of our assets (other than government securities and qualified real estate assets) can consist of the securities of any one issuer, no more than 25 percent (20 percent for taxable years beginning before January 1, 2026) of the value of our total assets can be represented by the securities of one or more TRSs and no more than 25 percent of our assets can be represented by debt of "publicly offered REITs" (i.e., REITs that are required to file annual and periodic reports with the SEC under the Exchange Act) that is not secured by real property or interests in real property. The Code provides that temporary investments of new capital in stock or debt instruments for the one-year period beginning on the date on which we receive the new capital will be considered qualified real estate assets for purposes of the above requirements. If we fail to comply with these requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. As a result, we may be required to liquidate otherwise attractive investments. These actions could have the effect of reducing our income and amounts available for distribution to our shareholders.
The maximum U.S. federal income tax rate applicable to qualified dividend income payable to certain non-corporate U.S. shareholders is 20 percent. Dividends payable by REITs, however, generally are not eligible for the reduced qualified dividend rates. For taxable years beginning before January 1, 2026, non-corporateNon-corporate taxpayers may deduct up to 20 percent of certain pass-through business income, including “"qualified REIT dividends”" (generally, dividends received by a REIT shareholder that are not designated as capital gain dividends or qualified dividend income), subject to certain limitations, resulting in an effective maximum U.S. federal income tax rate of 29.6 percent on such income. Although the reduced U.S. federal income tax rate applicable to qualified dividend income does not adversely affect the taxation of REITs or dividends payable by REITs, the more favorable rates applicable to regular corporate qualified dividends and the reduced corporate tax rate could cause certain non-corporate investors to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our shares.
These ownership limits could delay or prevent a transaction or a change inof control that might involve a premium price for our shares or otherwise be in the best interest of the shareholders.
Management's Discussion & Analysis (MD&A)
Largest changes
“Certain of our properties experienced demand headwinds in 2024, including our Los Angeles properties, which were affected by the entertainment industry strikes in 2023, which slowed production into 2024, and our LaPlaya Beach Resort & Club ("LaPlaya"), which was impacted by Hurricane Helene on September 26, 2024 and Hurricane Milton on October 9, 2024. The damage to LaPlaya primarily impacted the ground floor of the Beach House, pool complex, landscaping and parking garage. LaPlaya closed following Hurricane Milton to facilitate clean-up, repairs and a full assessment of damage. …”see in full comparison
Impairment — In 2025, we recognized an impairment loss of $48.9 million related to three hotels. In 2024, we recognized a loss of $10.0 million related to damage caused bysee in full comparisonHurricaneHurricanes Helene andHurricaneMilton at LaPlaya Beach Resort & Club and an impairment loss of $38.1 million related to one hotel property.In 2023 we recognized an impairment loss of $81.8 million on three hotels and one retail component of a hotel property.
“Interest expense — Interest expense decreased by $3.2 million due to pay-downs on our term loans during the first quarter of 2024, pay-downs of our senior notes during the fourth quarter of 2023 and interest being capitalized related to our Newport Harbor Island Resort redevelopment. This decrease was partially offset by an increase resulting from costs associated with the extensions of the revolver and term loans and higher interest rates on our unhedged floating rate debt.”see in full comparison
“Revenues — Total revenues increased by $22.2 million primarily due to increases at Newport Harbor Island Resort, which was closed for renovation for part of 2024; LaPlaya Beach Resort & Club, where the Beach House was closed in 2024 due to hurricane damage and reopened in 2025; recovery in demand at our San Francisco properties; and higher revenues at Estancia La Jolla Hotel & Spa and The Westin Copley Place, Boston. …”see in full comparison
“Our 2025 operating results showed continued recovery in several urban markets and resilient leisure demand throughout the portfolio. The operating environment was shaped by significant macro uncertainty, shifting policies and market-specific events that reduced visibility. San Francisco, Chicago, and Portland led the recovery, while San Diego and Washington, D.C. were challenged by weaker convention and government-related demand. Los Angeles was our most challenged market in 2025 due to the lingering impact of early-2025 wildfires and related disruptions. …”see in full comparison
“Revenues — Total revenues increased by $33.4 million primarily due to increases at LaPlaya Beach Resort & Club, which was partially closed in 2023 due to Hurricane Ian, at Margaritaville Hotel San Diego Gaslamp Quarter and Hilton San Diego Gaslamp Quarter, which were both under renovation in 2023, and at The Westin Michigan Avenue Chicago. This increase was partially offset by a $23.7 million decrease due to the sales of our non-comparable properties in 2023 and the decrease at Hyatt Centric Delfina Santa Monica as a result of disruption from the brand conversion in 2024.”see in full comparison
Full comparison: every changed paragraph (55)
Our 2025 operating results showed continued recovery in several urban markets and resilient leisure demand throughout the portfolio. The operating environment was shaped by significant macro uncertainty, shifting policies and market-specific events that reduced visibility. San Francisco, Chicago, and Portland led the recovery, while San Diego and Washington, D.C. were challenged by weaker convention and government-related demand. Los Angeles was our most challenged market in 2025 due to the lingering impact of early-2025 wildfires and related disruptions. We remained focused on driving operating efficiency and reducing our operating costs—through both traditional discipline and the expanded use of technology—so we can continue to improve profitability and cash flow.
Our 2024 operating results showed continued improvement in group and business transient demand. Leisure demand remained healthy and was boosted by customers returning to the cities for cultural, sporting and entertainment events. Our recently redeveloped properties performed well, gaining market share versus the prior year. Our properties in San Francisco, Los Angeles and Portland muted our overall performance, but strong markets such as San Diego, Boston, and Chicago helped to offset the weaker results.
