Pebblebrook Hotel Trust (PEB) risk factors, FY2025 10-K

Risks Related to Our Business and Properties

1. 01We depend on the efforts and expertise of our executive officers and would be adversely affected by the loss of their services
2. 02Our returns could be negatively impacted if the third-party management companies that operate our hotels do not manage our hotel properties effectively
3. 03Due to our exclusive focus on hotels and resorts, and our concentration in hotel investments primarily in major gateway urban and resort markets, a downturn in the lodging industry generally or regional downturns in the markets in which we operate would adversely affect our operations and financial condition22% rewritten
4. 04If we cannot obtain financing, our growth will be limited
5. 05Our ability to make distributions to our shareholders is subject to fluctuations in our financial performance, operating results and capital improvements requirements
6. 06We may pay taxable distributions in cash and our common shares, in which case shareholders may sell their common shares to pay tax on such distributions, placing downward pressure on the market price of our common shares
7. 07Restrictive covenants in our management contracts could preclude us from taking actions with respect to the sale or refinancing of a hotel property that would otherwise be in our best interest
8. 08We invest primarily in upper-upscale hotel properties, which, as a highly competitive sector and generally subject to greater volatility than most other lodging sectors, could negatively affect our profitability
9. 09Our TRS lessee structure subjects us to the risk of increased hotel operating expenses
10. 10Our hotels operated under franchise agreements are subject to risks arising from adverse developments with respect to the franchise brand and to costs associated with maintaining the franchise license
11. 11Our senior executive officers have broad discretion to make investments, and they may make investments where the returns are substantially below expectations or which result in net operating losses
12. 12Some of our hotels are subject to rights of first offer which may adversely affect our ability to sell those properties on favorable terms or at all
13. 13The purchase or sale of properties we put under contract may not be consummated
14. 14Our cash and cash equivalents are maintained in a limited number of financial institutions and the funds in those institutions may not be fully or federally insured
15. 15Our conflicts of interest policy may not adequately address all of the conflicts of interest that may arise with respect to our activities
16. 16Any joint venture investments that we may make in the future could be adversely affected by our lack of sole decision-making authority, our reliance on our co-venturers' financial condition and disputes between us and our co-venturers

Risks Related to Debt, Financing and Future Securities Issuances

1. 17Debt service obligations could adversely affect our overall operating results, may require us to sell hotel properties, may jeopardize our qualification as a REIT and could adversely affect our ability to make distributions to our shareholders and the market price of our common shares
2. 18Our existing indebtedness contains financial covenants that could limit our operations and our ability to make distributions to our shareholders
3. 19Our existing mortgage loan agreement contains, and mortgage loan agreements we may enter into in the future may contain, "cash trap" provisions that could limit our ability to make distributions to our shareholders
4. 20There is refinancing risk associated with our debt
5. 21If we default on our secured debt, the lenders may foreclose on our hotelsNew
6. 22Acquiring outstanding debt secured by a hotel or resort property may expose us to risks of costs and delays in acquiring the underlying property
7. 23We are subject to counterparty risk with respect to our capped callsNew
8. 24Further issuances of equity securities or debt securities convertible into our common shares, including in connection with conversions of notes, may be dilutive to current shareholders and convertible noteholders or materially and adversely affect the price of our common sharesNew
9. 25Future offerings of debt securities or preferred shares, which would be senior to our common shares upon liquidation and for the purpose of distributions, may cause the market price of our common shares to decline

Risks Related to the Lodging Industry

1. 26Economic conditions may reduce demand for hotel properties and adversely affect hotel profitability
2. 27Our operating results and ability to make distributions to our shareholders may be adversely affected by various operating risks common to the lodging industry
3. 28Competition for acquisitions may reduce the number of properties we can acquire
4. 29The seasonality of the lodging industry may cause fluctuations in our quarterly revenues that cause us to borrow money to fund distributions to our shareholders
5. 30The cyclical nature of the lodging industry may cause the returns from our investments to be less than we expect
6. 31Capital expenditure requirements at our properties may be costly and require us to incur debt, postpone improvements, reduce distributions or otherwise adversely affect the results of our operations and the market price of our common shares
7. 32Hotel and resort development and redevelopment is subject to timing, budgeting and other risks that may adversely affect our financial condition, results of operations, the market price of our common shares and our ability to make distributions to our shareholders
8. 33The increasing use by consumers of Internet travel intermediaries and alternative lodging marketplaces may reduce our revenues
9. 34We may be adversely affected by the increased use of technology that reduces the need for business-related travel
10. 35Our hotel managers and we rely on information technology in our operations, and any material failure, inadequacy, interruption or security failure of that technology could harm our business
11. 36We may face challenges managing rapidly advancing artificial intelligence in our business which could adversely affect our competitive positionNew
12. 37We are subject to risks associated with the employment of hotel personnel, particularly with hotels that employ unionized labor
13. 38There can be no assurance that climate change will not have a material adverse effect on our hotels, operating results or cash flows
14. 39Terrorism, terror alerts, rumors or threats of war and other disruptive geopolitical activity could adversely affect travel and hotel demandNew
15. 40Uninsured and underinsured losses could result in a loss of capital
16. 41Our hotels may be subject to unknown or contingent liabilities which could cause us to incur substantial costs
17. 42Noncompliance with environmental laws and regulations could subject us to fines and liabilities which could adversely affect our operating results
18. 43Compliance with the Americans with Disabilities Act could require us to incur substantial costs
19. 44Our hotel properties may contain or develop harmful mold, which could lead to liability for adverse health effects and costs of remediating the problem
20. 45The nature of the operations of our hotels exposes us to the risk of claims and litigation that may arise in the normal course of business
21. 46Illiquidity of real estate investments could significantly impede our ability to sell hotels or otherwise respond to adverse changes in the performance of our hotel properties
22. 47The costs of compliance with or liabilities under environmental laws could significantly reduce our profitability

