Company: PEB
Filing Date: 2025-07-29
Form Type: 10-Q
Source: 0001474098-25-000119
Chunk: 45

Company: Pebblebrook Hotel Trust
Filing Date: 2025-07-29
Form: 10-Q
Item: Item 1
Chunk 45
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 the amounts since the limited partners' share of income (loss) would also be added or subtracted to derive net income (loss) available to common shareholders.  

Note 11. Commitments and Contingencies

Hotel Management AgreementsThe Company’s hotel properties are operated pursuant to management agreements with various management companies. The remaining terms of these management agreements are up to nine years, not including renewals, and up to 27 years, including renewals. The majority of the Company’s management agreements are terminable at will by the Company upon paying a termination fee and some are terminable by the Company upon sale of the property, with, in some cases, the payment of termination fees. Most of the agreements also provide the Company the ability to terminate based on failure to achieve defined operating performance thresholds. Termination fees range from zero to up to three times the annual base management and incentive management fees, depending on the agreement and the reason for termination. Certain of the Company’s management agreements are non-terminable except upon the manager’s breach of a material representation or the manager’s failure to meet performance thresholds as defined in the management agreement.

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The management agreements require the payment of a base management fee generally between 1% and 4% of hotel revenues. Under certain management agreements, the management companies are also eligible to receive an incentive management fee if hotel operating income, cash flows or other performance measures, as defined in the agreements, exceed certain performance thresholds. The incentive management fee is generally calculated as a percentage of hotel operating income after the Company has received a priority return on its investment in the hotel. For the three and six months ended June 30, 2025, combined base and incentive management fees were $11.2 million and $18.8 million, respectively. For the three and six months ended June 30, 2024, combined base and incentive management fees were $11.2 million and $19.2 million, respectively. Base and incentive management fees are included in other direct and indirect expenses in the Company's accompanying consolidated statements of operations and comprehensive income.Reserve FundsCertain of the Company’s agreements with its hotel managers, franchisors, ground lessors and lenders have provisions for the Company to provide funds, typically 4.0% of hotel revenues, sufficient to cover the cost of (a) certain non-routine repairs and maintenance to the hotels and (b) replacements and renewals to the hotels’ furniture, fixtures and equipment.Restricted CashAt June