Certain of our properties experienced demand headwinds in 2024, including our Los Angeles properties, which were affected by the entertainment industry strikes in 2023, which slowed production into 2024, and our LaPlaya Beach Resort & Club ("LaPlaya"), which was impacted by Hurricane Helene on September 26, 2024 and Hurricane Milton on October 9, 2024. The damage to LaPlaya primarily impacted the ground floor of the Beach House, pool complex, landscaping and parking garage. LaPlaya closed following Hurricane Milton to facilitate clean-up, repairs and a full assessment of damage. The property's Bay Tower and Gulf Tower reopened November 1, 2024 and the upper floors of the Beach House reopened in January 2025. The ground floor of the Beach House is expected to open in the second quarter of 2025. In 2024, we recorded a loss of $10.0 million related to the damage from Hurricanes Helene and Milton, and we expect our property and flood insurance proceeds to cover the physical damage and business interruption losses from the hurricanes in excess of the applicable deductibles.
During 2024,2025, we hadcompleted the following transactions and events:
•We sold the Montrose at Beverly Hills for $44.3 million and The Westin Michigan Avenue Chicago for $72.0 million.
•We issued $400.0 million of our 1.625% Convertible Senior Notes due January 2030 and used net proceeds and cash on hand to repurchase $400.0 million of the 1.75% Convertible Senior Notes due December 2026 at a discount, for $392.0 million, which resulted in a gain on debt extinguishment of $7.4 million.
•We finalized a settlement agreement with our insurance carriers for damage caused by Hurricane Ian in 2022 totaling $146.5 million and recognized business interruption insurance income of $23.8 million and a gain on insurance settlement of $24.8 million.
•We repurchased 531,038 preferred shares for an aggregate purchase price of $10.1 million, or an average of approximately $18.95 per share, under our preferred share repurchase program.
•We finalized settlement agreements for our Hurricane Helene and Hurricane Milton insurance claims.
•We repaid $100.0 million of the $140.0 million mortgage loan on Margaritaville Hollywood Beach Resort.
•We paid down $463.3 million of our term loans.
•We extended the maturity of $356.7 million of our Term Loan 2024 to January 2028 and extended $185.2 million of our Term Loan 2025 to January 2029.
•We issued $400.0 million aggregate principal amount of 6.375% senior notes due October 2029.
The above table of hotel operating statistics includes information from all hotels owned as of December 31, 2024,2025, except for LaPlaya Beach Resort & Club which was excluded for boththe yearsfourth quarter due to disruptionits fromclosure in 2024 following Hurricane IanMilton and Newport Harbor Island Resort which was excluded for the first,first and second and fourth quarters only due to its redevelopment. The above table of hotel operating statistics also includes Montrose at Beverly Hills and The Westin Michigan Avenue Chicago for the first, second and third quarters and excluded in the fourth quarter due to their sale in the fourth quarter of 2025.
At December 31, 20242025 and 2023,2024, our consolidated financial statements included the operations of 44 and 46 hotel properties, respectively, which have been included in our results of operations during the respective periods since their dates of acquisition or through their dates of disposition. Based on when a property was acquired or disposed, operating results for certain properties are not comparable for the years ended December 31, 20242025 and 2023.2024. The properties listed in the table below are hereinafter referred to as "non-comparable properties" for the periods indicated and all other properties are referred to as "comparable properties":
Revenues — Total revenues increased by $22.2 million primarily due to increases at Newport Harbor Island Resort, which was closed for renovation for part of 2024; LaPlaya Beach Resort & Club, where the Beach House was closed in 2024 due to hurricane damage and reopened in 2025; recovery in demand at our San Francisco properties; and higher revenues at Estancia La Jolla Hotel & Spa and The Westin Copley Place, Boston. These increase were partially offset by lower revenue at Hyatt Centric Delfina Santa Monica, which continued to ramp up from its renovation and conversion to the Hyatt brand; and demand decreases at W Los Angeles - West Beverly Hills and Viceroy Santa Monica Hotel. Additionally, the increase was offset by a $3.1 million decrease due to the sales of our non-comparable properties in 2025.
Revenues — Total revenues increased by $33.4 million primarily due to increases at LaPlaya Beach Resort & Club, which was partially closed in 2023 due to Hurricane Ian, at Margaritaville Hotel San Diego Gaslamp Quarter and Hilton San Diego Gaslamp Quarter, which were both under renovation in 2023, and at The Westin Michigan Avenue Chicago. This increase was partially offset by a $23.7 million decrease due to the sales of our non-comparable properties in 2023 and the decrease at Hyatt Centric Delfina Santa Monica as a result of disruption from the brand conversion in 2024.
Hotel operating expenses — Total hotel operating expenses increased by $19.9$24.6 million primarily due to increased operations at Newport Harbor Island Resort, The Westin Copley Place, Boston, 1 Hotel San Francisco and LaPlaya Beach Resort & Club, Margaritaville Hotel San Diego Gaslamp Quarter, The Westin Michigan Avenue Chicago and Hilton San Diego Gaslamp Quarter, as well as an increase in staffing, wage rateswages and benefits atthroughout most of our comparable properties due to higher demand levels.portfolio. This increase was partially offset by a $18.0$2.4 million decrease due to the sales of our non-comparable properties in 2023.2025.
Depreciation and amortization — Depreciation and amortization expense decreased by $11.1$1.9 million primarily due to Newport Harbor Island Resort's useful life reduction of its furniture, fixtures and equipment in 2023 due to its scheduled renovation in November 2023, as well as the salessale of our non-comparable properties in 2023.2025.
