Market Overview

Pebblebrook Hotel Trust Files Definitive Proxy Materials and Sends Letter to LaSalle Hotel Properties Shareholders


Urges LaSalle Shareholders to Vote AGAINST the Proposed Blackstone
Merger Using the GOLD Proxy Card

Pebblebrook Hotel Trust (NYSE:PEB) ("Pebblebrook") today filed
definitive proxy materials with the U.S. Securities and Exchange
Commission ("SEC") and began sending a letter to the shareholders of
LaSalle Hotel Properties (NYSE:LHO) ("LaSalle"), along with the
definitive proxy statement and a GOLD proxy card, in connection with
LaSalle's Special Meeting of Shareholders. Pebblebrook urges LaSalle
shareholders to vote AGAINST LaSalle's merger agreement with BRE
Landmark L.P. ("BRE"), an affiliate of The Blackstone Group L.P.
(NYSE:BX) (together with BRE, "Blackstone"), at a price of $33.50 per
share using the GOLD proxy card.

"The LaSalle Board's pursuit of a transaction with Blackstone at a
significant discount to our proposal is irrational and irresponsible,
and we urge all LaSalle shareholders to join us in voting against it,"
said Jon E. Bortz, Chairman, President and Chief Executive Officer of
Pebblebrook Hotel Trust. "Our value-maximizing proposal to combine with
LaSalle continues to be a clearly superior alternative and we are
committed to moving quickly to close our transaction should LaSalle
shareholders reject Blackstone's take-under. We encourage all LaSalle
shareholders vote the GOLD proxy card against LaSalle's proposals."

Raymond James and BofA Merrill Lynch are acting as financial advisors,
Hunton Andrews Kurth LLP is acting as legal counsel and Okapi Partners
LLC is serving as information agent to Pebblebrook in connection with
the proposed transaction.

The full text of Pebblebrook's letter to LaSalle shareholders follows.

Letter from Pebblebrook to LaSalle Shareholders
Dated July 30, 2018

July 30, 2018

Dear LaSalle Shareholders,

Pebblebrook Hotel Trust, which owns approximately 9.8% of LaSalle Hotel
Properties' outstanding common shares, stands in opposition to the
"take-under" agreement the LaSalle Board announced with Blackstone, and
we are reaching out to you directly to explain our reasoning. In our
view, there is no legitimate rationale for LaSalle's agreement with
Blackstone when there is a superior offer available to you in the form
of our merger proposal. The logic of a strategic combination of
Pebblebrook and LaSalle is clear. A single portfolio of Pebblebrook's
and LaSalle's hotels would be best-in-class, with upscale and luxury
independent and branded hotels and resorts in or near urban markets in
the U.S., well-positioned to generate strong cash flow, provide for a
more stable dividend and create long-term incremental shareholder value.

We have taken numerous steps to reach an agreement with LaSalle's Board
that would maximize value for both LaSalle and Pebblebrook shareholders,
including increasing the price and cash consideration of our offer
multiple times. However, the LaSalle Board has refused to engage with us
in good faith despite our repeated attempts, and rejected our much
higher offers, most recently on July 30, 2018 when they rejected our
July 20, 2018 offer, citing as their rationale the need to provide the
certainty of Blackstone's $33.50 all-cash offer price. That rationale is
no longer valid given recent and ongoing trading levels of the common
shares of both Pebblebrook and LaSalle.

We urge you to join us in voting with Pebblebrook "AGAINST" all three of
the proposals relating to the Proposed BRE Merger by:

  • Voting "AGAINST" the proposal to approve the Proposed BRE Merger dated
    as of May 20, 2018;
  • Voting "AGAINST" the proposal to approve, on a non-binding, advisory
    basis, the compensation that may be paid or become payable to
    LaSalle's named executive officers that is based on or otherwise
    relates to the Proposed BRE Merger; and
  • Voting "AGAINST" the proposal to approve any adjournment of the
    LaSalle Special Meeting for the purpose of soliciting additional
    proxies if there are not sufficient votes at the Special Meeting to
    approve the BRE Merger Proposal.

