Current as of October 14, 2010 Grand Hotel Minneapolis Mondrian Los Angeles Argonaut Hotel Westin Gaslamp Quarter Hotel Monaco Seattle Sheraton Delfina Sofitel Philadelphia Sir Francis Drake Hotel Monaco Washington, DC InterContinental Buckhead 1
Forward-Looking Statements This presentation contains forward-looking statements that are subject to risks and uncertainties. These forward-looking statements include information about possible or assumed future results of the Company s business, financial condition, liquidity, results of operations, plans and objectives. These forward-looking statements are based on the Company s beliefs, assumptions and expectations of future performance, taking into account information currently available to the Company. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to the Company. If a change occurs, the Company s business, prospects, financial condition, liquidity and results of operations may vary materially from these forward-looking statements. These risks and uncertainties include, but are not limited to, the state of the U.S. economy, supply and demand in the hotel industry and other factors as are described in greater detail in the Company s filings with the Securities and Exchange Commission, including, without limitation, the Company's Annual Report on Form 10-K for the year ended December 31, 2010. You should carefully consider these risks when you make an investment decision concerning the Company s common shares. You are cautioned not to place undue reliance on any forward-looking statements. The Company assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. InterContinental Buckhead This presentation does not constitute, and may not be used in connection with, an offer or solicitation by anyone. This document is current as of May 3, 2011. Pebblebrook Hotel Trust assumes no obligation to update or revise any of the information in this document. The following presentation includes financial projections and forward-looking statements. These projections and forward-looking statements are based on assumptions and estimates developed by Pebblebrook Hotel Trust and actual results may vary from the projections and such variations may be material. This presentation may contain errors or omissions of information, of which may be material in nature and as such, Pebblebrook Hotel Trust undertakes no duty to update the information to conform to actual results or changes in our expectations. Additionally, the following assumptions, projections, estimates and forward-looking statements depend upon future events that may be out of Pebblebrook Hotel Trusts control and as such, should not be relied upon or regarded as a representation by Pebblebrook Hotel Trust, management or its employees that the projections, assumptions, estimates or forward-looking statements will be achieved. Investor Inquiries Raymond D. Martz Chief Financial Officer (240) 507-1330 rmartz@pebblebrookhotels.com Sofitel Philadelphia 2
Investment Highlights Experienced Leadership Leading hotel management team with deep industry experience Excellent long-term track record Management has led over $9.1 billion in lodging related transactions, including the acquisition of over 50 hotels, with 12 hotels and $997 million being completed at Pebblebrook Proven Ability to Acquire IPO equity proceeds committed twelve months ahead of expectations IPO equity proceeds committed twelve months ahead of expectations Acquisitions from multiple sources as a result of broad industry relationships Focused Property Investment Strategy Flexible and Diversified ifi Operating Strategy Prudent Capital Structure Pure play on cyclical lodging investment opportunities Primarily urban located, upper upscale, full-service hotels in major U.S. cities Resorts near primary urban target markets and in select destination markets Management contracts with multiple branded and independent third-party operators Intensive asset management alongside third-party operators Active leadership and involvement in all key aspects of hotel operations and strategic direction Conservative long-term leverage target $150 million corporate revolving credit facility as additional source of liquidity Currently $0 outstanding balance on the credit facility Successful investment of equity raised and prudent debt capital achieves sustainable company size and supportable corporate overhead Cash of over $235 million currently on the balance sheet 3
Pebblebrook Execution IPO $380 million in net cash raised in the IPO (Dec. 2009) Targeted full deployment of IPO proceeds in 18-24 months, starting in mid-2010 Target attractive unlevered returns with significant discounts to replacement costs Anticipated corporate revolving credit facility as additional source of liquidity TODAY $1.1 billion of common and preferred equity raised through the IPO and three other offerings Acquired twelve high-quality assets in target markets for $997 million Two hotels currently under contract for a total of $127M Initial capital deployed over a year ahead of expectations All assets priced within targeted return ranges Completed $150 million secured line of credit and $120 million in additional fixed rate financings Owners, lenders and CMBS servicers expected to Significant increase in expected industry transaction liquidate assets and portfolios activity for the remainder of 2011 and 2012 Management consisted of CEO, CFO and Controller Assembled superior senior management team Core platform in place with 16 employees to continue growth Operating performance expected to improve in 2nd half of 2010 Industry fundamentals turned positive sooner than expected and industry RevPAR growth of 5.5% for the full year of 2010 dramatically exceeded expectations 4