Real estate taxes, personal property taxes, property insurance and ground rent — Real estate taxes, personal property taxes, property insurance and ground rent increased by $1.6$7.2 million primarily due to alower $3.9property million increasetaxes in property2024 insuranceon dueseveral toCalifornia higher insurance premiums. This increase was partially offset by a $2.1 million decrease in real estate taxesproperties as a result of taxthe successful settlement of appeals from previous years and loweran increase in real estate tax assessments.assessments in 2025.
General and administrative — General and administrative expense increased by $3.3$1.4 million primarily due to an increase in employeelegal compensationcosts expense.in 2025. General and administrative expenses consist of employee compensation costs, legal and professional fees, insurance and other expenses.
Impairment — In 2025, we recognized an impairment loss of $48.9 million related to three hotels. In 2024, we recognized a loss of $10.0 million related to damage caused by HurricaneHurricanes Helene and Hurricane Milton at LaPlaya Beach Resort & Club and an impairment loss of $38.1 million related to one hotel property. In 2023 we recognized an impairment loss of $81.8 million on three hotels and one retail component of a hotel property.
Gain on sale of hotel properties — We recognized a gain on sale of $30.4 million primarily due to the sales of five hotels and two retail components of our hotels in 2023.
Business interruption insurance income and gain on insurance settlement — We recognized business interruption insurance income and gain on insurance settlement in 20242025 and 2023 of $48.6 million and $33.0 million, respectively,2024 related to the settlementsettlements of property damage, business interruption and other costs sustained at LaPlaya Beach Resort & Club resulting from Hurricanes Helene and Milton in 2025 and Hurricane Ian.Ian in 2024.
OtherInterest operating expensesexpense — OtherInterest operating expensesexpense decreased by $7.7$9.1 million primarily due to a decrease$7.4 inmillion hurricanegain relatedon payrolldebt costsextinguishment andrecorded claimsas administrationa costsresult of repurchasing a portion of our convertible debt at LaPlayaa Beach Resort & Club.discount.
Interest expense — Interest expense decreased by $3.2 million due to pay-downs on our term loans during the first quarter of 2024, pay-downs of our senior notes during the fourth quarter of 2023 and interest being capitalized related to our Newport Harbor Island Resort redevelopment. This decrease was partially offset by an increase resulting from costs associated with the extensions of the revolver and term loans and higher interest rates on our unhedged floating rate debt.
Other — Other decreased by $1.4 million due to a decrease in interest income earned as a result of lower excess cash balances in 2024.
Income tax (expense) benefit — In 2024, wethe recognizedCompany had an income tax benefit dueof to$25.6 million as a $31.7result millionof reductionthe inrelease of a portion of the valuation allowance,allowance. offsetIn by2025, $6.1the millionCompany ofhad an income tax expense.expense of $6.3 million as a result of taxable income of its taxable REIT subsidiary.
Distributions to preferred shareholders — Distributions to preferred shareholders decreased by $1.1 million as result of the redemption of one million of our 5.70% Series H Cumulative Redeemable Preferred Shares in November 2023.
Issuance costs of redeemedrepurchased preferred shares — Issuance costs of redeemedrepurchased preferred shares decreasedincreased due to the redemptionrepurchase of one531,038 millionpreferred ofshares under our 5.70%preferred Seriesshare Hrepurchase Cumulative Redeemable Preferred Shares in November 2023.program. These costs are included in the determination of net income (loss) attributable to common shareholders.
Adjusted FFO is defined as FFO, as adjusted for transaction costs, non-cash ground rent on operating and capitalfinance leases,lease liabilities, management/franchise contract transition costs, interest expense adjustment for acquired liabilities, finance lease adjustment, non-cash amortization of acquired intangibles, gain on insurance settlement, early extinguishment of debt, amortization of share-based compensation expense, issuance costs of redeemed preferred shares, hurricane-related costs, non-cash interest expenseexpense, unrealized loss on investment and deferred tax asset provision (benefit). We believe Adjusted FFO provides useful supplemental information regarding our ongoing operating performance.
EBITDA is defined as earnings before interest, income taxes, depreciation and amortization. We calculate EBITDAre in accordance with standards established by Nareit. EBITDAre is defined as EBITDA as adjusted for gain on sale of hotel properties and impairment loss. Adjusted EBITDAre is defined as EBITDAre, as adjusted for transaction costs, non-cash ground rent on operating and capitalfinance leases,lease liabilities, management/franchise contract transition costs, non-cash amortization of acquired intangibles, gain on insurance settlement, amortization of share-based compensation expense, unrealized loss on investment and hurricane-related costs. Hotel EBITDA is defined as Adjusted EBITDAre plus corporate general and administrative expenses less interest income, business interruption insurance income, and other. We believe that EBITDA, EBITDAre, Adjusted EBITDAre and Hotel EBITDA provide investors useful financial measures to evaluate our operating performance, excluding the impact of our capital structure (primarily interest expense) and our asset base (primarily depreciation and amortization).
We review our investments in hotel properties for impairment whenever events or changes in circumstances indicate that the carrying value of the hotel properties may not be recoverable. Events or circumstances that may cause a review include, but are not limited to, when a hotel property experiences a current or projected loss from operations, when it becomes more likely than not that a hotel property will be sold before the end of its useful life, adverse changes in the demand for lodging at the properties due to declining national or local economic conditions and/or new hotel construction in markets where the hotels are located. When such conditions exist, we perform an analysis to determine if the estimated undiscounted future cash flows from operations and the proceeds from the ultimate disposition of a hotel exceed its carrying value. If the estimated undiscounted future cash flows are less than the carrying amount of the asset, an adjustment to reduce the carrying amount to the related hotel's estimated fair market value is recorded and an impairment loss recognized. In the evaluation of impairment of our hotel properties, we make many assumptions and estimates including projected cash flows both from operations and eventual disposition, expected useful life and holding period, future required capital expenditures,expenditures and fair values, including consideration of capitalization rates, discount rates,rates and comparable selling prices. We will adjust our assumptions with respect to the remaining useful life of the hotel property when circumstances change, such as an expiring ground lease or it is more likely than not that the hotel property will be sold prior to its previously expected useful life.