Our July 20, 2018 superior offer for a strategic combination with
LaSalle remains outstanding, and we are prepared to move forward with it


The Blackstone take-under agreement deprives LaSalle shareholders of
significant value that they have a right to realize. In contrast, our
offer would allow LaSalle shareholders to maximize immediate and
long-term value. Pursuant to our offer, LaSalle shareholders would be
able to elect to receive for each share they own either a) a fixed
amount of $37.80 in cash (for up to 20% of the total outstanding LaSalle
common shares), or b) a fixed exchange ratio of 0.92 Pebblebrook common
share. Additionally, our offer takes into account the $112 million
termination fee that would be owed to Blackstone pursuant to LaSalle's
agreement with Blackstone.

Our offer provides LaSalle shareholders with materially superior value
to the Blackstone agreement. As of market close on July 27, 2018, the
implied price per share of our offer provides premiums to the Blackstone
proposal of:

  • $2.71 per share, or 8.1%, based on the 5-day VWAP of Pebblebrook
    common shares;
  • $2.82 per share, or 8.4%, based on the 30-day VWAP of Pebblebrook
    common shares; and
  • $2.92 per share, or 8.7%, based on the 60-day VWAP of Pebblebrook
    common shares1.

Given the consistent trading of Pebblebrook common shares over the last
90 days, these premiums have been generally consistent since the time of
the announced merger agreement with Blackstone. In the face of steadily
improving industry fundamentals, the value of Pebblebrook's shares would
have to decline by over 8.5% to eliminate our offer's premium to the
proposed Blackstone agreement price of $33.50 per LaSalle share.

By entering into an agreement with Blackstone and rejecting our offer,
and by supporting a transaction at an unprecedented discount to an
available alternative, it is our view that the LaSalle Board members
have neither acted as responsible stewards of their shareholders'
interests nor upheld their fiduciary duties. Indeed, we are not aware of
any listed equity REIT M&A transaction since 20062 in
which a target has agreed to a cash offer at a discount of greater than
1% compared to a competing share or cash/stock offer. In fact, a survey
of trends in public REIT M&A transactions recently published by
LaSalle's legal counsel has clearly stated that cash transaction prices
are generally less attractive to stock or cash/stock alternatives in M&A
transactions.3 Their research has shown that all-cash buyers
typically pay higher premiums than cash/stock buyers in public
M&A transactions.4 Currently, our offer provides premiums
to the Blackstone proposal of $2.71 to $2.92 per share, or 8.1% to 8.7%,
based on the above metrics.

The harm that the Blackstone take-under would do to shareholder value is
real, and in a demonstration of the egregious transfer of value the
proposal represents, Blackstone is currently marketing a number of
LaSalle's hotel properties to be sold contemporaneously with the close
of their proposed transaction. Because the Blackstone offer is for a
fixed amount of cash per share, the net proceeds of any such sale will
benefit Blackstone, not LaSalle shareholders. These asset sales
represent value that should be realized by LaSalle shareholders.


For those shareholders who wish to receive cash instead of shares, our
proposal provides a fixed cash price per share of $37.80, subject to
pro-rata cutbacks in the event shareholders elect cash for more than 20%
of the total shares outstanding. However, as the list of LaSalle
shareholders includes significant ownership by index funds and dedicated
REIT investors, we believe that there is a significant desire among
shareholders to receive the shares in order to avoid transaction costs
and income tax implications, and most importantly, to participate in the
bright future following the combination.

Ours is the only offer that gives LaSalle shareholders this long-term
upside potential – a key consideration given that macro trends in the
lodging industry are expected to continue on the same positive
trajectory for the foreseeable future.

