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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
FORM10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022
OR
    
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to              .
Commission File Number 001-34571
PEBBLEBROOK HOTEL TRUST
(Exact Name of Registrant as Specified in Its Charter)

Maryland27-1055421
(State of Incorporation or Organization)(I.R.S. Employer Identification No.)
4747 Bethesda Avenue, Suite 1100, Bethesda, Maryland
20814
(Address of Principal Executive Offices)(Zip Code)

(240)507-1300
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Shares, $0.01 par value per sharePEBNew York Stock Exchange
Series E Cumulative Redeemable Preferred Shares, $0.01 par valuePEB-PENew York Stock Exchange
Series F Cumulative Redeemable Preferred Shares, $0.01 par valuePEB-PFNew York Stock Exchange
Series G Cumulative Redeemable Preferred Shares, $0.01 par valuePEB-PGNew York Stock Exchange
Series H Cumulative Redeemable Preferred Shares, $0.01 par valuePEB-PHNew York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes      No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    ☑  Yes     No



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filer(do not check if a smaller reporting company)Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes      No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class
Outstanding at April 19, 2022
Common shares of beneficial interest ($0.01 par value per share)131,351,374




Pebblebrook Hotel Trust
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
PART II. OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
2


PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.

Pebblebrook Hotel Trust
Consolidated Balance Sheets
(in thousands, except share and per-share data)
March 31, 2022December 31, 2021
 (Unaudited) 
ASSETS
Investment in hotel properties, net$5,975,857 $6,079,333 
Cash and cash equivalents69,446 58,518 
Restricted cash26,507 33,729 
Hotel receivables (net of allowance for doubtful accounts of $236 and $1,142, respectively)
40,645 37,045 
Prepaid expenses and other assets66,918 52,565 
Total assets$6,179,373 $6,261,190 
LIABILITIES AND EQUITY
Debt$2,443,090 $2,441,888 
Accounts payable, accrued expenses and other liabilities233,298 250,584 
Lease liabilities - operating leases319,375 319,426 
Deferred revenues78,756 69,064 
Accrued interest8,355 4,567 
Distribution payable11,565 11,756 
Total liabilities3,094,439 3,097,285 
Commitments and contingencies (Note 11)
Shareholders’ equity:
Preferred shares of beneficial interest, $.01 par value (liquidation preference $740,000 at March 31, 2022 and December 31, 2021), 100,000,000 shares authorized; 29,600,000 shares issued and outstanding at March 31, 2022 and December 31, 2021
296 296 
Common shares of beneficial interest, $.01 par value, 500,000,000 shares authorized; 130,904,299 shares issued and outstanding at March 31, 2022 and 130,813,750 shares issued and outstanding at December 31, 2021
1,309 1,308 
Additional paid-in capital4,269,322 4,268,042 
Accumulated other comprehensive income (loss)12,092 (19,442)
Distributions in excess of retained earnings(1,206,019)(1,094,023)
Total shareholders’ equity3,077,000 3,156,181 
Non-controlling interests7,934 7,724 
Total equity3,084,934 3,163,905 
Total liabilities and equity$6,179,373 $6,261,190 

The accompanying notes are an integral part of these financial statements.
3

Pebblebrook Hotel Trust
Consolidated Statements of Operations and Comprehensive Income
(in thousands, except share and per-share data)
(Unaudited)
 For the three months ended March 31,
 20222021
Revenues:
Room$168,632 $53,463 
Food and beverage62,424 14,809 
Other operating27,012 15,371 
Total revenues258,068 83,643 
Expenses:
Hotel operating expenses:
Room42,463 16,710 
Food and beverage46,050 10,743 
Other direct and indirect85,847 45,228 
Total hotel operating expenses174,360 72,681 
Depreciation and amortization59,100 55,443 
Real estate taxes, personal property taxes, property insurance, and ground rent30,457 28,590 
General and administrative9,708 7,646 
Impairment loss60,983 14,856 
Other operating expenses1,123 562 
Total operating expenses335,731 179,778 
Operating income (loss)(77,663)(96,135)
Interest expense(22,572)(25,331)
Other19 29 
Income (loss) before income taxes(100,216)(121,437)
Income tax (expense) benefit (3)
Net income (loss)(100,216)(121,440)
Net income (loss) attributable to non-controlling interests(686)(858)
Net income (loss) attributable to the Company(99,530)(120,582)
Distributions to preferred shareholders(11,344)(8,139)
Net income (loss) attributable to common shareholders$(110,874)$(128,721)
Net income (loss) per share available to common shareholders, basic$(0.85)$(0.98)
Net income (loss) per share available to common shareholders, diluted$(0.85)$(0.98)
Weighted-average number of common shares, basic130,904,299 130,775,873 
Weighted-average number of common shares, diluted130,904,299 130,775,873 
4