Experienced Leadership Team Jon E. Bortz, Chairman, President and Chief Executive Officer A Founder of Pebblebrook Hotel Trust Founder, Former Chairman of the Board and Chief Executive Officer of LaSalle Hotel Properties Founder and Former President of Jones Lang LaSalle s Hotel Investment Group Has led transactions totaling over $3.6 billion in asset value, including overseeing 40 hotel acquisitions Has raised over $4.3 billion of debt and equity capital Raymond D. Martz, Executive Vice President and Chief Financial Officer A Founder of Pebblebrook Hotel Trust Former Chief Financial Officer of Phillips Edison and Eagle Hospitality Properties Trust Former Treasurer and Vice President of Finance at LaSalle Hotel Properties Has executed over $2.5 billion of capital markets transactions Sheraton Delfina Santa Monica Thomas C. Fisher, Executive Vice President and Chief Investment Officer Former Managing Director of Americas for Jones Lang LaSalle Hotels Has executed over $5.7 billion in hotel transactions Established platform with deep industry strength Core team of 16 employees with acquisitions, accounting, finance and asset management expertise Independent Board members bring additional insight and expertise across the travel, finance, leisure, REIT, investment t and hospitality sectors - Cydney C. Donnell, Director of Real Estate Programs and Executive Professor, Mays School of Business Texas A&M and former principal and Managing Director at European Investors - Ron E. Jackson, President and CEO, Meadowbrook Golf, Inc. - Michael J. Schall, President and CEO, Essex Property Trust, Inc. - Earl E. Webb, President, U.S. Operations, Avision Young - Laura H. Wright, SVP and CFO, Southwest Airlines Co. Hotel Monaco Washington, DC 5
Disciplined Acquisition Approach in Primary Urban Target Markets High Barrier-to-Entry Markets Significant Discounts to Replacement Cost Opportunities to Improve Cash Flow Seattle Portland Minneapolis Boston (1) San Francisco Philadelphia Los Angeles Washington, DC Target Market Target Market with Recent / Pending Acquisitions San Diego Miami (2) Pending Atlanta Unique Competitive Advantages Location and Facilities Redevelopment and Repositioning Upside 6 (1) The W Boston Hotel is currently under contract but has not yet been acquired by the Company. The acquisition of this hotel is subject to the approval of bankruptcy court and as a result, Pebblebrook Hotel Trust can give no assurance that the transaction will be consummated under the initial terms disclosed, or at all. (2) The Company is currently under contract for a hotel in the Miami-Fort Lauderdale region for $89.5M. The acquisition of this property is subject to customary due diligence and closing conditions and requirements and therefore, Pebblebrook Hotel Trust can give no assurance that the transaction will be consummated under the initial terms disclosed, or at all.
2010 ADR Peer Comparison $240 2010 Lodging REIT ADR (1) Comparison Mondrian Los Angeles $226 $220 $200 $180 $183 $180 $173 $160 $162 $149 $140 $136 $120 $123 $100 $98 $80 BEE LHO PEB HST DRH SHO HT AHT FCH 7 Source: Company Filings (1) Host and Strategic ADR include the effects of international properties. (2) PEB ADR represents Pebblebrook Hotel Trust s historical pro forma 2010 ADR as reported April 28, 2011.
Attractive Acquisition Opportunities from Numerous Sources Management s extensive long-term relationships with owners, operators, lenders, brokers and other key players provide a healthy pipeline of opportunities (Red denotes an off market transaction) Brokers Long-term relationships Certainty of execution Sir Francis Drake, San Francisco, CA Skamania Lodge, Stevenson, WA Sheraton Delfina, Santa Monica, CA Sofitel, Philadelphia, PA Argonaut, San Francisco, CA Hotel Monaco Seattle, Seattle, WA Owners Private Equity funds, pension funds, and REITs seeking liquidity and/or deleveraging DoubleTree by Hilton, Bethesda - Washington, DC Management Companies Provide a pipeline for offmarket opportunities aligned with Pebblebrook s multioperator approach Hotel Monaco Washington, DC Mondrian Los Angeles, CA Bankruptcies, Servicers and Receivers Defaulted and delinquent loans continue to grow Banks W Boston, Boston, MA (1) Foreclosure and REO opportunities continue to rise Brands Brand execution matches well with Pebblebrook s strategy Provide a pipeline for offmarket opportunities given Pebblebrook s growth outlook InterContinental, Buckhead, GA The Westin Gaslamp Quarter, San Diego, CA The Grand Hotel, Minneapolis, MN Pebblebrook s acquisitions are spread across multiple sources 8 (1) The W Boston Hotel is currently under contract but has not yet been acquired by the Company. The acquisition of this hotel is subject to the approval of bankruptcy court and as a result, Pebblebrook Hotel Trust can give no assurance that the transaction will be consummated under the initial terms disclosed, or at all.