Pebblebrook's proven track record of success as a public company and our
extensive knowledge of LaSalle's assets and markets makes us the perfect
and obvious strategic partner for LaSalle. A single portfolio of
LaSalle's and Pebblebrook's hotel properties would be exceptional among
the industry, comprised of 69 primarily upper-upscale and luxury
independent and branded hotels and resorts located in or near key urban
markets in the United States. Under our control and management, the
combined portfolio would be well-positioned to benefit
disproportionately from recent improvements in the hotel industry and
the broader economic landscape, particularly given Pebblebrook's heavy
concentration of hotel properties in San Francisco, which analysts
forecast will experience significant growth in 2019 and beyond. Further,
we believe that the hotel properties will benefit from significant
capital investment and redevelopment projects that have already been
made by each of Pebblebrook and LaSalle. Common shareholders of a
company owning such a portfolio would be able to participate in its
future performance.

Leading Hotel REIT Management Team with Deep
Industry Experience and Excellent Long-Term Track Record

No other buyer on the market understands LaSalle's portfolio better than
Pebblebrook. Jon Bortz was the Founder and former Chief Executive
Officer of LaSalle from its IPO in 1998 through August 2009, and served
as Chairman of the Board of LaSalle from 2001 to 2009. Twenty-two of the
hotels that LaSalle owns today were purchased while Mr. Bortz was CEO of
the company, and LaSalle currently owns another 12 hotels that
Pebblebrook previously bid on prior to purchase by LaSalle. As a matter
of record, companies led by Mr. Bortz have historically consistently
traded at premium multiples and outperformed peer groups and industry
averages. Thus, Pebblebrook's deep understanding of LaSalle's portfolio
makes Pebblebrook best positioned to provide shareholders with
significant long-term upside.

Proven Asset Management Approach with Benefits
of Additional Scale

We also believe there is significant opportunity to improve EBITDA per
key for LaSalle's properties, given the approximately $5K per key higher
average amount for Pebblebrook's properties as compared to the per-key
EBITDA of LaSalle's portfolio, based on 2018 estimates. Pebblebrook's
properties were at a similar EBITDA per key level to LaSalle's portfolio
several years ago, but through Pebblebrook's unique creativity,
expertise and approach, Pebblebrook has delivered significantly higher
growth levels in EBITDA per key over time.

A significantly larger Pebblebrook would offer an attractive financial
profile with greater access to the capital markets, enhanced flexibility
and increased influence and negotiating strength.

Receipt of Dividend

Under the terms of our current outstanding offer, LaSalle shareholders
would benefit from receiving a dividend on their shares in the combined
company. LaSalle's most recent dividend per LaSalle common share was
$0.225 for the quarter ended June 30, 2018. Under the terms of the
Blackstone agreement, LaSalle is not permitted, with limited exceptions,
to pay any other common share dividend in the future. If the Blackstone
merger is consummated, LaSalle shareholders will receive cash in
exchange for their LaSalle common shares and will receive no dividends

Pebblebrook has paid a dividend per Pebblebrook common share of $0.38
for 10 consecutive quarters through the quarter ended June 30, 2018.
Based on the 0.92 fixed exchange ratio of our outstanding offer, the
Pebblebrook common share dividend at that historical rate would
represent a 55% increase in the per-share dividend above that most
recently paid per LaSalle common share. We expect to maintain that
dividend rate if we are successful in acquiring LaSalle.


Since LaSalle's May 21, 2018 announcement of its merger agreement with
Blackstone at $33.50 per share, over 112 million LaSalle shares have
traded, and all above $33.50, and over 30 million LaSalle shares have
traded at or above $35.00. This is a clear indication that LaSalle
shareholders believe that a higher deal price for LaSalle is warranted
given our outstanding offer and its significant premium, and that any
shareholder who wanted certainty at $33.50 has had the opportunity to
realize that value or more.




We urge you to make your vote count. As outlined in the proxy statement
filed by LaSalle with the SEC on July 30, 2018, the proposed agreement
with Blackstone must be approved by the affirmative vote of the holders
of at least sixty-six and two-thirds percent (66 2/3%) of the
outstanding LaSalle common shares as of the record date for the special
meeting. We intend to vote the approximately 10.8 million LaSalle common
shares that we own AGAINST the proposed Blackstone agreement, and urge
you to make your vote count too.