Pebblebrook Hotel Trust
Consolidated Statements of Operations and Comprehensive Income - Continued
(in thousands, except share and per-share data)
(Unaudited)
For the three months ended March 31,
20222021
Comprehensive Income:
Net income (loss)$(100,216)$(121,440)
Other comprehensive income (loss):
Change in fair value of derivative instruments27,367 9,736 
Amounts reclassified from other comprehensive income4,374 6,418 
Comprehensive income (loss)(68,475)(105,286)
Comprehensive income (loss) attributable to non-controlling interests(479)(752)
Comprehensive income (loss) attributable to the Company$(67,996)$(104,534)

The accompanying notes are an integral part of these financial statements.
5

Pebblebrook Hotel Trust
Consolidated Statements of Equity
(in thousands, except share data)
(Unaudited)
For the three months ended March 31, 2021
Preferred SharesCommon SharesAdditional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Distributions in Excess of Retained EarningsTotal Shareholders' EquityNon-Controlling InterestsTotal Equity
SharesAmountSharesAmount
Balance at December 31, 202020,400,000 $204 130,673,300 $1,307 $4,169,870 $(60,071)$(853,973)$3,257,337 $6,989 $3,264,326 
Issuance of shares, net of offering costs— — — — (10)— — (10)— (10)
Issuance of common shares for Board of Trustees compensation— — 27,711 1 515 — — 516 — 516 
Repurchase of common shares— — (38,310)(1)(719)— — (720)— (720)
Share-based compensation— — 150,216 1 3,278 — — 3,279 349 3,628 
Distributions on common shares/units— — — — — — (1,077)(1,077)(8)(1,085)
Distributions on preferred shares— — — — — — (8,139)(8,139) (8,139)
Cumulative effect adjustment from adoption of new accounting standard— — — — (113,099)— — (113,099)— (113,099)
Purchases of capped calls in connection with convertible senior notes— — — — (20,975)— — (20,975)— (20,975)
Other comprehensive income (loss):
Change in fair value of derivative instruments— — — — — 9,736 — 9,736 — 9,736 
Amounts reclassified from other comprehensive income— — — — — 6,418 — 6,418 — 6,418 
Net income (loss)— — — — — — (120,582)(120,582)(858)(121,440)
Balance at March 31, 202120,400,000 $204 130,812,917 $1,308 $4,038,860 $(43,917)$(983,771)$3,012,684 $6,472 $3,019,156 
6

Pebblebrook Hotel Trust
Consolidated Statements of Equity - Continued
(in thousands, except share data)
(Unaudited)
For the three months ended March 31, 2022
Preferred SharesCommon SharesAdditional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Distributions in Excess of Retained EarningsTotal Shareholders' EquityNon-Controlling InterestsTotal Equity
SharesAmountSharesAmount
Balance at December 31, 202129,600,000$296 130,813,750 $1,308 $4,268,042 $(19,442)$(1,094,023)$3,156,181 $7,724 $3,163,905 
Issuance of common shares for Board of Trustees compensation— 33,866 1 737 — — 738 — 738 
Repurchase of common shares— (49,787)(1)(1,112)— — (1,113)— (1,113)
Share-based compensation— 106,470 1 1,655 — — 1,656 698 2,354 
Distributions on common shares/units— — — — — (1,122)(1,122)(9)(1,131)
Distributions on preferred shares— — — — — (11,344)(11,344)— (11,344)
Other comprehensive income (loss):
Change in fair value of derivative instruments— — — — 27,160 — 27,160 207 27,367 
Amounts reclassified from other comprehensive income— — — — 4,374 — 4,374 — 4,374 
Net income (loss)— — — — — (99,530)(99,530)(686)(100,216)
Balance at March 31, 202229,600,000$296 130,904,299$1,309 $4,269,322 $12,092 $(1,206,019)$3,077,000 $7,934 $3,084,934 

The accompanying notes are an integral part of these financial statements.
7

Pebblebrook Hotel Trust
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
 For the three months ended March 31,
 20222021
Operating activities:
Net income (loss)$(100,216)$(121,440)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization59,100 55,443 
Share-based compensation2,354 2,182 
Amortization of deferred financing costs, non-cash interest and other amortization3,489 4,744 
Impairment loss60,983 14,856 
Non-cash ground rent2,489 1,521 
Other adjustments(1,906)69 
Changes in assets and liabilities:
Hotel receivables(2,694)(6,800)
Prepaid expenses and other assets(2,127)1,686 
Accounts payable and accrued expenses7,147 35,110 
Deferred revenues10,213 5,493 
Net cash provided by (used in) operating activities38,832 (7,136)
Investing activities:
Improvements and additions to hotel properties(19,906)(9,623)
Other investing activities(47)(47)
Net cash provided by (used in) investing activities(19,953)(9,670)
Financing activities:
Payment of offering costs — common and preferred shares (10)
Payment of deferred financing costs(32)(9,576)
Repayments under revolving credit facilities (40,000)
Proceeds from debt 263,750 
Repayments of debt(324)(177,000)
Purchases of capped calls for convertible senior notes (20,975)
Repurchases of common shares(1,113)(720)
Distributions — common shares/units(1,322)(1,312)
Distributions — preferred shares(11,344)(8,139)
Repayments of refundable membership deposits(1,038)(880)
Net cash provided by (used in) financing activities(15,173)5,138 
Net change in cash and cash equivalents and restricted cash3,706 (11,668)
Cash and cash equivalents and restricted cash, beginning of year92,247 136,300 
Cash and cash equivalents and restricted cash, end of period$95,953 $124,632 

