XML 21 R7.htm IDEA: XBRL DOCUMENT v3.20.4
Organization
 12 Months Ended
Dec. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization Organization
Pebblebrook Hotel Trust (the "Company") was formed as a Maryland real estate investment trust in October 2009 to opportunistically acquire and invest in hotel properties located primarily in major United States cities, with an emphasis on major gateway coastal markets.
As of December 31, 2020, the Company owned 53 hotels with a total of 13,236 guest rooms. The hotels are located in the following markets: Boston, Massachusetts; Chicago, Illinois; Key West, Florida; Miami (Coral Gables), Florida; Los Angeles, California (Beverly Hills, Santa Monica, and West Hollywood); Naples, Florida; New York, New York; Philadelphia, Pennsylvania; Portland, Oregon; San Diego, California; San Francisco, California; Seattle, Washington; Stevenson, Washington; and Washington, D.C.
Substantially all of the Company’s assets are held by, and all of the Company's operations are conducted through, Pebblebrook Hotel, L.P. (the "Operating Partnership"). The Company is the sole general partner of the Operating Partnership. At December 31, 2020, the Company owned 99.8% of the common limited partnership units issued by the Operating Partnership ("common units"). The remaining 0.2% of the common units are owned by the other limited partners of the Operating Partnership. For the Company to maintain its qualification as a real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended (the "Code"), it cannot operate the hotels it owns. Therefore, the Operating Partnership and its subsidiaries lease the hotel properties to subsidiaries of Pebblebrook Hotel Lessee, Inc. (collectively with its subsidiaries, "PHL"), a taxable REIT subsidiary ("TRS"), which in turn engage third-party eligible independent contractors to manage the hotels. PHL is consolidated into the Company’s financial statements.
COVID-19 Operations and Liquidity Update
In March 2020, the World Health Organization declared the novel coronavirus ("COVID-19") to be a global pandemic and the virus has continued to spread throughout the United States and the world. As a result of this pandemic and subsequent government mandates, health official recommendations, corporate policy changes and individual responses, hotel demand was dramatically reduced. Following government mandates and health official recommendations, the Company temporarily suspended operations at 47 of its hotels and resorts and working with its operators, dramatically reduced staffing and expenses at the hotels that remained operational. Throughout the summer months, hotel industry demand improved from its historical lows seen in the second quarter, particularly as leisure customers sought to travel to drive-to hotels and resorts that could offer more space and outdoor experiences. The monthly revenue increased slowly through October as the Company reopened several of its hotels and resorts between May and October. November and December had declining revenue at most of its opened hotels, except its South Florida properties, as leisure demand declined and business travel did not return in a meaningful manner. The South Florida properties experienced slightly increasing revenue late in the year which is consistent with the seasonal pattern for these warm weather resort properties. The Company anticipates leisure travel will return as vaccine distribution becomes more widely available, followed by business travel. The Company still anticipates group demand will be the slowest to return until there is more certainty around health and immunity solution for the country. As of December 31, 2020, 37 of the Company's hotels and resorts listed below were open, with operations at the remaining 16 hotels still temporarily suspended. The Company anticipates reopening additional hotels as demand returns and it determines that the Company would lose less money with the hotels open versus remaining closed.