By voting on the Gold Card against the proposals, you are sending a
message to the LaSalle Board to engage with us and enter into a value
maximizing agreement. The "Never Pebblebrook" approach that the LaSalle
Board has taken is unacceptable and irrational. As previously disclosed,
we are prepared to enter into a merger agreement essentially identical
to the Blackstone agreement adapted merely to reflect the proposed
merger terms of our July 20, 2018 offer. A completed agreement could be
negotiated in a day or two at most with LaSalle. Additionally, we
believe a transaction can be completed within the next 75 to 90 days,
which includes the time to gain approval from both sets of shareholders.
For the reasons set forth below and in the enclosed materials, we urge
you to vote AGAINST all three of LaSalle's proposals using the enclosed
GOLD proxy card.

Please follow the instructions on the enclosed GOLD proxy card to vote
by telephone or Internet or sign, date and return the enclosed GOLD
proxy card in the postage-paid envelope provided.

While your vote is of critical importance to ensuring LaSalle
shareholders receive the value they deserve for their shares, there are
actions you can take even before the transaction comes up for a vote. WE
YOUR VIEWS. Our proposal, which we most recently submitted to the
LaSalle Board on July 20, 2018, remains outstanding and we are ready to
move swiftly to complete a value-maximizing transaction.

Sincerely yours,

Jon E. Bortz
Chairman, President & CEO
Pebblebrook Hotel

To vote "AGAINST" the BRE Proposal, the Payout Proposal and the
Adjournment Proposal at the Special Meeting, please follow the following
instructions. We urge you to vote in advance of the meeting by signing
and dating the enclosed GOLD proxy card and returning it using the
postage-paid envelope we have enclosed. Submitting a proxy will not
affect your right to attend the Special Meeting and vote in person.

Vote by Mail

If you hold LaSalle Common Shares directly in your name as a
shareholder of record
, please complete, sign and date the
enclosed GOLD proxy card and return it promptly in the enclosed
postage-paid envelope.

To be able to vote your LaSalle Common Shares in accordance with your
instructions at the Special Meeting, please send us your proxy as soon
as possible. You may vote your LaSalle Common Shares without submitting
a proxy to us if you vote in person or submit a proxy to LaSalle.

If you hold LaSalle Common Shares in "street name,"
meaning through a broker, bank, nominee or other holder of record
to vote by mail, you will need to sign, date and mark the voting
instruction form provided by your broker, bank, nominee or other holder
of record with these materials and return it in the postage-paid return
envelope provided. Your broker, bank, nominee or other holder of record
must receive your voting instruction form in sufficient time to vote
your shares.

Vote in Person

If you hold LaSalle Common Shares directly in your name as a
shareholder of record
, you may vote in person at the Special
Meeting. Shareholders of record also may be represented by another
person at the Special Meeting by executing a proper proxy designating
that person in writing.

However, if you hold LaSalle Common Shares in "street name,"
meaning through a broker, bank, nominee or other holder of record
you must obtain a legal proxy from that institution in order to vote
your LaSalle Common Shares at the Special Meeting. To request a legal
proxy, please contact your broker, bank, nominee or other holder of

Okapi Partners LLC, or Okapi, is assisting Pebblebrook with its efforts
to solicit proxies. If you have any questions concerning this Proxy
Statement or would like additional copies, please contact:

Okapi Partners LLC
1212 Avenue of the Americas, 24th Floor
York, NY 10036
(212) 297-0720

Shareholders may call toll free: (855) 305-0855

About Pebblebrook Hotel Trust

Pebblebrook Hotel Trust is a publicly traded real estate investment
trust ("REIT") organized to opportunistically acquire and invest
primarily in upper upscale, full-service hotels located in urban markets
in major gateway cities. The Company owns 28 hotels, with a total of
6,973 guest rooms. The Company owns hotels located in 9 states and the
District of Columbia, including: Los Angeles, California (Beverly Hills,
Santa Monica and West Hollywood); San Diego, California; San Francisco,
California; Washington, DC; Coral Gables, Florida; Naples, Florida;
Buckhead, Georgia; Boston, Massachusetts; Minneapolis, Minnesota;
Portland, Oregon; Philadelphia, Pennsylvania; Nashville, Tennessee;
Columbia River Gorge, Washington; and Seattle, Washington. For more
information, please visit us at
and follow us on Twitter at @PebblebrookPEB.