The accompanying notes are an integral part of these financial statements.
8


PEBBLEBROOK HOTEL TRUST
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Organization
Pebblebrook Hotel Trust (the "Company") is an internally managed hotel investment company, 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 March 31, 2022, the Company owned 53 hotels with a total of 13,247 guest rooms. The hotel properties are located in: Boston, Massachusetts; Chicago, Illinois; Hollywood, Florida; Jekyll Island, Georgia; Key West, Florida; Miami (Coral Gables), Florida; Los Angeles, California (Beverly Hills, Santa Monica, and West Hollywood); Naples, Florida; Philadelphia, Pennsylvania; Portland, Oregon; San Diego, California; San Francisco, California; Santa Cruz, 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. As of March 31, 2022, the Company owned 99.3% of the common limited partnership units issued by the Operating Partnership ("common units"). The remaining 0.7% 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 and Liquidity Update
In March 2020, the World Health Organization declared the novel coronavirus ("COVID-19") to be a global pandemic and the virus 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 dramatically declined. In response, the Company implemented significant cost controls, salary reductions and temporarily suspended operations at 47 of its hotels and resorts in 2020. In addition, to improve liquidity, the Company raised capital by issuing convertible notes and additional preferred shares. The Company also amended the agreements governing its existing credit facilities, term loan facilities and unsecured senior notes which, among other things, waived quarterly financial covenants until the second quarter of 2022, with substantially less-restrictive covenants through the end of the first quarter of 2023.
As demand has since improved as a result of an increase in vaccinations and corresponding lifting of governmental restrictions and recommendations, the Company gradually reopened its hotels and resorts. As of July 1, 2021, all of the Company's hotels and resorts were open, with the exception of Hotel Vitale, whose operations will remain suspended until the completion of its renovations and repositioning, which is expected to occur in the second quarter of 2022.
The COVID-19 pandemic has had a significant negative impact on the Company's operations and financial results and is expected to continue to have a negative impact on the Company's results of operations, financial position and cash flows for the remainder of 2022. However, results have improved in the first quarter of 2022 relative to 2021 and this trend is expected to continue throughout 2022. The demand recovery has been led by strong leisure travel with a slower recovery in business and group travel. As a result of the strength in leisure travel, the Company's resort properties are operating at or above pre-pandemic levels.
Based on the amendments to the Company's credit agreements, assumptions regarding the recovery of demand and the Company's liquidity of $694.4 million as of March 31, 2022, the Company believes it has sufficient liquidity to meet its obligations for the next 12 months.
9

Note 2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited interim consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and in conformity with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) applicable to interim financial information. As such, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted in accordance with the rules and regulations of the SEC. These unaudited consolidated financial statements include all adjustments considered necessary for a fair presentation of the consolidated balance sheets, consolidated statements of operations and comprehensive income, consolidated statements of equity and consolidated statements of cash flows for the periods presented. Interim results are not necessarily indicative of full-year performance, as a result of the impact of seasonal and other short-term variations and the acquisitions and or dispositions of hotel properties. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
The Company and its subsidiaries are separate legal entities and maintain records and books of account separate and apart from each other. The consolidated financial statements include all of the accounts of the Company and its subsidiaries and are presented in accordance with U.S. GAAP. All significant intercompany balances and transactions have been eliminated in consolidation.
Certain reclassifications have been made to the prior period's financial statements to conform to the current year presentation.
Use of Estimates
The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and revenues and expenses. These estimates are prepared using management’s best judgment, after considering past, current and expected events and economic conditions. Actual results could differ from these estimates.
Risks and Uncertainties
The state of the overall economy can significantly impact hotel operational performance and thus the Company's financial position. As discussed in Note 1, Organization, the COVID-19 pandemic has significantly impacted the hotels' operational performance. A continued reduction in travel may impact the Company's ability to service debt or meet other financial obligations.
New Accounting Pronouncements
Reference Rate Reform
In March 2020 and January 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, and ASU 2021-01, Reference Rate Reform (Topic 848), respectively. ASU 2020-04 and ASU 2021-01 provide optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform, if certain criteria are met. The guidance in ASU 2020-04 and ASU 2021-01 was effective upon issuance and, once adopted, may be applied prospectively to contract modifications and hedging relationships through December 31, 2022.
In 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company will continue to evaluate the impact of the adoption of ASU 2020-04 and ASU 2021-01 on its consolidated financial statements and disclosures.
Business Combinations
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to the recognition of an acquired contract liability and to payment terms and their effect on subsequent revenue recognized by the acquirer. The amendments in ASU 2021-08 require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts.
10

