2020 Annual Report Property Locations Seattle, WA Portland, OR Columbia River Gorge, WA Boston, MA New York City, NY Chicago, IL Philadelphia, PA San Francisco, CA Santa Cruz, CA Washington, DC West Los Angeles, CA Santa Monica, CA Del Mar, CA San Diego, CA Boston, MA Hyatt Regency Boston Harbor Revere Hotel Boston Common The Liberty, a Luxury Collection Hotel, Boston The Westin Copley Place, Boston W Boston Naples, FL Miami, FL Chicago, IL Key West, FL Hotel Chicago Downtown, Autograph Collection The Westin Michigan Avenue Chicago San Francisco, CA Argonaut Hotel Los Angeles, CA Chaminade Resort & Spa Chamberlain West Hollywood Hotel Harbor Court Hotel San Francisco Grafton on Sunset Hotel Spero Hotel Palomar Los Angeles Beverly Hills Hotel Vitale Le Méridien Delfina Santa Monica Hotel Zelos San Francisco Le Parc Suite Hotel Hotel Zephyr Fisherman's Wharf Mondrian Los Angeles Hotel Zeppelin San Francisco Montrose West Hollywood Hotel Zetta San Francisco Viceroy Santa Monica Hotel Hotel Zoe Fisherman's Wharf W Los Angeles – West Beverly Hills Sir Francis Drake The Marker San Francisco New York City, NY Villa Florence San Francisco on Union Square The Roger New York Seattle, WA Philadelphia, PA Hotel Monaco Seattle Sofitel Philadelphia at Rittenhouse Square Hotel Vintage Seattle Portland, OR Southern Florida Hotel Vintage Portland Hotel Colonnade Coral Gables, Autograph Collection Skamania Lodge LaPlaya Beach Resort & Club The Heathman Hotel Southernmost Beach Resort The Hotel Zags The Marker Key West Harbor Resort The Nines, a Luxury Collection Hotel, Portland Washington, DC San Diego, CA George Hotel Embassy Suites San Diego Bay – Downtown Hotel Monaco Washington DC Hilton San Diego Gaslamp Quarter Hotel Zena Washington DC L'Auberge Del Mar Viceroy Washington DC Paradise Point Resort & Spa San Diego Mission Bay Resort Solamar Hotel The Westin San Diego Gaslamp Quarter TO OUR FELLOW SHAREHOLDERS million. This property was the second hotel we acquired after the creation of Pebblebrook, and when it transacts early in the As I reflect on 2020, certainly the most challenging year the hotel second quarter of 2021, it will have been a very successful industry has ever faced in my lifetime, I am tremendously proud investment for us (we purchased it for $90 million), delivering a of the painstaking efforts made by our corporate team members significant gain on sale and an 11-year compounded internal rate at Pebblebrook, and our many hotel operators and their of return of over 12% a year. We intend to reallocate the hardworking property teams, to successfully preserve our assets, proceeds from this sale, and any other 2021 sales, into new protect our teams and guests, maintain morale, limit operating investment opportunities elsewhere in the U.S. resulting from losses, complete comprehensive redevelopments, find creative this unprecedented downturn in travel. ways to bolster liquidity and execute on critical transactions. Despite an unprecedented impact on our industry and As we navigated through tumultuous and uncertain times in Pebblebrook, we relied on the strength of our teams, leaders, 2020, we worked closely with our long-term banking and lending relationships and experiences with prior crises to do all that was partners to negotiate amendments to our borrowing agreements necessary to protect the long-term value of the Company, and to accommodate the unexpected impact from the virus. These even strengthen it to take advantage of the tremendous waivers not only empower us to get through to the other side of opportunities we foresee in the coming years. the pandemic, but they have allowed us to continue investing in our existing portfolio to maintain our competitive advantage and At the onset of the COVID-19 pandemic, we unfortunately transform existing properties into exciting new ones. While we correctly foresaw the dramatic negative impact on travel that the were able to complete numerous redevelopment and health crisis would cause. We rallied our troops and leaned transformational projects in 2020, many of which related to heavily on our experiences from prior crises. As a result, we properties we acquired as part of late 2018’s corporate moved rapidly to implement dramatic operating changes and acquisition, some of the more notable projects included the $25 cost-saving measures to drastically reduce our hotel-level and million redevelopment of Donovan Hotel into Hotel Zena corporate losses and cash burn. Early in March, with draconian Washington DC (the seventh member of our Unofficial Z governmental restrictions on the way in response to the virus, we Collection), which uniquely celebrates the empowerment of were one of the first owners to temporarily suspend operations women and their fight for equality over the centuries, the $11 at the vast majority of our hotels and resorts and institute strict million last phase of the $32 million transformation of Hilton San cash controls across our entire portfolio, allowing us to mitigate Diego Resort & Spa into San Diego Mission