Risks Related to Our Organization and Structure

1. 48Provisions of our declaration of trust may limit the ability of a third party to acquire control of us by authorizing our board of trustees to authorize issuances of additional securities
2. 49Provisions of Maryland law may limit the ability of a third party to acquire control of us by requiring our board of trustees or shareholders to approve proposals to acquire our company or effect a change of control
3. 50The ownership limitations in our declaration of trust may restrict or prevent shareholders from engaging in certain transfers of our common shares
4. 51Our rights and the rights of our shareholders to take action against our trustees and officers are limited, which could limit shareholders' recourse in the event of actions not in their best interests
5. 52Our declaration of trust contains provisions that make removal of our trustees difficult, making it difficult for our shareholders to effect changes to our management
6. 53The ability of our board of trustees to change our major policies without the consent of shareholders may not be in our shareholders' interest
7. 54Holders of our outstanding preferred shares have dividend, liquidation and other rights that are senior to the rights of the holders of our common shares28% rewritten
8. 55The change of control conversion and redemption features of the Series E Preferred Shares, the Series F Preferred Shares, the Series G Preferred Shares and the Series H Preferred Shares may make it more difficult for a party to take over our company or discourage a party from taking over our company
9. 56If we fail to maintain an effective system of internal controls, we may not be able to accurately determine our financial results or prevent fraud. As a result, our shareholders could lose confidence in our financial results, which could harm our business and the value of our common shares
10. 57Our failure to maintain our qualification as a REIT would result in higher taxes and reduced cash available for distribution to our shareholders
11. 58Complying with REIT requirements may cause us to forego otherwise attractive business opportunities or liquidate otherwise attractive investments
12. 59To maintain our qualification as a REIT and avoid corporate income tax and excise tax, we must distribute annually a certain percentage of our REIT taxable income, which could require us to raise capital on terms or sell properties at prices or at times that are unfavorable
13. 60We may pay taxable dividends partly in shares and partly in cash, in which case shareholders may sell our shares to pay tax on such dividends, placing downward pressure on the market price of our shares
14. 61Our TRS lessees increase our overall tax liability
15. 62Our ownership of our TRSs is limited and our transactions with our TRSs will cause us to be subject to a 100 percent penalty tax on certain income or deductions if those transactions are not conducted on arm's-length terms
16. 63If the leases of our hotel properties to our TRS lessees are not respected as true leases for U.S. federal income tax purposes, we would fail to qualify as a REIT and would be subject to higher taxes and have less cash available for distribution to our shareholders
17. 64If our Operating Partnership failed to qualify as a partnership for U.S. federal income tax purposes, we would cease to qualify as a REIT and would be subject to higher taxes and have less cash available for distribution to our shareholders and suffer other adverse consequences
18. 65If our TRSs fail to qualify as TRSs for U.S. federal income tax purposes or our hotel managers do not qualify as "eligible independent contractors," we would fail to qualify as a REIT
19. 66Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends
20. 67Complying with REIT requirements may limit our ability to hedge our liabilities effectively and may cause us to incur tax liabilities
21. 68If our subsidiary REITs failed to qualify as REITs, we could be subject to higher taxes and could fail to remain qualified as REITs
22. 69The ability of our board of trustees to revoke our REIT qualification without shareholder approval may subject us to U.S. federal and state income tax and reduce distributions to our shareholders
23. 70The share ownership restrictions of the Code for REITs and the 9.8 percent share ownership limit in our declaration of trust may inhibit market activity in our shares and restrict our business combination opportunities
24. 71The prohibited transactions tax may limit our ability to engage in transactions, including dispositions of assets that would be treated as sales for U.S. federal income tax purposes
25. 72We may be subject to adverse legislative or regulatory tax changes that could increase our tax liability, reduce the tax benefits of our REIT structure compared to non-REIT corporations, reduce our operating flexibility and reduce the market price of our shares