ASU 2021-08 is effective for fiscal years beginning after December 15, 2022 and early adoption is permitted. While the Company is continuing to assess the timing of adoption and the potential impacts of ASU 2021-08, it does not expect ASU 2021-08 to have a material effect on its consolidated financial statements and disclosures.
Note 3. Acquisition and Disposition of Hotel Properties
There were no acquisitions or dispositions of hotel properties during the three months ended March 31, 2022 and 2021.
Note 4. Investment in Hotel Properties
Investment in hotel properties as of March 31, 2022 and December 31, 2021 consisted of the following (in thousands):
March 31, 2022December 31, 2021
Land$902,262 $926,330 
Buildings and improvements5,176,540 5,197,816 
Furniture, fixtures and equipment540,944 535,607 
Finance lease asset91,181 91,181 
Construction in progress13,624 15,869 
$6,724,551 $6,766,803 
Right-of-use asset, operating leases376,574 378,939 
Investment in hotel properties$7,101,125 $7,145,742 
Less: Accumulated depreciation(1,125,268)(1,066,409)
Investment in hotel properties, net$5,975,857 $6,079,333 
Impairment
The Company reviews its investment in hotel properties for impairment whenever events or circumstances indicate potential impairment. As a result of the ongoing effects of the COVID-19 pandemic on its expected future operating cash flows and estimated hold periods for certain properties, the Company determined certain impairment triggers had occurred and therefore, the Company assessed its investment in hotel properties for recoverability. Based on the analyses performed, for the three months ended March 31, 2022, the Company recognized an impairment loss of $61.0 million related to two hotels as a result of their fair values being lower than their carrying values. The impairment loss was determined using Level 2 inputs under authoritative guidance for fair value measurements using information from marketing efforts for these properties. For the three months ended March 31, 2021, the Company recognized an impairment loss of $14.9 million related to one hotel as a result of its fair value being lower than its carrying value. The impairment loss was determined using Level 2 inputs under authoritative guidance for fair value measurements using information from marketing efforts for this property.
Right-of-use Assets and Lease Liabilities
The Company recognized right-of-use assets and related liabilities related to its ground leases, all of which are operating leases. When the rate implicit in the lease could not be determined, the Company used incremental borrowing rates, which ranged from 4.7% to 7.6%. In addition, the term used includes any options to exercise extensions when it is reasonably certain the Company will exercise such options. See Note 11. Commitments and Contingencies, for additional information about the ground leases.
The right-of-use assets and liabilities are amortized to ground rent expense over the term of the underlying lease agreements. As of March 31, 2022, the Company's lease liabilities consisted of operating lease liabilities of $319.4 million and financing lease liabilities of $42.2 million. As of December 31, 2021, the Company's lease liabilities consisted of operating lease liabilities of $319.4 million and financing lease liabilities of $42.0 million. The financing lease liabilities are included in accounts payable, accrued expenses and other liabilities on the Company's accompanying consolidated balance sheets.
Note 5. Debt
In 2021, the Company amended the agreements governing its existing credit facilities, term loan facilities and senior notes to, among other things, waive financial covenants until the second quarter of 2022 (with substantially less-restrictive covenants through the end of the first quarter of 2023), extend certain debt maturity dates and increase the interest rate spread.
11