In order to maintain our qualification as a REIT, we must pay dividends to our shareholders of at least 90%90 percent of our taxable income. As a result of this requirement, we cannot rely on retained earnings to fund long-term liquidity requirements such as hotel property acquisitions, redevelopments and repayments of long-term debt. As such, we expect to continue to raise capital through equity and debt offerings to fund our growth.
Our outstanding debt consisted of floating- and fixed-rate unsecured term loans, convertible senior notes, unsecured senior unsecured notes and mortgage loans with varying maturities. Our total debt had an aggregate face value of $2.3$2.1 billion as of December 31, 2024,2025, as summarized below:
As of December 31, 2024,2025, we had $9.1$2.2 million of outstanding purchase commitments, all of which will be paid on or before December 31, 2025.2026. These purchase commitments represent outstanding purchase orders and contracts that have been executed for capital and renovation projects at our properties. See Capital Investments (below) for discussion on planned capital investments.
Operating Activities. Our net cash provided by operating activities was $275.0 million for the year ended December 31, 2024 and $236.2 million for the year ended December 31, 2023. Fluctuations in our net cash provided by operating activities are primarily the result of changes in hotel revenues, operating cash requirements and corporate expenses. The increase in cash provided by operating activities in 2024 is primarily due to an increase in operations at our hotel properties that had been under renovation in 2023.
InvestingOperating Activities. Our net cash provided by (used in) investingoperating activities was $(92.8)$249.7 million for the year ended December 31, 20242025 and $142.0$275.0 million for the year ended December 31, 2023.2024. Fluctuations in our net cash provided by (used in) investingoperating activities are primarily the result of acquisitionchanges in hotel revenues, operating cash requirements and dispositioncorporate activities, as well as capital improvements and additions to our properties.expenses.
Investing Activities. Our net cash provided by (used in) investing activities was $10.3 million for the year ended December 31, 2025 and $(92.8) million for the year ended December 31, 2024. Fluctuations in our net cash provided by (used in) investing activities are primarily the result of disposition activities, as well as capital improvements and additions to our properties.
•During the year ended December 31, 2025, we invested $97.4 million in improvements to our hotel properties, received $102.6 million from the sales of two hotel properties and received $5.6 million in property insurance proceeds.
•During the year ended December 31, 2023, we invested $200.6 million in improvements to our hotel properties, received $314.9 million from the sale of five hotel properties and two retail components of our hotel properties and received $30.2 million in property insurance proceeds.
•During the year ended December 31, 2025, we borrowed $400.0 million and repaid $511.2 million in other debt, repurchased $72.6 million of common shares through our common share repurchase program and for tax withholding purposes in connection with vestings of share-based equity awards, repurchased $6.1 million of preferred shares through our preferred share repurchase program, paid $51.9 million in preferred and common distributions, purchased $27.2 million in capped call transactions and paid $11.0 million in financing costs.
•During the year ended December 31, 2023, we borrowed and repaid $10.0 million of revolving credit facility borrowings, borrowed $140.0 million and repaid $211.1 million in other debt, repurchased $92.8 million of common shares through our common share repurchase program and for tax withholding purposes in connection with vestings of share-based equity awards, repurchased $15.8 million of preferred shares through our preferred share repurchase program and paid $53.6 million in common and preferred distributions.
For the year ended December 31, 2024,2025, we invested $128.8$97.4 million in capital investments (or $104.0$76.6 million excluding the repair and remediation of LaPlaya Beach Resort & Club) to reposition and/or improve our properties, including the capital maintenance projects and renovations of Newport Harbor Island Resort, Skamania Lodge, Estancia La Jolla Hotel & Spa, Southernmost Beach Resort and Hyatt Centric Delfina Santa Monica.Monica, Skamania Lodge, Chaminade Resort & Spa, The Westin Copley Place, Boston, Paradise Point Resort & Spa and Margaritaville Hollywood Beach Resort.
Depending on market conditions, and in some instances subject to approval from governmental authorities, we expect to invest an additional $65.0 million to $75.0 million in capital investments in 2025,2026, which includes normal hotel capital refurbishments and repositioning projects and excludes capital expenditures related to the repair and remediation of LaPlaya Beach Resort & Club.projects. The following significant capital projects are expected to be completed in 20252026:
•$16.0 million conversion of Hyatt Centric Delfina Santa Monica, which commenced in the fourth quarter of 2024 and is expected to be completed in the first quarter of 2025; and
•The refurbishment of Paradise Point Resort & Spa's convention center space,space; and guestroom refurbishments at Chaminade Resort & Spa and Argonaut Hotel.
•Guest room refurbishments at Chaminade Resort & Spa.
On July 27, 2017, our board of trustees authorized a share repurchase program of up to $100.0 million of common shares. Under this program, we could repurchase common shares from time to time in transactions on the open market or by private agreement. As of June 30, 2023, no common shares remained available for repurchase under this program.
On February 17, 2023, our board of trustees authorized a share repurchase program of up to $150.0 million of common shares.shares (the "February 2023 Common Share Repurchase Program"). Under this program, we maycould repurchase common shares from time to time in transactions on the open market or by private agreement. We maycould suspendhave suspended or discontinuediscontinued this program at any time. Repurchased common shares cease to be outstanding and become authorized but unissued common shares.