Investment Summary Hotel Name / Location Year Opened / Renovated Rooms Total Price (Millions) Price per Key (000s) Forward Occupancy / 12-Month Cap ADR Rate (1) (3) DoubleTree by Hilton Bethesda -Washington, DC 1971 / 2007 269 $67.1 $249 6.6% - 7.3% 71% / $160 Sir Francis Drake Hotel 1928 / 2009 416 90.0 216 2.8% - 3.3% 76% / $139 InterContinental Buckhead 2004 422 105.0 249 6.1% - 6.6% 68% / $155 Monaco Washington, DC 1839 / 2002 183 74.0 404 6.1% - 6.8% 80% / $257 The Grand Hotel 1915 / 2000 140 33.0 150 (2) 61%- 6.1% 76% 7.6% 61% / $176 Skamania Lodge 1993 / 2009 254 55.8 219 7.0% - 7.5% 48% / $149 Sheraton Delfina 1972 / 2005 310 102.8 331 6.2% - 6.7% 81% / $179 Sofitel Philadelphia 1964 / 2000 306 87.0 284 4.4% - 5.1% 77% / $179 Argonaut Hotel 1907 / 2003 252 84.0 333 5.0% - 5.6% 87% / $185 1987 / 2011 The Westin Gaslamp Quarter 450 110.0 244 5.9% - 6.4% 72% / $157 Hotel Monaco Seattle 1969 / 1997 189 51.2 271 4.5% - 5.0% 81% / $147 Mondrian Los Angeles 1959 / 1996 / 2008 237 137.0 578 5.6% - 6.1% 71% / $257 Grand Total / Average 3,428 (4) $996.9 (4) $287 (2)(4) 5.5% - 6.1% 73% / $173 9 (1) Based on forward twelve month hotel operating income (after a 4.0% of total revenues FF&E reserve) from the date the property was acquired (2) Estimated $150/key after allocation of value to 58,000 SF athletic club and 10,776 SF restaurant leases at The Grand Hotel Minneapolis (3) Occupancy and ADR for all properties acquired prior to December 31, 2010 represent operations for the year 2009. Occupancy and ADR for properties acquired after December 31, 2010 represent operations for the year 2010. (4) Includes the impact of acquisitions that are under contract but have not yet been completed for total rooms, purchase price and price per key.