The Company's debt consisted of the following as of March 31, 2022 and December 31, 2021 (dollars in thousands):
   Balance Outstanding as of
 Interest RateMaturity DateMarch 31, 2022December 31, 2021
Revolving credit facilities
Senior unsecured credit facilityFloating
(1)(2)
March 2023$ $ 
PHL unsecured credit facilityFloating
(3)
March 2023  
Total revolving credit facilities$ $ 
Unsecured term loans
First Term LoanFloating
(4)
January 202326,000 26,000 
First Term Loan ExtendedFloating
(4)
March 2024274,000 274,000 
Second Term LoanFloating
(4)(10)
April 202226,327 26,327 
Fourth Term LoanFloating
(4)
October 2024110,000 110,000 
Sixth Term Loan
Tranche 2021 ExtendedFloating
(4)(8)
November 202282,071 82,071 
Tranche 2022Floating
(4)(9)
November 2022114,670 114,670 
Tranche 2023Floating
(4)
November 2023400,000 400,000 
Tranche 2024Floating
(4)
January 2024400,000 400,000 
Total Sixth Term Loan996,741 996,741 
Total term loans at stated value1,433,068 1,433,068 
Deferred financing costs, net(4,883)(5,812)
Total term loans$1,428,185 $1,427,256 
Convertible senior notes
Convertible senior notes1.75%December 2026750,000 750,000 
Debt premium (discount), net11,020 11,605 
Deferred financing costs, net(15,386)(16,204)
Total convertible senior notes$745,634 $745,401 
Senior unsecured notes
Series A Notes5.15%
(5)
December 202347,600 47,600 
Series B Notes5.38%
(6)
December 20252,400 2,400 
Total senior unsecured notes at stated value50,000 50,000 
Deferred financing costs, net(142)(162)
Total senior unsecured notes$49,858 $49,838 
Mortgage loans
Margaritaville Hollywood Beach ResortFloating
(7)
May 2023161,500 161,500 
Estancia La Jolla Hotel & Spa5.07%September 202861,049 61,373 
Total mortgage loans at stated value222,549 222,873 
Debt premium (discount), net(2,447)(2,735)
Deferred financing costs, net(689)(745)
Total mortgage loans$219,413 $219,393 
Total debt$2,443,090 $2,441,888 
______________________
(1)    Borrowings bear interest at floating rates equal to, at the Company's option, either (i) LIBOR plus an applicable margin or (ii) an Adjusted Base Rate (as defined in the applicable credit agreement) plus an applicable margin.
(2)    $39.0 million of the total borrowing capacity matured in January 2022. The Company has the option to extend the maturity date of March 2023 for the remaining $611.0 million for up to two six-month periods, pursuant to certain terms and conditions and payment of an extension fee.
(3)    Borrowings bear interest at floating rates equal to, at the Company's option, either (i) LIBOR plus an applicable margin or (ii) a Eurocurrency Rate (as defined in the applicable credit agreement) plus an applicable margin.
(4)    Borrowings under the term loan facilities bear interest at floating rates equal to, at the Company's option, either (i) LIBOR plus an applicable margin or (ii) a Base Rate plus an applicable margin. As of March 31, 2022, approximately $1.1 billion of the borrowings under the term loan facilities bore an effective weighted-average fixed interest rate of 4.05%, after taking into account interest rate swap agreements, and approximately $293.1 million bore an effective weighted-average floating interest rate of 2.82%. As of December 31, 2021, approximately $1.3 billion of the borrowings under the term loan facilities bore an effective weighted-average fixed interest rate of 4.06%, after taking into account interest rate swap agreements, and approximately $113.1 million bore a weighted-average floating interest rate of 2.64%.
(5)    In February 2021, the interest rate increased from 4.70% to 5.15%. The increased interest rate is effective through the end of the waiver period.
(6)    In February 2021, the interest rate increased from 4.93% to 5.38%. The increased interest rate is effective through the end of the waiver period.
(7)    In April 2022, the Company exercised the option to extend the maturity date to May 2023. The loan bears interest at a floating rate equal to one-month LIBOR plus a weighted-average spread of 2.37%. The Company has the option to extend the maturity date to May 2024.
12