On October 21, 2025, our board of trustees terminated the February 2023 Common Share Repurchase Program and authorized a new share repurchase program of up to $150.0 million of common shares (the "October 2025 Common Share Repurchase Program"). Under this program, we may repurchase common shares from time to time in transactions on the open market or by private agreement. We may suspend or discontinue this program at any time. Common shares repurchased by us cease to be outstanding and become authorized but unissued common shares.
During the year ended December 31, 2024,2025, we repurchased 1,127,2556,277,068 common shares for an aggregate purchase price of $15.0$71.4 million, or an average of approximately $13.31$11.37 per share.share, under the February 2023 Common Share Repurchase Program. As of December 31, 2024,2025, $131.0no common shares were available for repurchase under the February 2023 Common Share Repurchase Program, as the program had been terminated. As of December 31, 2025, $150.0 million of common shares remained available for repurchase under thisthe program.October 2025 Common Share Repurchase Program.
The timing, manner, price and amount of any repurchases will be determined by us in our discretion and will depend on a variety of factors, including legal requirements, price, liquidity and economic considerationsconsiderations, and market conditions. The program does not require us to repurchase any specific number of common shares. The program does not have an expiration date and may be suspended, modified or discontinued at any time.
During the year ended December 31, 2024,2025, nowe repurchased 531,038 preferred shares werefor repurchasedan underaggregate thispurchase program.price of $10.1 million, or an average of approximately $18.95 per share. As of December 31, 2024,2025, $84.2$74.1 million of preferred shares remained available for repurchase under this program.
As of December 31, 2024,2025, we have interest rate swap agreements with an aggregate notional amount of $855.0$665.0 million to hedge variable interest rates on our unsecured term loans and a mortgage loan. We have designated these pay-fixed, receive-floating interest rate swap derivatives as cash flow hedges. For a further discussion of our derivative instruments see Note 5. Debt,Debt to our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K.
What changed in the latest 10-Q
Risk Factors
There have been no material changes from the risk factors disclosed in the "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2025.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Comparison of the six months ended June 30, 2026 to the six months ended June 30, 2025”
Largest changes
“Comparison of the six months ended June 30, 2026 to the six months ended June 30, 2025”see in full comparison
“Impairment — We recognized an impairment loss of $8.8 million in 2026 related to one hotel. No impairment loss was recognized in 2025.”see in full comparison
“Second quarter operating results built on the strength we saw in the first quarter. Both business and leisure demand continued to grow. Our resort properties led the portfolio growth, particularly LaPlaya Beach Resort & Club, Estancia La Jolla Hotel & Spa, Paradise Point Resort & Spa, and Newport Harbor Island Resort. San Francisco's recovery continued to gain momentum, with a significant increase in RevPAR as corporate and leisure demand broadened alongside an active citywide convention calendar. Chicago, Los Angeles, and Boston also benefited from healthy ADR increases. …”see in full comparison
“Revenues — Total revenues increased by $25.0 million primarily due to an increase in revenues at our Los Angeles properties, which were negatively impacted in 2025 by the wildfires, and an increase in revenues at our San Francisco properties due to the continued recovery of business travel as well as the Super Bowl. In addition, many of the resort properties had increases in revenues, primarily Paradise Point Resort & Spa, Estancia La Jolla Hotel & Spa and LaPlaya Beach Resort & Club. …”see in full comparison
“On July 24, 2026, our Board of Trustees authorized a new share repurchase program of up to $50.0 million of preferred shares (the "2026 Preferred Share Repurchase Program"), which will commence upon the completion of the 2023 Preferred Share Repurchase Program. …”see in full comparison
“Revenues — Total revenues increased by $25.4 million primarily due to an increase in revenues at our Los Angeles properties which were negatively impacted in 2025 by the wildfires, and an increase in revenue at our San Francisco properties due to partial recovery of business travel as well as the Super Bowl. These increases were partially offset by decreases in revenue from non-comparable properties, a decline in revenue at the Washington, D.C. …”see in full comparison
Full comparison: every changed paragraph (60)
Second quarter operating results built on the strength we saw in the first quarter. Both business and leisure demand continued to grow. Our resort properties led the portfolio growth, particularly LaPlaya Beach Resort & Club, Estancia La Jolla Hotel & Spa, Paradise Point Resort & Spa, and Newport Harbor Island Resort. San Francisco's recovery continued to gain momentum, with a significant increase in RevPAR as corporate and leisure demand broadened alongside an active citywide convention calendar. Chicago, Los Angeles, and Boston also benefited from healthy ADR increases. Pricing power strengthened across our portfolio and our continued focus on operating efficiencies initiatives have resulted in higher earnings growth. While the quarter was positive, we remain cautious towards the remainder of the year given an uncertain macroeconomic environment.
Operating results for the first quarter were strong and significantly exceeded expectations. Strength came from continued recovery in San Francisco and Los Angeles and the ramp-up of recently redeveloped resorts. San Diego urban hotels and Chicago also delivered healthy RevPAR growth. A continued focus on expense management also resulted in positive earnings growth. While the quarter results were positive, we remain cautious towards the remainder of the year given an increasingly uncertain macroeconomic environment.
During the threesix months ended MarchJune 31,30, 2026, we had the following transactions and events:
•We repurchased 405,821944,452 common shares for an aggregate purchase price of $4.9$12.9 million, or an average of $12.12approximately $13.63 per share, under our common share repurchase program.
•We repurchased 1,487,038 preferred shares for an aggregate purchase price of $28.6 million, or an average of approximately $19.22 per share, under our preferred share repurchase program.
•We sold the Chamberlain West Hollywood Hotel for $43.5 million.
The following table represents the key same-property hotel operating statistics for our hotels for the three and six months ended MarchJune 31,30, 2026 and 2025:
For the three and six months ended MarchJune 31,30, 2026 and 2025, the above table of hotel operating statistics includes information from all hotels owned as of MarchJune 31,30, 2026 and includes Chamberlain West Hollywood Hotel for the first quarter only due to its sale in May 2026.