DoubleTree by Hilton Bethesda Washington, DC Acquisition Highlights $67.1M purchase price, $249k / key Projected 6.6% 7.3% forward 12-month NOI cap rate Property Amenities 269-room, upscale, full-service hotel Over 13,500 SF of IACC certified meeting space Multiple food and beverage outlets Operator: Thayer Lodging Management DoubleTree by Hilton Bethesda Washington, DC DoubleTree by Hilton Bethesda Washington, DC DoubleTree by Hilton Bethesda Washington, DC Investment Highlights High barriers-to-entry market Excellent location in downtown Bethesda and closest hotel to National Institutes of Health (NIH) and National Naval Medical Center (NNMC) Significant discount to expected replacement cost Off-market transaction Attractive yield Terminable at-will management agreement Upside Opportunities Near-term growth in NIH and NNMC, two large demand generators Pebblebrook asset management, including best practices implementation and enhanced strategic revenue management $3.2M of improvements to guest rooms and public areas 10
Sir Francis Drake Hotel Acquisition Highlights $90.0M purchase price, $216k / key Projected 2.8% 33%f 3.3% forward d12-month NOI cap rate Extensive renovations totaling $23.0M completed 2006-2009 Property Amenities 416-room, upper upscale, full-service boutique hotel 24-hour business and fitness center Historic/Unique meeting space totaling over 18,000 SF Award-winning Scala s Bistro, the Wine Room at Scala s, Bar Drake, Starbucks, and renowned Harry Denton s Starlight Room Operator: Kimpton Hotels & Restaurants Sir Francis Drake Hotel Sir Francis Drake Hotel Investment Highlights Famous historic hotel located in the center of Union Square area Extremely high barriers to entry Strong retail lease income Significant discount to expected replacement cost Upside Opportunities Continued strong market recovery Repositioning to 4-Diamond hotel through $9.0M renovation of rooms, select public areas and Starlight Room Pebblebrook asset management, operational efficiency opportunities and enhanced strategic positioning and revenue management 11
InterContinental Buckhead Acquisition Highlights $105.0M purchase price, $249k / key Projected 6.1% 6.6% forward 12-month NOI cap rate Property Amenities Premier 422-room, luxury, full-service hotel 31,000 SF of event space and 24,000 SF garden 5,000 SF Wellness Spa and Fitness Center French brasserie, Au Pied de Cochon, and XO Bar, an upscale hotel lounge On-site parking Operator: InterContinental Hotels InterContinental Buckhead InterContinental Buckhead InterContinental Buckhead Investment Highlights Core institutional quality asset in premier location on Peachtree Road in Buckhead Off-market transaction Newly built property acquired at a significant discount to replacement cost, opened in November 2004 Upside Opportunities $7.0M phased soft goods refurbishment Strong market recovery from business travel Pebblebrook asset management, including best practices implementation, strategic positioning, operational efficiency opportunities and restaurant reconcept 12
Hotel Monaco Washington, DC Acquisition Highlights $74.0M purchase price, $404k / key Projected 6.1% 6.8% forward 12-month NOI cap rate Assumed existing debt of $35.0M; debt matures in Q1 2012 Property Amenities 183-room, full-service, upper upscale, boutique hotel Poste Moderne Brasserie, a 174-seat upscale restaurant and bar Original United States Post Office, built in 1839 as the Tariff Building Ground lease with the United States expires in 2059 Operator: Kimpton Hotels & Restaurants Hotel Monaco Washington, DC Hotel Monaco Washington, DC Investment Highlights Off-market transaction Market leader Superior downtown location Irreplaceable asset and registered national historic landmark High-quality physical condition Significant discount to expected replacement cost Upside Opportunities Continued market recovery Pebblebrook asset management, including best practices implementation, operational efficiencies i i and enhanced revenue management 13
The Grand Hotel Minneapolis Acquisition Highlights $33.0M purchase price, $150k / key (1) $54.0M renovation/conversions to a hotel completed in 2000 Projected 6.1% 7.6% forward 12-month NOI cap rate Property Amenities 140-room, upper upscale, full-service hotel 6,500 SF of meeting space, 4,500 SF ballroom 58,000-square foot luxury athletic club and 10,000 SF Zahtar restaurant leased to Life Time Fitness (NYSE: LTM) and free to hotel guests Directly connected to the Minneapolis Skyway y system Operator: Kimpton Hotels & Restaurants Investment Highlights Core institutional quality asset in excellent downtown location Significant discount to expected replacement cost Stable cash flow from Life Time Athletic Club and Zahtar leases The Grand Hotel Minneapolis The Grand Hotel Minneapolis Upside Opportunities Strong market recovery from business travel $6.0M property renovation and energy conservation capital New national boutique operator with the installation of Kimpton Hotels Pebblebrook asset management, including best practices implementation, operating efficiency opportunities, professional sales and revenue management and basic execution 14 (1) Estimated $150/key after allocation of value to 58,000 s.f. athletic club and 10,776 s.f. restaurant leases
