Pebblebrook Hotel Trust (PEB)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this report. Pebblebrook Hotel Trust is a Maryland real estate investment trust that conducts its operations so as to qualify as a real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended (the "Code"). Substantially all of the operations are conducted through Pebblebrook Hotel, L.P. (our "Operating Partnership"), a Delaware limited partnership of which Pebblebrook Hotel Trust is the sole general partner. In this report, we use the terms "the Company", "we" or "our" to refer to Pebblebrook Hotel Trust and its subsidiaries and "hotels" and "hotel properties" to refer to hotels and resorts, unless the context indicates otherwise.

FORWARD-LOOKING STATEMENTS

This report, together with other statements and information publicly disseminated by us, contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words "may", "will", "should", "potential", "could", "seek", "assume", "forecast", "believe", "expect", "intend", "anticipate", "estimate", "project" or similar expressions. Forward-looking statements in this report include, among others, statements about our business strategy, including acquisition and development strategies, industry trends, estimated revenues and expenses, estimated costs and durations of renovation or restoration projects, timing and extent of debt refinancings, estimated insurance recoveries, our ability to realize deferred tax assets and expected liquidity needs and sources (including capital expenditures and our ability to obtain financing or raise capital). You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond our control and which could materially affect actual results, performance or achievements. These factors include, but are not limited to, the following:

•risks associated with the hotel industry, including competition; changes in visa and other travel policies by the U.S. government making it less convenient, more difficult or less desirable for international travelers to enter the U.S.; increases in employment costs, energy costs or other operating costs; and decreases in demand caused by events beyond our control, including, without limitation, actual or threatened terrorist attacks, natural disasters, cyber attacks, any type of flu or disease-related pandemic, or downturns in general and local economic conditions;

•world events impacting the ability or desire of people to travel may lead to a decline in demand for hotels;

•the availability and terms of financing and capital and the general volatility of securities markets;

•our dependence on third-party managers of our hotels, including our inability to implement strategic business decisions directly;

•risks associated with the U.S. and global economies, the cyclical nature of hotel properties and the real estate industry, including environmental contamination and costs of complying with new or existing laws, including the Americans with Disabilities Act and similar laws;

•interest rate increases;

•our possible failure to qualify as a REIT under the Code and the risk of changes in laws affecting REITs;

•the timing and availability of potential hotel acquisitions, our ability to identify and complete hotel acquisitions and our ability to complete hotel dispositions in accordance with our business strategy;

•the possibility of uninsured losses;

•risks associated with redevelopment and repositioning projects, including delays and cost overruns; and

•the other factors discussed under Risk Factors in Part II, Item 1A of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2025.

Accordingly, there is no assurance that our expectations will be realized. Except as otherwise required by the federal securities laws, we disclaim any obligations or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

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Overview

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.

During the six months ended June 30, 2026, we had the following transactions and events:

•We amended our senior unsecured revolving credit facility and unsecured term loan facilities to extend the $360.0 million Term Loan 2027 to mature in February 2031 and to provide for a delayed draw option to borrow an additional $90.0 million by December 15, 2026 (which we now refer to the extended loan as Term Loan 2031). We also extended the maturity date of the $48.0 million unextended portion of the senior unsecured revolving credit facility to October 2028.

•We repaid the remaining $40.0 million mortgage loan on Margaritaville Hollywood Beach Resort.

•We repurchased 944,452 common shares for an aggregate purchase price of $12.9 million, or an average of approximately $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.

While we do not operate our hotel properties, both our asset management team and our executive management team monitor and work cooperatively with our hotel managers by advising and making recommendations in all aspects of our hotels' operations, including property positioning and repositioning, revenue and expense management, operations analysis, physical design, renovation and capital improvements, guest experience and overall strategic direction. Through these efforts, we seek to improve property efficiencies, lower costs, maximize revenues and enhance property operating margins, which we expect will enhance returns to our shareholders.