The following table reconciles net income (loss) to FFO, FFO available to common share and unit holders and Adjusted FFO available to common share and unit holders for the three and six months ended MarchJune 31,30, 2026 and 2025 (in thousands):
The following table reconciles net income (loss) to EBITDA, EBITDAre, Adjusted EBITDAre and Hotel EBITDA for the three and six months ended MarchJune 31,30, 2026 and 2025 (in thousands):
At MarchJune 31,30, 2026 and 2025, our consolidated financial statements included the operations of 4443 and 46 hotel properties, respectively, which have been included in our results of operations during the respective periods since their dates of acquisition or through their dates of disposition. Based on when a property was acquired or disposed of, operating results for certain properties are not comparable for the three and six months ended MarchJune 31,30, 2026 and 2025. The properties listed in the table below are hereinafter referred to as "non-comparable properties" and all other properties are referred to as "comparable properties".
Comparison of the three months ended MarchJune 31,30, 2026 to the three months ended MarchJune 31,30, 2025
Revenues — Total revenues decreased by $0.4 million primarily due to the loss of $19.7 million in revenues from the sales of the non-comparable properties, offset by an increase in revenues at many of the resort properties, including Paradise Point Resort & Spa, Estancia La Jolla Hotel & Spa, LaPlaya Beach Resort & Club and Newport Harbor Island Resort, as well as an increase in revenues at our Los Angeles and San Francisco properties due to their continued recovery.
Revenues — Total revenues increased by $25.4 million primarily due to an increase in revenues at our Los Angeles properties which were negatively impacted in 2025 by the wildfires, and an increase in revenue at our San Francisco properties due to partial recovery of business travel as well as the Super Bowl. These increases were partially offset by decreases in revenue from non-comparable properties, a decline in revenue at the Washington, D.C. properties resulting from the presidential inauguration occurring only in 2025 and a decrease in revenue at Revere Hotel Boston Common as a result of a room refreshment.
Hotel operating expenses — Total hotel operating expenses increaseddecreased by $4.9$1.2 million primarily as a result of higherthe revenuessales inof Losnon-comparable Angelesproperties, and San Francisco, which waspartially offset by aan decreaseincrease in hotelcosts operatingat expensesour comparable properties associated with non-comparablehigher properties.revenues.
Depreciation and amortization — Depreciation and amortization expense decreased by $5.5 million primarily due to the salesales of the non-comparable properties and lower capital expenditures in 2025.2025 and 2026.
Real estate taxes, personal property taxes, property insurance and ground rent — Real estate taxes, personal property taxes, property insurance and ground rent decreased by $0.5$1.7 million primarily due to a decrease in real estate taxtaxes onat the non-comparable properties,properties and reductions resulting from assessment appeals and a decrease in property insurance costs, partially offset by higher percentage ground rent asresulting a result offrom higher revenues at properties subject to ground leases.
General and administrative — General and administrative expenses decreased by $1.2 million primarily due to a decrease in non-cash compensation expense. General and administrative expenses consist of employee compensation costs, legal and professional fees, insurance and other expenses.
Impairment — We recognized an impairment loss of $7.7$1.1 million in 2026 related to one hotel. No impairment loss was recognized in the firstsecond quarter of 2025.
Business interruption insurance income and gain on insurance settlement — We recognized business interruption insurance income in 2025 related to partial settlements with our insurance carriers for lost income at LaPlaya Beach Resort & Club resulting from Hurricanes Helene and Milton. There was no business interruption insurance income in 2026.
Interest expense — Interest expense decreased by $1.2 million primarily as a result of lower borrowings in 2026.
Non-controlling interests — Non-controlling interests represents the allocation of income or loss of the Operating Partnership to third-party OP unit holders and preferred OP unit holders.
Repurchase of preferred shares — Repurchase of preferred shares represents the preferred share issuance costs offset by the repurchase discount. In 2026, we repurchased 1,487,038 preferred shares under our preferred share repurchase program at a discount to the redemption value. The discount, net of the issuance costs associated with the preferred shares repurchased, is included in the determination of net income (loss) attributable to common shareholders.
Comparison of the six months ended June 30, 2026 to the six months ended June 30, 2025
Revenues — Total revenues increased by $25.0 million primarily due to an increase in revenues at our Los Angeles properties, which were negatively impacted in 2025 by the wildfires, and an increase in revenues at our San Francisco properties due to the continued recovery of business travel as well as the Super Bowl. In addition, many of the resort properties had increases in revenues, primarily Paradise Point Resort & Spa, Estancia La Jolla Hotel & Spa and LaPlaya Beach Resort & Club. These increases were partially offset by decreases in revenues from non-comparable properties, a decline in revenues at the Washington, D.C. properties resulting from the presidential inauguration occurring only in 2025 and a decrease in revenues at Revere Hotel Boston Common as a result of a room refreshment.
Hotel operating expenses — Total hotel operating expenses increased by $3.6 million primarily as a result of higher revenues as described above, which was offset by a decrease in hotel operating expenses associated with non-comparable properties.
Depreciation and amortization — Depreciation and amortization expense decreased by $11.1 million primarily due to the sales of the non-comparable properties and lower capital expenditures in 2025 and 2026.
Real estate taxes, personal property taxes, property insurance and ground rent — Real estate taxes, personal property taxes, property insurance and ground rent decreased by $2.2 million primarily due to a decrease in real estate taxes at non-comparable properties, partially offset by higher percentage ground rent resulting from higher revenues at properties subject to ground leases.
General and administrative — General and administrative expenses decreased by $1.8 million primarily due to a decrease in non-cash compensation expense. General and administrative expenses consist of employee compensation costs, legal and professional fees, insurance and other expenses.