Skamania Lodge Acquisition Highlights $55.8M purchase price, $219k / key $4.5M renovation completed in 2007 and upside still remaining Projected 7.0% 7.5% forward 12-month NOI cap rate Property Amenities 254-room, upscale, full-service conference center and lodge 22,000 SF of meeting space, 7,000 SF ballroom Waterleaf Spa and Fitness Center 18-hole, par 70 golf course with driving range and practice area The award-winning Cascade Room, the River Rock Restaurant and Lounge, and The Greenside Grill Operator: Destination Hotels & Resorts Skamania Lodge Skamania Lodge Investment Highlights Strong initial cash yields still substantially below prior peak Significant discount to expected replacement cost High quality physical condition Quality meeting facilities Unique and convenient location Upside Opportunities Healthy recovery in group demand Limited new supply Pebblebrook asset management, including best practices implementation, operational efficiencies and enhanced revenue management 15
Sheraton Delfina Santa Monica Acquisition Highlights $102.8M purchase price, $331k / key Projected 6.2% 6.7% forward 12-month NOI cap rate Property Amenities 310-room, full-service, upper upscale, boutique style hotel 10,000 SF of meeting space, 4,500 SF penthouse ballroom Heated outdoor swimming pool with poolside food and beverage service Two food and beverage outlets: restaurant lobby lounge and cafe Operator: Viceroy Hotel Group Sheraton Delfina Santa Monica Sheraton Delfina Santa Monica Investment Highlights Strong non-seasonal market with extremely high barriers to entry Contemporary design High-demand d leisure and corporate meeting and transient t travel market New significant demand drivers Desirable, healthy meeting space, including rooftop ballroom with ocean views Solid discount to expected replacement cost Upside Opportunities Repositioning possibilities from guestroom and meeting space renovation Three years remaining with the Sheraton franchise agreement Pebblebrook asset management, including best practices implementation, operational efficiencies and enhanced revenue management 16
Sofitel Philadelphia Acquisition Highlights Sofitel Philadelphia $87.0M purchase price, $284k / key $11 0M renovation completed in 2005 $11.0M Projected 4.4% 5.1% forward 12-month NOI cap rate Assumed existing debt of $56.1M; debt matures in Q1 2012 Property Amenities 306-room, full-service, upper upscale, boutique style hotel, including 68 suites Four-fixture bathrooms and large sleeping rooms 15,000 SF of meeting space, 4,500 SF Paris Ballroom Two food and beverage outlets: Liberté and Chez Colette On-site indoor parking facilities and fitness center Operator: Accor Investment Highlights High barrier-to-entry market Premiere Center City location in historically strong performing market Cash flow significantly below prior peak performance Desirable contemporary design Considerable discount to expected replacement cost Upside Opportunities Major convention center expansion being completed in 2011 Bar/restaurant reconfiguration Pebblebrook asset management, g, including g best p practices implementation, p, Sofitel Philadelphia operational efficiencies and enhanced revenue management 17
Argonaut Hotel Argonaut Hotel Acquisition Highlights $84.0M purchase price, $333k / key Projected 5.0% 5.6% forward 12-month NOI cap rate Assumed existing debt of $42.0M; debt matures in Q1 2012 Property Amenities 254-room, full-service, upper upscale, boutique hotel Blue Mermaid Chowder House and Bar, a three-meal-a-day restaurant Originally the historic Haslett Warehouse, built in 1907 Ground lease with the United States expires 2059 Operator: Kimpton Hotels & Restaurants Investment Highlights ADR and RevPAR market leader Superior Fisherman s Wharf location Irreplaceable asset and historic registered landmark High-quality physical condition Significant discount to expected replacement cost Argonaut Hotel Upside Opportunities Continued market recovery Soft-goods renovation of guestrooms Pebblebrook asset management, including best practices implementation, operational efficiencies and enhanced revenue management 18