(8)    The Company has the option to extend the maturity date for $69.8 million of the principal balance by up to one year, subject to certain terms and conditions and payment of an extension fee.
(9)    The Company has the option to extend the maturity date for $93.0 million of the principal balance by up to one year, subject to certain terms and conditions and payment of an extension fee.
(10)    The Company used cash on hand to payoff this term loan upon maturity in April 2022.
Unsecured Revolving Credit Facilities
The Company has a $611.0 million senior unsecured revolving credit facility which will mature in March 2023, with options to extend the maturity date for up to two six-month periods, subject to certain terms and conditions and payment of an extension fee. As of March 31, 2022, the Company had no outstanding borrowings, $12.6 million of outstanding letters of credit and borrowing capacity of $598.4 million remaining on its senior unsecured credit facility. Interest is paid on the periodic advances under the senior unsecured revolving credit facility at varying rates, based upon either the London Inter-bank Offered Rate ("LIBOR") or the alternate base rate, plus an additional margin amount, or spread. The Company has the ability to further increase the aggregate borrowing capacity under the credit agreement up to $1.3 billion, subject to lender approval. Borrowings on the revolving credit facility bear interest at LIBOR plus 1.45% to 2.25%, depending on the Company’s leverage ratio. As a result of the amendments to the credit agreements, the spread on the borrowings is fixed at 2.40% during the waiver period. Additionally, the Company is required to pay an unused commitment fee at an annual rate of 0.20% or 0.30% of the unused portion of the revolving credit facility, depending on the amount of borrowings outstanding. The credit agreement contains certain financial covenants, including a maximum leverage ratio, a minimum fixed charge coverage ratio, and a maximum percentage of secured debt to total asset value.
The Company also has a $20.0 million unsecured revolving credit facility (the "PHL Credit Facility") to be used for PHL's working capital and general corporate purposes. This credit facility has substantially similar terms as the Company's senior unsecured revolving credit facility and matures in March 2023. Borrowings on the PHL Credit Facility bear interest at LIBOR plus 1.45% to 2.25%, depending on the Company's leverage ratio. As a result of the amendments described above, the spread of the borrowings is fixed at 2.40% during the waiver period. The PHL Credit Facility is subject to debt covenants substantially similar to the covenants under the Company's credit agreement that governs the Company's senior unsecured revolving credit facility. As of March 31, 2022, the Company had no borrowings under the PHL Credit Facility and had $20.0 million borrowing capacity remaining available under the PHL Credit Facility.
Under the terms of the credit agreement for the unsecured revolving credit facility, one or more standby letters of credit, up to a maximum aggregate outstanding balance of $30.0 million, may be issued on behalf of the Company by the lenders under the unsecured revolving credit facility. The Company will incur a fee that shall be agreed upon with the issuing bank. Any outstanding standby letters of credit reduce the available borrowings on the senior unsecured revolving credit facility by a corresponding amount. Standby letters of credit of $12.6 million and $12.1 million were outstanding as of March 31, 2022 and December 31, 2021, respectively.
As of March 31, 2022, the Company was in compliance with all debt covenants of the credit agreements that govern the unsecured revolving credit facilities.
Unsecured Term Loan Facilities
The Company has senior unsecured term loans with different maturities. Each unsecured term loan bears interest at a variable rate of a benchmark interest rate plus an applicable margin, depending on the Company's leverage ratio. Each of the term loan facilities is subject to debt covenants substantially similar to the covenants under the credit agreement that governs the revolving credit facility. As of March 31, 2022, the Company was in compliance with all debt covenants of its term loan facilities.
The Company entered into interest rate swap agreements to fix the LIBOR rate on a portion of these unsecured term loan facilities. See Derivative and Hedging Activities for further discussion on the interest rate swaps.
Convertible Senior Notes
In December 2020, the Company issued $500.0 million aggregate principal amount of 1.75% Convertible Senior Notes due December 2026 (the "Convertible Notes"). The net proceeds from this offering of the Convertible Notes were approximately $487.3 million after deducting the underwriting fees and other expenses paid by the Company.
In February 2021, the Company issued an additional $250.0 million aggregate principal amount of Convertible Notes. These additional Convertible Notes were sold at a 5.5% premium to par and generated net proceeds of approximately $257.2 million after deducting the underwriting fees and other expenses paid by the Company of $6.5 million, which was offset by a premium received in the amount of $13.8 million.
The Convertible Notes are governed by an indenture (the “Base Indenture”) between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee. The Convertible Notes bear interest at a rate of 1.75% per annum, payable semi-annually in arrears on June 15th and December 15th of each year, beginning on June 15, 2021. The Convertible Notes will mature on December 15, 2026.
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The Company separated the Convertible Notes issued in December 2020 into liability and equity components. The initial carrying amount of the liability component was $386.1 million and was calculated using a discount rate of 6.25%. The discount rate was based on the terms of debt instruments that were similar to the Convertible Notes. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the principal amount of such Convertible Notes, or $113.9 million. The amount recorded in equity was not subject to remeasurement or amortization. The $113.9 million also represented the initial discount recorded on the Convertible Notes. As a result of the Company's early adoption of ASU 2020-06 on January 1, 2021, the Convertible Notes are now recorded as a single liability with no portion recorded in equity. The Company also ceased recording non-cash interest expense associated with the amortization of the debt discount.
Prior to June 15, 2026, the Convertible Notes will be convertible upon certain circumstances. On and after June 15, 2026, holders may convert any of their Convertible Notes into the Company’s common shares of beneficial interest (“common shares”) at the applicable conversion rate at any time at their election two days prior to the maturity date. The initial conversion rate is 39.2549 common shares per $1,000 principal amount of Convertible Notes, which represents an initial conversion price of approximately $25.47 per share. The conversion rate is subject to adjustment in certain circumstances. As of March 31, 2022 and December 31, 2021, the if-converted value of the Convertible Notes did not exceed the principal amount.