Impairment — We recognized an impairment loss of $8.8 million in 2026 related to one hotel. No impairment loss was recognized in 2025.
Interest expense — Interest expense decreased slightly by $0.8$2.0 million primarily as a result of lower borrowings in 2026.
Income tax (expense) benefit — Income tax benefitexpense decreasedincreased by $3.1$3.0 million primarily due primarily to aan decreaseincrease in the taxable lossincome of our TRS during the quarter compared to the same period in the prior year.
Non-controlling interests — Non-controlling interests represents the allocation of income or loss of the Operating Partnership to third-party common OP unit holders and to the preferred OP unit holders.
Repurchase of preferred shares — Repurchase of preferred shares represents the preferred share issuance costs offset by the repurchase discount. In 2026, we repurchased 1,487,038 preferred shares under our preferred share repurchase program at a discount to the redemption value. The discount, net of the issuance costs associated with the preferred shares repurchased, is included in the determination of net income (loss) attributable to common shareholders.
Our primary sources of liquidity are cash provided by our operations, borrowings under our credit facilities, net proceeds from equity and debt offerings, and net proceeds from property sales. Our primary cash requirements in the short term (i.e., those requiring cash on or before MarchJune 31,30, 2027) will be to fund property lease obligations, interest and current principal on debt, capital improvements, dividends on common and preferred shares, and working capital of our property operations. We believe our cash and cash equivalents, restricted cash and the amount available on our senior unsecured revolving credit facility, which totaled $845.8$911.6 million as of MarchJune 31,30, 2026, along with cash generated from ongoing operations will be sufficient to satisfy our short-term cash requirements. As of MarchJune 31,30, 2026, we had no off-balance sheet arrangements.
Our outstanding debt consisted of floating- and fixed-rate unsecured term loans, convertible senior notes, unsecured senior notes and a mortgage loan with varying maturities. Our total debt had an aggregate face value of $2.1 billion as of MarchJune 31,30, 2026, as summarized below:
We expect that future principal and interest payments associated with our remaining debt obligations outstanding as of MarchJune 31,30, 2026 will be $2.4 billion through their maturity, with $352.2 million of principal and $88.1$85.4 million of interest payable on or before MarchJune 31,30, 2027. We intend to pay amounts due with available cash, borrowings under our revolving credit facility or proceeds from property sales or to refinance amounts due with long-term debt.
Our mortgage loan contains customary provisions regarding events of default, as well as customary cash management, cash trap and lockbox provisions. Cash trap provisions may be triggered if the hotel's performance is below a certain threshold. Once triggered, all of the cash flow generated by the hotel is deposited directly into lockbox accounts and then swept into cash management accounts for the benefit of our lender. As of MarchJune 31,30, 2026, the mortgage loan was not in a cash trap.
Future fixed minimum payments associated with our hotel, ground and finance leases total $1.9 billion as of MarchJune 31,30, 2026, with $25.0$24.8 million payable on or before MarchJune 31,30, 2027.
As of MarchJune 31,30, 2026, we had $0.7$3.4 million of outstanding purchase commitments, all of which will be paid on or before MarchJune 31,30, 2027. These purchase commitments represent outstanding purchase orders and contracts that have been executed for capital and renovation projects at our properties. See Capital Investments (below) for discussion on planned capital investments.
Preferred share dividends and Series Z preferred operating partnership unitsdistributions
We expect to pay aggregate annual dividends and distributions of approximately $46.4$44.1 million on our outstanding Series E, Series F, Series G and Series H Cumulative Redeemable Preferred Shares and Series Z Cumulative Perpetual Preferred Units on or before MarchJune 31,30, 2027 and in future years until the shares/units are redeemed. For further discussion on our preferred shares and preferred units, see Note 7. Equity to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Operating Activities. Our net cash provided by operating activities was $84.1$170.4 million for the threesix months ended MarchJune 31,30, 2026 and $50.3$140.9 million for the threesix months ended MarchJune 31,30, 2025. Fluctuations in our net cash provided by (used in) operating activities are primarily the result of changes in hotel revenues, operating cash requirements and corporate expenses.
Investing Activities. Our net cash used in investing activities was $9.0$5.4 million for the threesix months ended MarchJune 31,30, 2026 and $20.9$47.5 million for the threesix months ended MarchJune 31,30, 2025. Fluctuations in our net cash provided by (used in) investing activities are primarily the result of disposition activities, as well as capital improvements and additions to our properties.
•During the threesix months ended MarchJune 31,30, 2026, we invested $11.9$24.4 million in improvements to our hotel propertiesproperties, received $16.1 million from the sale of Chamberlain West Hollywood Hotel and received $3.2 million in property insurance proceeds.
•During the threesix months ended MarchJune 31,30, 2025, we invested $20.7$49.5 million in improvements to our hotel properties.properties and received $2.4 million in property insurance proceeds.
Financing Activities. Our net cash used in financing activities was $66.7$90.8 million for the threesix months ended MarchJune 31,30, 2026 and $28.9$43.8 million for the threesix months ended MarchJune 31,30, 2025. Fluctuations in our net cash provided by (used in) financing activities are primarily the result of our issuance and repurchase of debt and equity securities and distributions paid on our preferred and common shares.
•During the threesix months ended MarchJune 31,30, 2026, we borrowed $360.0 million and repaid $400.8$401.3 million of debt, repurchased $5.9$13.9 million of common shares through our common share repurchase program and for tax withholding purposes in connection with vestings of share-based equity awards, paid $6.6 million in deferred financing costs and paid $12.7$25.5 million in preferred and common distributions.