Key Indicators of Financial Condition and Operating Performance

We measure hotel results of operations and the operating performance of our business by evaluating financial and non-financial metrics such as room revenue per available room ("RevPAR"); total revenue per available room ("Total RevPAR"); average daily rate ("ADR"); occupancy rate ("Occupancy"); funds from operations ("FFO"); Adjusted FFO; earnings before interest, income taxes, depreciation and amortization ("EBITDA"); and EBITDA for real estate ("EBITDAre"); Adjusted EBITDAre; and hotel-level EBITDA ("Hotel EBITDA"). We evaluate individual hotel and company-wide performance with comparisons to budgets, prior periods and competing properties. ADR, occupancy and RevPAR may be impacted by macroeconomic factors as well as regional and local economies and events. See Non-GAAP Financial Measures for further discussion of FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDAre and Hotel EBITDA.

Hotel Operating Statistics

The following table represents the key same-property hotel operating statistics for our hotels for the three and six months ended June 30, 2026 and 2025:

For the three and six months ended June 30, 2026 and 2025, the above table of hotel operating statistics includes information from all hotels owned as of June 30, 2026 and includes Chamberlain West Hollywood Hotel for the first quarter only due to its sale in May 2026.

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Non-GAAP Financial Measures

Non-GAAP financial measures are measures of our historical or future financial performance that are different from measures calculated and presented in accordance with U.S. GAAP. We report FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDAre and Hotel EBITDA, which are non-GAAP financial measures that we believe are useful to investors as key measures of our operating performance.

We calculate FFO in accordance with standards established by Nareit, formerly known as the National Association of Real Estate Investment Trusts, which defines FFO as net income (calculated in accordance with U.S. GAAP), excluding real estate related depreciation and amortization, gains (losses) from sales of real estate, impairments of real estate assets (including impairment of real estate related joint ventures), the cumulative effect of changes in accounting principles and adjustments for unconsolidated affiliates. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most industry investors consider presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. By excluding the effect of real estate related depreciation and amortization including our share of the joint venture depreciation and amortization, gains (losses) from sales of real estate and impairments of real estate assets (including impairment of real estate related joint ventures), all of which are based on historical cost accounting and which may be of lesser significance in evaluating current performance, we believe that FFO provides investors a useful financial measure to evaluate our operating performance.

Adjusted FFO is defined as FFO, as adjusted for transaction costs, non-cash ground rent on operating and finance 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 e

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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this report. Pebblebrook Hotel Trust is a Maryland real estate investment trust that conducts its operations so as to qualify as a REIT under the Code. Substantially all of the operations are conducted through Pebblebrook Hotel, L.P. (our "Operating Partnership"), a Delaware limited partnership of which Pebblebrook Hotel Trust is the sole general partner. In this report, we use the terms "the Company", "we" or "our" to refer to Pebblebrook Hotel Trust and its subsidiaries, unless the context indicates otherwise.

Overview

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.

During 2025, we completed the following transactions:

•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 repurchased 6,277,068 common shares for an aggregate purchase price of $71.4 million, or an average of $11.37 per share, under our common share repurchase program.

•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.

While we do not operate our hotel properties, both our asset management team and our executive management team monitor and work cooperatively with our hotel managers by advising and making recommendations in all aspects of our hotels' operations, including property positioning and repositioning, revenue and expense management, operations analysis, physical design, renovation and capital improvements, guest experience and overall strategic direction. Through these efforts, we seek to improve property efficiencies, lower costs, maximize revenues and enhance property operating margins, which we expect will enhance returns to our shareholders.

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Key Indicators of Financial Condition and Operating Performance

We measure hotel results of operations and the operating performance of our business by evaluating financial and non-financial metrics such as room revenue per available room ("RevPAR"); total revenue per available room ("Total RevPAR"); average daily rate ("ADR"); occupancy rate ("Occupancy"); funds from operations ("FFO"); Adjusted FFO; earnings before interest, income taxes, depreciation and amortization ("EBITDA"); and EBITDA for real estate ("EBITDAre"); Adjusted EBITDAre; and hotel-level EBITDA ("Hotel EBITDA"). We evaluate individual hotel and company-wide performance with comparisons to budgets, prior periods and competing properties. ADR, occupancy and RevPAR may be impacted by macroeconomic factors as well as regional and local economies and events. See Non-GAAP Financial Measures for further discussion of FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDAre and Hotel EBITDA.