The Westin Gaslamp Quarter The Westin Gaslamp Quarter Acquisition Highlights $110.0M purchase price, $244k / key Projected 5.9% 6.4% forward 12-month NOI cap rate Property Amenities 450-room, full-service, upper upscale, branded hotel Over 32,000 SF of indoor / outdoor meeting space; 9,000 SF California Ballroom and 6,000 SF indoor / outdoor San Diego Ballroom and Terrace Three food and beverage outlets: Horton s Bar & Grill, Lobby Lounge and Café Express Operator: Starwood Hotels and Resorts The Westin Gaslamp Quarter Investment Highlights Strong, consistent growth in hotel demand Top convention destination High barrier-to-entry market Premier Gaslamp Quarter location Significant discount to replacement cost Upside Opportunities Significant upside from $25.0M comprehensive hotel renovation Planned expansion of the San Diego Convention Center Extensive renovation and revitalization of Horton Plaza and Westfield Mall Pebblebrook asset management, including best practices implementation, operational efficiencies and enhanced revenue management 19
Hotel Monaco Seattle Hotel Monaco Seattle Acquisition Highlights $51.2M purchase price, $271k / key Projected 4.5% 5.0% forward 12-month NOI cap rate Property Amenities 189-room, full-service, upper upscale, boutique hotel; including 45 suites Sazerac, an award-winning, winning, three-meal-a-day a restaurant Over 6,000 SF of meeting space; 2,160 SF Paris Ballroom Operator: Kimpton Hotels & Restaurants Hotel Monaco Seattle Investment Highlights Strong and growing coastal market with excellent fundamentals Unique boutique hotel product Consistently successful restaurant and bar Gateway city to Asia Significant discount to expected replacement cost Upside Opportunities Hotel NOI down approximately 50% from the prior peak Comprehensive guestrooms and meeting space renovation planned for the end of 2011 Planned convention center expansion No new immediate hotel supply Pebblebrook asset management, including best practices implementation, operational efficiencies and enhanced revenue management 20
Mondrian Los Angeles Mondrian Los Angeles Acquisition Highlights $137.0M purchase price, $578k / key Projected 5.6% 6.1% forward 12-month NOI cap rate Property Amenities 237-room, full-service, luxury, boutique hotel SkyBar, an immensely popular bar destination with views of Los Angeles Asia de Cuba, a three-meal-a-day innovative Asian-Latin fusion restaurant Agua Spa, a full-service spa and salon Over 1,200 SF of meeting space Operator: Morgans Hotel Group Investment Highlights Recently renovated signature product Superior Sunset Boulevard location Strong destination restaurant and bar venues and associated revenues Premier hotel name recognition Stable market with excellent long-term supply and demand fundamentals Mondrian Los Angeles Upside Opportunities Continued upside from comprehensive $39M ($165K / key) renovation No new immediate hotel supply Attractive rebounding hotel fundamentals Pebblebrook asset management, including best practices implementation, operational efficiencies and enhanced revenue management 21
Capitalizing on Forecasted Improvement in Fundamentals Lodging industry exhibiting improvement in fundamentals and projecting a sustained recovery Year-Over-Year % Change 15.0% Trough to Peak Cumulative RevPAR Growth PEB IPO 10.0% 92 48.1% 00 03 34.2% 07 92 00 10 41.3%E 15 5.0% 0.0% (5.0%) * * (10.0%) (15.0%) (20.0%) * Cycle Trough in RevPAR * % Change in RevPAR % Change in Room Night Supply % Change in Room Night Demand 22 Source: Smith Travel Research (1998 2011E) and PKF Hospitality Research (2012E 2015E) for the U.S. lodging industry.
U.S. Hotel Industry Trailing 28-Day Moving Average 15.0 Year-over-year RevPAR turned positive in March 2010 and fundamentals have shown significantly consistent improvement U.S. Hotel Industry Trailing 28-Day Moving Average RevPAR Change Occupancy Change ADR Change Year -ov ver-year % Chang e 12.5 10.0 7.5 5.0 2.5 0.0 (2.5) (5.0) (7.5) (10.0) (12.5) (15.0) (17.5) (20.0) (22.5) (25.0) 23 Source: STR Weekly Hotel Review, Smith Travel Research
Acquisition Environment Favors Public Buyers Transaction activity has significantly increased in 2010 and is expected to further increase as sellers face pending maturities Volume ($ in mm) $50 Transaction Volume Pending Commercial Real Estate Debt Maturities ($ in billions) ($ in billions) $450.0 $45 $40 $400.0 $350.0 $326.1 $346.6 $361.9 $368.3 $344.1 $339.8 $35 $30 $25 Over $1.1 bn in hotels acquired by public companies in 2010 $300.0 $250.0 2010 $200.00 $20 $150.0 $15 $10 $100.0 $5 $50.0 $0 $0.0 2010E 2011E 2012E 2013E 2014E 2015E Banks CMBS Other Life Cos 24 Source: Jones Lang LaSalle Hotels Note: Transactions $10 million and above, excludes land site and casino transactions. Source: Foresight Analytics, LLC, a division of Trepp, LLC. Note: As of 6/30/2010.