•During the threesix months ended MarchJune 31,30, 2025, we repaid $0.5$1.1 million of debt, repurchased $14.6$15.6 million of common shares through our common share repurchase program and for tax withholding purposes in connection with vestings of share-based equity awards and paid $13.0$26.0 million in preferred and common distributions.
For the threesix months ended MarchJune 31,30, 2026, we invested $11.9$24.4 million in capital investments to reposition and/or improve our properties, including the capital maintenance projects and renovations of Chaminade Resort & Spa.
Common Share Repurchase Program and Preferred Share Repurchase ProgramPrograms
During the threesix months ended MarchJune 31,30, 2026, we repurchased 405,821944,452 common shares for an aggregate purchase price of $4.9$12.9 million, or an average of approximately $12.12$13.63 per share. As of MarchJune 31,30, 2026, $145.1$137.1 million of common shares remained available for repurchase under this program.
The timing, manner, price and amount of any repurchases will be determined by us in our discretion and will depend on a variety of factors, including legal requirements, price, liquidity and economic considerationsconsiderations, and market conditions. The program does not require us to repurchase any specific number of common shares. The program does not have an expiration date and may be suspended, modified or discontinued at any time.
Preferred Share Repurchase ProgramPrograms
On February 17, 2023, our Board of Trustees authorized a share repurchase program of up to $100.0 million of preferred shares.shares (the "2023 Preferred Share Repurchase Program"). Under the terms of the program, we may repurchase up to an aggregate of $100.0 million of our 6.375% Series E Cumulative Redeemable Preferred Shares, 6.30% Series F Cumulative Redeemable Preferred Shares, 6.375% Series G Cumulative Redeemable Preferred Shares and 5.70% Series H Cumulative Redeemable Preferred Shares from time to time in transactions on the open market or by private agreement.
During the six months ended June 30, 2026, we repurchased and retired 1,487,038 preferred shares for an aggregate purchase price of $28.6 million, or an average of approximately $19.22 per share. This includes 1,347,614 preferred shares received as partial consideration for the sale of Chamberlain West Hollywood Hotel and 139,424 preferred shares repurchased in the market. As of June 30, 2026, $45.6 million remained available for repurchase of preferred shares under this program.
On July 24, 2026, our Board of Trustees authorized a new share repurchase program of up to $50.0 million of preferred shares (the "2026 Preferred Share Repurchase Program"), which will commence upon the completion of the 2023 Preferred Share Repurchase Program. Under the 2026 Preferred Share Repurchase Program, we may repurchase up to an aggregate of $50.0 million of our 6.375% Series E Cumulative Redeemable Preferred Shares, 6.30% Series F Cumulative Redeemable Preferred Shares, 6.375% Series G Cumulative Redeemable Preferred Shares and 5.70% Series H Cumulative Redeemable Preferred Shares from time to time in transactions on the open market or by private agreement.
During the three months ended March 31, 2026, no preferred shares were repurchased. As of March 31, 2026, $74.1 million of preferred shares remained available for repurchase under this program.
The timing, manner, price and amount of any repurchases will be determined by us in our discretion and will depend on a variety of factors, including legal requirements, price, liquidity and economic considerations, and market conditions. The programprograms doesdo not require us to repurchase any specific number of preferred shares. The programprograms doesdo not have an expiration date and may be suspended, modified or discontinued at any time.
As of MarchJune 31,30, 2026, we have interest rate swap agreements with an aggregate notional amount of $865.0 million to hedge variable interest rates on our unsecured term loans. We have designated these pay-fixed, receive-floating interest rate swap derivatives as cash flow hedges. For a further discussion of our derivative instruments, see Note 5. Debt to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
PEB insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 3 Form 4 filings (1 insider, 5 trade dates, 100,000 shares, about $1.7M) and open-market sales in 1 filing (1 insider, 1 trade date, 40,000 shares, about $770.0K). Net open-market shares: 60,000 (purchases minus sales); net value about $971.4K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-10-01 | Bayless William C Jr |
Grant/award | 2,658 | — | — |
| 2026-08-03 | Fisher Thomas Charles |
Open-market sale | 40,000 | $19.25 | $770.0K |
| 2026-06-12 | Bortz Jon E |
Open-market purchase | 20,000 | $18.18 | $363.6K |
| 2026-06-11 | Bortz Jon E |
Open-market purchase | 20,000 | $17.73 | $354.6K |
| 2026-06-10 | Bortz Jon E |
Open-market purchase | 20,000 | $17.23 | $344.6K |
| 2026-06-09 | Bortz Jon E |
Open-market purchase | 20,000 | $17.09 | $341.8K |
| 2026-06-08 | Bortz Jon E |
Open-market purchase | 20,000 | $16.84 | $336.8K |
Well-known investors holding PEB (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Oaktree Capital Management (Howard Marks) | 2026-06-30 | 0 | $63.1M | 1.19% | No change |
| D. E. Shaw & Co. | 2026-06-30 | 2,728,760 | $53.0M | 0.03% | Added 219% |
| Two Sigma Investments | 2026-06-30 | 2,581,564 | $50.1M | 0.04% | Added 4% |
| Millennium Management (Israel Englander) | 2026-06-30 | 1,689,674 | $32.8M | 0.02% | Reduced 33% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 1,032,301 | $20.0M | 0.01% | Added 245% |
| D. E. Shaw & Co. | 2026-06-30 | 0 | $16.5M | 0.01% | No change |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 571,788 | $11.1M | 0.0% | Added 7% |
| Renaissance Technologies | 2026-06-30 | 72,800 | $1.4M | 0.0% | New position |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 81,418 | $1.0M | — | Sold out |
| Gotham Asset Management (Joel Greenblatt) | 2026-06-30 | 20,479 | $397.5K | 0.0% | Added 28% |