Hotel Operating Statistics

The following table represents the key same-property hotel operating statistics for our hotels for the years ended December 31, 2025 and 2024:

The above table of hotel operating statistics includes information from all hotels owned as of December 31, 2025, except for LaPlaya Beach Resort & Club which was excluded for the fourth quarter due to its closure in 2024 following Hurricane Milton and Newport Harbor Island Resort which was excluded for the first and second quarters 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.

Results of Operations

This section includes comparisons of certain 2025 financial information to the same information for 2024. Year-to-year comparisons of the 2024 financial information to the same information for 2023 are contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 26, 2025.

At December 31, 2025 and 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, 2025 and 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":

Comparison of the year ended December 31, 2025 to the year ended December 31, 2024

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.

Hotel operating expenses — Total hotel operating expenses increased by $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, as well as an increase in wages and benefits throughout most of our portfolio. This increase was partially offset by a $2.4 million decrease due to the sales of our non-comparable properties in 2025.

Depreciation and amortization — Depreciation and amortization expense decreased by $1.9 million primarily due to the sale of our non-comparable properties in 2025.

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Real estate taxes, personal property taxes, property insurance and ground rent — Real estate taxes, personal property taxes, property insurance and ground rent increased by $7.2 million primarily due to lower property taxes in 2024 on several California properties as a result of the successful settlement of appeals from previous years and an increase in real estate tax assessments in 2025.

General and administrative — General and administrative expense increased by $1.4 million primarily due to an increase in legal costs 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 Hurricanes Helene and Milton at LaPlaya Beach Resort & Club and an impairment loss of $38.1 million related to one hotel property.

Business interruption insurance income and gain on insurance settlement — We recognized business interruption insurance income and gain on insurance settlement in 2025 and 2024 related to the settlements 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 in 2024.

Interest expense — Interest expense decreased by $9.1 million primarily due to a $7.4 million gain on debt extinguishment recorded as a result of repurchasing a portion of our convertible debt at a discount.

Income tax (expense) benefit — In 2024, the Company had an income tax benefit of $25.6 million as a result of the release of a portion of the valuation allowance. In 2025, the Company had an income tax expense of $6.3 million as a result of taxable income of its taxable REIT subsidiary.

Non-controlling interests — Non-controlling interests represent the allocation of income or loss of our Operating Partnership to third-party common OP unit holders and to the preferred OP unit holders.

Issuance costs of repurchased preferred shares — Issuance costs of repurchased preferred shares increased due to the repurchase of 531,038 preferred shares under our preferred share repurchase program. These costs are included in the determination of net income (loss) attributable to common shareholders.

Non-GAAP Financial Measures

Non-GAAP financial measures are measures of our historical or future financial performance that are different from measures calculated and presented in accordance with U.S. GAAP. We report FFO, Adjusted FFO, EBITDA, EBITDAre, Adjusted EBITDAre and Hotel EBITDA, which are non-GAAP financial measures that we believe are useful to investors as key measures of our operating performance.

We calculate FFO in accordance with standards established by Nareit, formerly known as the National Association of Real Estate Investment Trusts, which defines FFO as net income (calculated in accordance with U.S. GAAP), excluding real estate related depreciation and amortization, gains (losses) from sales of real estate, impairments of real estate assets (including impairment of real estate related joint ventures), the cumulative effect of changes in accounting principles and adjustments for unconsolidated affiliates. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most industry investors consider presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. By excluding the effect of real estate related depreciation and amortization including our share of the joint venture depreciation and amortization, gains (losses) from sales of rea

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