Bay Resort, and the $8 losses. We also slashed our corporate cash general and million renovation and repositioning of Mason & Rook Hotel into administrative expenses by $11 million for 2020 through several the luxurious Viceroy Washington DC. actions, including significant compensation reductions for our senior management team and board members, and all With an eye on strengthing our balance sheet and increasing our employees made compensation sacrifices. Furthermore, we liquidity while also lowering our overall debt costs, we raised reduced our capital expenditure budget by $50 million for 2020 $763.8 million of gross proceeds through the creative issuance of to preserve cash, and unfortunately, we all but eliminated our $750 million par value 6-year convertible notes at a 1.75% common dividend to retain approximately $150 million for the coupon. The issuance of these convertible notes was a first-time- year. ever offering in the lodging REIT space, as we took advantage of a unique window of opportunity in the credit markets. This As we searched for ways to increase our liquidity and strengthen capital increased our liquidity by more than $300 million, and our balance sheet, we pursued and completed several key allowed us to pay down $377 million of our 2021 and 2022 debt property sales, including the $331 million sale involving maturities. We fundamentally view these convertible notes as a Intercontinental Buckhead Atlanta and Sofitel Washington DC forward equity raise at a significantly higher share price than Lafayette Square. These properties successfully transacted in current levels, which we do not believe represent the Company's early March, just as the pandemic was beginning to explode in long-term value. As a result of these offerings, we are entering the open. A strong sales contract with an honorable and well- 2021 with more than three-quarters of a billion dollars of heeled institutional investor was key. The sale was at pre- liquidity, which is hundreds of millions of dollars more than we pandemic pricing, and both hotels turned out to be superb long- had at the beginning of the pandemic. These combined efforts term investments for us. In July 2020, we opportunistically sold will enable us to pursue the tremendous investment Union Station Hotel Nashville, Autograph Collection to a strategic opportunities we expect to occur in the coming years due to the buyer for $56 million. In addition, in January 2021, we creatively distress caused by the virus. monetized, in a first-of-its-kind transaction, numerous rooftop antenna leases that generated an additional $12 million. The While we were successfully managing through these capital from these sales, which totaled $399 million, along with unprecedented challenges, we managed to still find the time to our $650 million credit facility that we had increased as part of transform our asset management team’s portfolio-wide our corporate acquisition in November 2018, have played a initiatives into a completely new company, Curator Hotel & critical role in our ability to fund and absorb the losses associated Resort Collection, which we successfully launched in November with the pandemic. Moreover, as I write this letter, we have a 2020 to great fanfare in combination with six industry-leading contract to sell Sir Francis Drake in San Francisco for over $157 hotel operators. Curator’s distinct and unique owner-centric platform offers an alternative for independent lifestyle hotel Pebblebrook over 11 years ago. On behalf of myself and owners and operators looking to strengthen their performance everyone at the Company, I thank you and am truly grateful for by providing them with best-in-class agreements, services, and the opportunity to lead this wonderful company, and for your technologies to reduce costs while allowing their hotels to retain continuing support. We want to wish all of our shareholders, their unique identities. As we continue to grow Curator, the employees, hotel teams, and other stakeholders health and economies of scale benefits will expand, which will further reduce safety as we continue on the much-needed path to recovery in hotel operating expenses at our lifestyle hotels and resorts. We 2021. are particularly excited about Curator's potential. We believe that as we grow Curator and prove its value proposition to third- party hotels that are joining, this new company will create very Sincerely, significant value in the future for Pebblebrook and our fellow shareholders. Jon E. Bortz Chairman, President and Our mission and vision for Pebblebrook continue to be realized, Chief Executive Officer even in the most difficult of times, through the hard work and collaboration of our hotel operating partners. Every year, we express our appreciation for and celebrate our hotel management teams through Pebby Awards, recognizing and rewarding those who have shown outstanding performance during the year. As a result of the unique challenges of 2020, this year’s categories look a bit different than prior years.