Special Servicers Hotel CMBS loans (1) transferred to special servicers continue to increase 200 180 160 140 120 100 Cumulative ## of of Hotels Transferred to to Special Servicing Cumulative Current Loan Loan Balance (in in 000,000's 000,000 s as as of of Jan. '10) 11 Single Assets Portfolios - (Number of Assets) as of Jan. 11 Property Transacted / Restructured 30 31 32 33 34 35 51 52 53 $12,000 $10,500 $9,000 $7,500 $6,000 Loan Balance 80 60 40 20 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 Q1 '07 Q2 '07 Q3 '08 Q4 '08 Q1 '09 Q2 '09 Q3 '09 Q4 '09 Q1 '10 Q2 '10 Q3 '10 Q4 '10 114 $4,500 $3,000 $1,500 $0 ($ in MM) Properties and Portfolios 1 Royal Palm 24 Holiday Inn Mission Bay Sea World 47 Hotel Burnham 70 Comfort Inn - San Diego Zoo 93 Marriott Columbia 2 Hotel 71 25 Four Seasons San Francisco 48 Marriott Mobile, AL 71 Marriott Overland Park 94 Columbia Sussex Portfolio (8) 3 Sheraton Keauhou 26 Hyatt Regency Albuquerque 49 W New York - Union Square 72 Sheraton Premiere Tysons Corner 95 Doubletree Guest Suites D.C. 4 Sheraton West - Richmond 27 Ontario Airport Marriott 50 Hilton Dedham, MA 73 Ventana Inn and Spa 96 Sheraton Park Hotel - Anaheim, CA 5 Resort Atlantic City 28 Westin O'Hare 51 SLS Beverly erl Hills 74 Courtyard San Diego downtown n 97 National Conference Center 6 Westin Portfolio - (2) 29 Renaissance Baltimore 52 Hampton Inn-Las Vegas 75 Marriott Irvine 98 Lowell Hotel 7 Embassy Suites-Phoenix 30 Marriott Del Mar 53 Palm Beach Gardens Marriott 76 Crowne Plaza - Addison 99 Hyatt Regency Jacksonville 8 ResortQuest Kauai 31 Crowne Plaza-Laguardia 54 Hilton Tapatio 77 The Argent Hotel 100 Hotel Monaco Baltimore 9 Sheraton - St. Louis 32 Sheraton Universal Hotel 55 Four Seasons Hotels - (5) 78 Courtyard - Lynhurst, NJ 101 Four Seasons Aviara Resort 10 Loews Lake Las Vegas 33 Graves 601 Hotel 56 Hilton - Ontario 79 Hilton Pasadena 102 Sherman Oaks Marriott 11 BPG Portfolio - (3) 34 Citigroup Hilton Portfolio - (5) 57 CNL Hotel & Resorts - (5) 80 Doubletree Plymouth 103 Norfolk Marriott 12 Pointe South Mountain 35 Wyndham Jacksonville Riverwalk 58 Wynfrey Hotel 81 Westin Casuarina Hotel & Spa 104 Great Wold Portfolio (2) 13 Wyndham-Atlanta 36 Hyatt on Capitol Hill (OH) 59 Konover Hotel Portfolio - (15) 82 Hilton Times Square 105 Fairmont Sonoma Mission Inn & Spa 14 Amalfi Hotel 37 The Sagamore Hotel 60 Four Seasons Resort - Las Colinas 83 Four Seasons Resort Maui 106 Windsor Hospitality Portfolio (4) 15 Ritz-Carlton New Orleans 38 Doubletree Bakersfield 61 Westin Portland 84 Marriott Suites - Garden Grover 107 Ritz Carlton Bachelor Gulch 16 Hyatt Regency Dearborn 39 Renaissance Westchester 62 The Allerton Hotel of Chicago 85 Residence Inn Silicon Valley II 108 Sheraton Gunter 17 W Hotel San Diego 40 Crowne Plaza Tampa 63 Embassy Suites Lake Buena Vista 86 Residence Inn Silicon Valley I 109 Doubletree Hotel - Tuscon, AZ 18 The Dream Hotel 41 Windsor/RECP Hotel Portfolio - (5) 64 Trinity Hotel Portfolio - (13) 87 JW Marriott Starr Pass 110 Hotel del Coronado 19 HRO Hotel Portfolio - (7) 42 The Time Hotel 65 Whitehall/Highgate Portfolio - (11) 88 Residence Inn - San Diego 111 Hilton DFW 20 Mystic Marriott 43 Hilton Providence 66 Sheraton Chicago Hotel 89 Residence Inn - Anaheim 112 Marriott - Williamsburg 21 DLJ West Coast - (6) 44 Planet Hollywood Resort and Casino 67 Comfort Inn & Suites - Sea World 90 Crowne Plaza Hotel San Antonio 113 The Suites at Mainsail Village 22 Astor Crowne Plaza 45 The Shore Club 68 Hyatt Regency- Bethesda 91 Hudson Hotel 114 Carlton Hotel on Madison 23 Mondrian-Scottsdale 46 Embassy Suites - New Orleans 69 Champions Gate Hotel 92 Mondrian Hotel 25 Source: Eastdil Secured, Wells Fargo Securities,Trepp; Does not include Extended Stay Hotels and Red Roof Inns As of January 2011