The Company may redeem for cash all or a portion of the Convertible Notes, at its option, on or after December 20, 2023 upon certain circumstances. The redemption price will be equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. If certain make-whole fundamental changes occur, the conversion rate for the Convertible Notes may be increased.
In connection with the Convertible Notes issuances, the Company entered into privately negotiated capped call transactions (the “Capped Call Transactions”) with certain of the underwriters of the offerings of the Convertible Notes or their respective affiliates and other financial institutions. The Capped Call Transactions initially cover, subject to anti-dilution adjustments substantially similar to those applicable to the Convertible Notes, the number of common shares underlying the Convertible Notes. The Capped Call Transactions are expected generally to reduce the potential dilution to holders of common shares upon conversion of the Convertible Notes and/or offset the potential cash payments that the Company could be required to make in excess of the principal amount of any converted Convertible Notes upon conversion thereof, with such reduction and/or offset subject to a cap. The upper strike price of the Capped Call Transactions is $33.0225 per share. The cost of the Capped Call Transactions entered into in December 2020 and February 2021 was $38.3 million and $21.0 million, respectively, and was recorded within additional paid-in capital.
Senior Unsecured Notes
The Company has $47.6 million of senior unsecured notes outstanding bearing a fixed interest rate of 4.70% per annum and maturing in December 2023 (the "Series A Notes") and $2.4 million of senior unsecured notes outstanding bearing a fixed interest rate of 4.93% per annum and maturing in December 2025 (the "Series B Notes"). As a result of the amendments described above, the interest rates of the Series A Notes and the Series B Notes are fixed at 5.15% and 5.38%, respectively, for the duration of the waiver period. The debt covenants of the Series A Notes and the Series B Notes are substantially similar to those of the Company's senior unsecured revolving credit facility. As of March 31, 2022, the Company was in compliance with all such debt covenants.
Mortgage Loans
On September 23, 2021, the Company assumed a $161.5 million loan secured by a first-lien mortgage on the leasehold interest of Margaritaville Hollywood Beach Resort ("Margaritaville"). The loan requires interest-only payments based on a floating interest rate of one-month LIBOR plus a weighted-average spread of 2.37%. The loan matures on May 9, 2023 and may be extended by one-year. If the loan is extended, the interest rate spread will increase by 20 basis points for the extension period only. The Company expects to exercise this extension. The loan is also subject to an interest rate cap agreement.
On December 1, 2021, the Company assumed a $61.7 million loan secured by a first-lien mortgage on the leasehold interest of Estancia La Jolla Hotel & Spa ("Estancia"). The loan requires both principal and interest monthly payments based on a fixed interest rate of 5.07%. The loan matures on September 1, 2028.
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The Company's mortgage loans associated with Margaritaville and Estancia are non-recourse to the Company except for customary carve-outs to the general non-recourse liability. The loans contain customary provisions regarding events of default, as well as customary cash management, cash trap and lockbox provisions. Cash trap provisions are 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. No event of default has occurred under the loan documents.
Estancia's mortgage loan triggered the cash trap provisions prior to its acquisition, and therefore cash from hotel operations is being held by the lender in the cash management accounts and is reflected as restricted cash in the accompanying consolidated balance sheets. Cash will be released from the lockbox once the hotel reaches profitability levels that terminate the cash trap or the loan is paid off. Margaritaville's mortgage loan also triggered cash trap provisions prior to its acquisition, but the hotel reached profitability levels that terminated the cash trap and all cash in the lockbox was released during the first quarter of 2022.
Interest Expense
The components of the Company's interest expense consisted of the following for the three months ended March 31, 2022 and 2021 (in thousands):
For the three months ended March 31,
20222021
Unsecured revolving credit facilities$493 $561 
Unsecured term loan facilities13,534 15,909 
Convertible senior notes3,281 2,819 
Senior unsecured notes645 1,252 
Mortgage debt1,810  
Amortization of deferred financing fees, (premiums) and discounts2,285 2,659 
Other524 2,131 
Total interest expense$22,572 $25,331 
Fair Value
The Company estimates the fair value of its fixed rate debt by discounting the future cash flows of each instrument at estimated market rates, taking into consideration general market conditions and maturity of the debt with similar credit terms and is classified within Level 2 of the fair value hierarchy. The estimated fair value of the Company’s fixed rate debt (unsecured senior notes, convertible senior notes and the Estancia mortgage loan) as of March 31, 2022 and December 31, 2021 was $714.7 million and $747.8 million, respectively. The estimated fair value of the Company's variable rate debt approximates its book value.
Derivative and Hedging Activities
The Company enters into interest rate swap agreements to hedge against interest rate fluctuations. All of the Company's interest rate swaps are cash flow hedges. All unrealized gains and losses on these hedging instruments are reported in accumulated other comprehensive income (loss) and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.
The Company's interest rate swaps at March 31, 2022 and December 31, 2021 consisted of the following, by maturity date (dollars in thousands):
Aggregate Notional Value as of
Hedge TypeInterest Rate RangeMaturityMarch 31, 2022December 31, 2021
Swap-cash flow
1.78% - 1.79%
January 2022$ $180,000 
Swap-cash flow
1.64% - 1.68%
April 2022100,000 100,000 
Swap-cash flow
0.17%
January 2023200,000 200,000 
Swap-cash flow
1.99%
November 2023250,000 250,000 
Swap-cash flow
2.60%
January 2024300,000 300,000 
Swap-cash flow
1.43% - 1.44%
February 2026290,000 290,000 
Total$1,140,000 $1,320,000 