PropertyLocation
1.L'Auberge Del MarDel Mar, CA
2.Hotel Palomar Los Angeles Beverly HillsLos Angeles, CA
3.W Los Angeles - West Beverly HillsLos Angeles, CA
4.Mondrian Los AngelesWest Hollywood, CA
5.Le Meridien Delfina Santa MonicaSanta Monica, CA
6.Viceroy Santa Monica HotelSanta Monica, CA
7.Le Parc Suite HotelWest Hollywood, CA
8.Montrose West HollywoodWest Hollywood, CA
9.Chamberlain West Hollywood HotelWest Hollywood, CA
10.Grafton on SunsetWest Hollywood, CA
11.Embassy Suites San Diego Bay - DowntownSan Diego, CA
12.Paradise Point Resort & SpaSan Diego, CA
13.San Diego Mission Bay Resort (formerly Hilton San Diego Mission Bay Resort)San Diego, CA
14.The Westin San Diego Gaslamp QuarterSan Diego, CA
15.Hilton San Diego Gaslamp QuarterSan Diego, CA
16.Solamar HotelSan Diego, CA
17.Hotel SperoSan Francisco, CA
18.Hotel Zetta San FranciscoSan Francisco, CA
19.Chaminade Resort & SpaSanta Cruz, CA
20.Southernmost Beach ResortKey West, FL
21.The Marker Key West Harbor ResortKey West, FL
22.LaPlaya Beach Resort and ClubNaples, FL
23.Hotel Colonnade Coral Gables, Autograph CollectionMiami, FL
24.The Liberty, A Luxury Collection Hotel, BostonBoston, MA
25.Hyatt Regency Boston HarborBoston, MA
26.W BostonBoston, MA
27.The Westin Copley Place, BostonBoston, MA
28.George HotelWashington, DC
29.Hotel Zena Washington DC (formerly Donovan Hotel)Washington, DC
30.Viceroy Washington DC (formerly Mason & Rook Hotel)Washington, DC
31.Skamania LodgeStevenson, WA
32.Hotel Monaco SeattleSeattle, WA
33.Hotel Vintage SeattleSeattle, WA
34.Hotel Vintage PortlandPortland, OR
35.The Heathman Hotel Portland, OR
36.The Nines, a Luxury Collection Hotel, PortlandPortland, OR
37.Sofitel Philadelphia at Rittenhouse SquarePhiladelphia, PA
The COVID-19 pandemic has had a significant negative impact on the Company's operations and financial results to date and the Company expects that it will continue to have a significant negative impact on the Company's results of operations, financial position and cash flow in 2021. The Company cannot estimate when travel demand will recover. As a result of uncertainty at the beginning of the pandemic, in March 2020, the Company fully drew down on its $650.0 million unsecured revolving credit facility, reduced the quarterly cash dividend on its common shares to one penny per share, reduced planned capital expenditures, reduced the compensation of its executive officers, trustees and employees, and, working closely with its hotel operating partners, significantly reduced its hotels' operating expenses. On June 29, 2020, the Company amended its
existing credit facilities, term loan facilities and senior notes. Among other things, the amendments extended the maturity of a significant portion of the term loan due in November 2021 to November 2022, waived existing financial covenants through the end of the first quarter of 2021 and provided substantially less restrictive financial covenants through the end of the second quarter of 2022. In addition, the Company repaid approximately $250.0 million on its unsecured revolving credit facility. In December 2020, the Company issued $500.0 million of convertible notes and used the proceeds to repay an additional $250.0 million of its unsecured revolving credit facility and $200.0 million of its unsecured term loans. As of December 31, 2020, the Company had a balance of $40.0 million on its unsecured revolving credit facility.
In February 2021, the Company issued an additional $250.0 million of convertible notes under the same terms as the December 2020 offering, at a 5.5% premium to par. In connection with the pricing of the convertible notes, the Company entered into privately negotiated capped call transactions with certain of the underwriters, their respective affiliates and/or other counterparties. The Company used the net proceeds to reduce amounts outstanding under the Company’s senior unsecured revolving credit facility, unsecured term loans, and for general corporate purposes.
In February 2021, the Company further amended the agreements governing the existing credit facilities, term loan facilities and senior notes to, among other items, waive financial covenants through the end of the first quarter of 2022 except for the minimum fixed charge coverage and minimum unsecured interest coverage ratio which were extended through December 31, 2021 and to increase the interest rate spread. Refer to "Note 5. Debt" for additional information regarding these amendments and convertible debt. Based on these amendments and expense and cash burn rate reductions, the Company believes that it has sufficient liquidity to meet its obligations for the next twelve months.
The negative impact of the demand loss caused by COVID-19 will result in a significant income tax loss in PHL. Given the continued negative impact of the COVID-19 pandemic on the Company's financial results and uncertainties about the Company's ability to utilize its net operating loss in future years, the Company had a valuation allowance of $20.9 million as of December 31, 2020. As of December 31, 2020, the Company had an income tax receivable of $6.9 million attributable to the net operating loss carry-back, which is included in prepaid expenses and other assets in the accompanying consolidated balance sheets.
The Company also adopted an optional remote-work policy and other physical distancing policies at its corporate office and the Company does not anticipate these policies to have any adverse impact on its ability to continue to operate its business.  Transitioning to a remote-work environment has not had a material adverse impact on the Company's financial reporting system, internal controls or disclosure controls and procedures.