Historical RevPAR Outperformance by Urban and Upper Upscale YoY % Change 15.0% 10.0% Urban vs. U.S. Hotel Industry RevPAR Performance US Industry Year-Over-Year RevPAR % Growth US Urban Year-Over-Year RevPAR % Growth US Industry RevPAR CAGR US Urban RevPAR CAGR 5.0% 0.0% 3.3% 2.3% (5.0%) (10.0%) (15.0%) (20.0%) YoY % Change 15.0% 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Upper Upscale vs. U.S. Hotel Industry RevPAR Performance US Industry Year-Over-Year RevPAR % Growth US Upper Upscale Year-Over-Year RevPAR % Growth US Industry RevPAR CAGR US Upper Upscale RevPAR CAGR 10.0% 5.0% 0.0% 2.6% 2.3% (5.0%) (10.0%) (15.0%) (20.0%) 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 26 Source: Smith Travel Research.
Hands-on Operating Strategy Operating Strategy Staff for intensive asset management and operational involvement over time Align operators interests with PEB s through terminable management agreements or control arrangements Senior PEB executive involvement and oversight Investment Strategy Invest (and divest) based on extensive research Diversify by geography, brands / independents, operators and customers Utilize prudent capital structure Management Strategy Establish strong governance through active, independent and non-classified board Maintain regular capital investments in hotels and be at the forefront of design Facilitate attractive sales of properties 27
Prudent Capital Structure Pebblebrook plans to utilize a conservative amount of leverage to minimize risk and absorb cyclical downturns Credit Facility and Recent Financings Net Debt + Preferred / 2011E EBITDA (1) Credit Facility: 12.4x 14.0x $150 million secured Line of Credit, with $0 balance 12.0x Recent Financings: InterContinental Buckhead Loan Amount: $52.5M; Rate: 4.88%; 5-year term (Jan. 2016) 10.0x 8.0x 10.5x 9.2x 6.6x Skamania Lodge Loan Amount: $31.0M; Rate: 5.44%; 5-year term (Feb. 2016) 6.0x 4.0x 5.6x 5.5x 4.5x 3.4x DoubleTree by Hilton Bethesda Washington, DC Loan Amount: $36.0M; Rate: 5.28%; 5-year term (Feb. 2016) 2.0x 0.0x 00x 0.0x 00x 0.0x BEE AHT FCH SHO LHO HT HST DRH PEB CHSP Pebblebrook s capital structure provides total additional acquisition capacity of an estimated $350 - $400 million beyond the hotels currently under contract 28 (1) EBITDA are consensus Street estimates per SNL Data source as of 2/28/2011; PEB net debt + preferred / 2011 EBITDA does not reflect the company s recent preferred offering
Acquisition Capacity and Current Balance Sheet Utilizing a very modest amount of debt, Pebblebrook s capital structure provides significant acquisition capacity moving forward Current Estimated Acquisition Capacity Argonaut Hotel ($) in millions ($) differences due to rounding Cash $267 Hotels Under Contract: - Hotel in Miami Fort Lauderdale (37) - W Boston (90) Remaining Cash 140 + Projected Remaining Additional Debt 210-260 Additional Acquisition Capacity $350 - $400 29 Cash balance is shown for illustrative purposes only and is only an estimation of the Company s actual cash balance.
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