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The Company records all derivative instruments at fair value in the accompanying consolidated balance sheets. Fair values of interest rate swaps and caps are determined using the standard market methodology of netting the discounted future fixed cash receipts/payments and the discounted expected variable cash payments/receipts. Variable interest rates used in the calculation of projected receipts and payments on the swaps are based on an expectation of future interest rates derived from observable market interest rate curves (Overnight Index Swap curves) and volatilities (Level 2 inputs). Derivatives expose the Company to credit risk in the event of non-performance by the counterparties under the terms of the interest rate hedge agreements. The Company incorporates these counterparty credit risks in its fair value measurements. The Company believes it minimizes the credit risk by transacting with major creditworthy financial institutions.
As of March 31, 2022, the Company's derivative instruments were in both asset and liability positions, with aggregate asset and liability fair values of $13.8 million and $1.6 million, respectively. Derivative assets are included in prepaid expenses and other assets and derivative liabilities are included in accounts payable, accrued expenses and other liabilities in the accompanying consolidated balance sheets. The Company expects approximately $0.2 million will be reclassified from accumulated other comprehensive income (loss) to interest expense within the next 12 months.
Note 6. Revenue
The Company presents revenue on a disaggregated basis in the accompanying consolidated statements of operations and comprehensive income. The following table presents revenues by geographic location for the three months ended March 31, 2022 and 2021 (in thousands):
For the three months ended March 31,
20222021
Southern Florida/Georgia$85,241 $35,244 
San Diego, CA52,879 14,678 
Los Angeles, CA36,221 8,040 
Boston, MA33,936 9,757 
San Francisco, CA14,067 2,953 
Portland, OR13,524 5,782 
Other (1)
7,283 2,975 
Chicago, IL6,668 1,824 
Washington, D.C.6,276 1,902 
Seattle, WA1,973 488 
$258,068 $83,643 
______________________
(1)     Other includes: New York, NY, Philadelphia, PA and Santa Cruz, CA.
Payments from customers are primarily made when services are provided. Due to the short-term nature of the Company's contracts and the almost simultaneous receipt of payment, almost all of the contract liability balance at the beginning of the period is expected to be recognized as revenue over the following 12 months.
Note 7. Equity
Common Shares
The Company is authorized to issue up to 500,000,000 common shares. Each outstanding common share entitles the holder to one vote on each matter submitted to a vote of shareholders. Holders of common shares are entitled to receive dividends when authorized by the Board of Trustees.
Share Repurchase Program
On February 22, 2016, the Company announced that the Board of Trustees authorized a share repurchase program of up to $150.0 million of common shares. Under this program, the Company may repurchase common shares from time to time in transactions on the open market or by private agreement. The Company may suspend or discontinue this program at any time. Upon repurchase by the Company, common shares cease to be outstanding and become authorized but unissued common shares. For the three months ended March 31, 2022, the Company had no repurchases under this program and as of March 31, 2022, $56.6 million of common shares remained available for repurchase under this program. The credit agreements governing the Company's existing indebtedness prohibit the Company from repurchasing common shares until the Company has certified compliance with certain financial covenants through June 30, 2022.
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On July 27, 2017, the Company announced that the Board of Trustees authorized a new share repurchase program of up to $100.0 million of common shares. Under this program, the Company may repurchase common shares from time to time in transactions on the open market or by private agreement. The Company may suspend or discontinue this program at any time. This $100.0 million share repurchase program will commence upon completion of the Company's $150.0 million share repurchase program.
ATM Program
On April 29, 2021, the Company filed a prospectus supplement with the SEC to sell up to $200.0 million of common shares under an "at the market" offering program (the "ATM program"). No common shares were issued or sold under the ATM program during the three months ended March 31, 2022. As of March 31, 2022, $200.0 million of common shares remained available for issuance under the ATM program.
Common Dividends
The Company declared the following dividends on common shares/units for the three months ended March 31, 2022:
Dividend per Share/UnitFor the Quarter EndedRecord DatePayable Date
$0.01 March 31, 2022March 31, 2022April 15, 2022
Preferred Shares
The Company is authorized to issue up to 100,000,000 preferred shares of beneficial interest, $0.01 par value per share (“preferred shares”).
In May 2021, the Company issued 9,200,000 6.375% Series G Cumulative Redeemable Preferred Shares at a public offering price of $25.00 per share for net proceeds of $222.6 million. In July 2021, the Company issued 10,000,000 5.70% Series H Cumulative Redeemable Preferred Shares at a public offering price of $25.00 per share for net proceeds of $242.1 million.
In August 2021, the Company redeemed all outstanding 6.50% Series C Cumulative Redeemable Preferred Shares and 6.375% Series D Cumulative Redeemable Preferred Shares at the redemption amount of $25.00 per share plus accrued and unpaid dividends of $0.17 and $0.16 per share, respectively.
The following Preferred Shares were outstanding as of March 31, 2022 and December 31, 2021:
Security TypeMarch 31, 2022December 31, 2021
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
10,000,000 10,000,000 
29,600,000 29,600,000 
.
The Series E, Series F, Series G and Series H Cumulative Redeemable Preferred Shares (collectively, the “Preferred Shares”) rank senior to the common shares and on parity with each other with respect to payment of distributions. The Preferred Shares do not have any maturity date and are not subject to mandatory redemption. The Company may redeem the Series E and Series F Preferred Shares at any time. The Series G and Series H Preferred Shares may not be redeemed prior to May 13, 2026 and July 27, 2026, respectively, except in limited circumstances relating to the Company’s continuing qualification as a REIT or as discussed below. On or after such dates, the Company may, at its option, redeem the Preferred Shares, in each case in whole or from time to time in part, by payment of $25.00 per share, plus any accumulated, accrued and unpaid distributions through the date of redemption. Upon the occurrence of a change of control, as defined in the Company's declaration of trust, the result of which the common shares and the common securities of the acquiring or surviving entity are not listed on the New York Stock Exchange, the NYSE MKT or Nasdaq, or any successor exchanges, the Company may, at its option, redeem the Preferred Shares in whole or in part within