This communication does not constitute an offer to buy or solicitation
of an offer to sell any securities. This communication relates to a
proposal which Pebblebrook has made for a business combination
transaction with LaSalle. In furtherance of this proposal and subject to
future developments, Pebblebrook (and, if a negotiated transaction is
agreed, LaSalle) may file one or more registration statements, proxy
statements, tender or exchange offer statements, prospectuses or other
documents with the SEC. This communication is not a substitute for any
proxy statement, registration statement, tender or exchange offer
statement, prospectus or another document Pebblebrook or LaSalle may
file with the SEC in connection with the proposed transaction. INVESTORS
definitive proxy statement or prospectus (if and when available) will be
delivered to shareholders of LaSalle or Pebblebrook, as applicable.
Investors and security holders will be able to obtain free copies of
these documents (if and when available) and other documents filed with
the SEC by Pebblebrook through the website maintained by the SEC at

Pebblebrook or LaSalle and their respective trustees and executive
officers and other members of management and employees may be deemed to
be participants in the solicitation of proxies in respect of the
proposed transaction. You can find information about Pebblebrook's
executive officers and trustees in Pebblebrook's definitive proxy
statement filed with the SEC on April 27, 2018. You can find information
about LaSalle's executive officers and trustees in LaSalle's definitive
proxy statement filed with the SEC on March 22, 2018. Additional
information regarding the interests of such potential participants will
be included in one or more registration statements, proxy statements,
tender or exchange offer statements or other documents filed with the
SEC if and when they become available. You may obtain free copies of
these documents using the sources indicated above.

In connection with the proposed merger transaction between LaSalle and
affiliates of Blackstone, which Pebblebrook opposes (the "Proposed BRE
Merger"), LaSalle filed a definitive proxy statement with the SEC on
July 30, 2018 (the "LaSalle Proxy Statement"). On July 30, 2018,
Pebblebrook filed a definitive proxy statement with the SEC in
opposition that proposed merger transaction (the "Pebblebrook Proxy
Statement"). This communication is not a substitute for the LaSalle
Proxy Statement or the Pebblebrook Proxy Statement or for any other
document that LaSalle or Pebblebrook have filed or may file with the SEC
or send to LaSalle shareholders in connection with the Proposed BRE
RELATED MATTERS. Investors and security holders are able to obtain free
copies of the LaSalle Proxy Statement, the Pebblebrook Proxy Statement
and other documents filed by LaSalle or Pebblebrook with the SEC through
the website maintained by the SEC at
Copies of the documents filed by LaSalle with the SEC are also available
free of charge on LaSalle's website at,
or by contacting LaSalle's Investor Relations Department at (301)
941-1500. Copies of the documents filed by Pebblebrook with the SEC are
also available free of charge on Pebblebrook's website at,
or by contacting Pebblebrook's Investor Relations at (240) 507-1330.
LaSalle and its trustees and certain of its executive officers may be
considered participants in the solicitation of proxies from LaSalle's
shareholders with respect to the Proposed BRE Merger under the rules of
the SEC. Information about the trustees and executive officers of
LaSalle is set forth in LaSalle's Annual Report on Form 10-K for the
year ended December 31, 2017, which was filed with the SEC on February
20, 2018, LaSalle's proxy statement for its 2018 annual meeting of
shareholders, which was filed with the SEC on March 22, 2018, and in
subsequent documents filed by LaSalle with the SEC. Additional
information regarding persons who may be deemed participants in the
proxy solicitations and a description of their direct and indirect
interests, by security holdings or otherwise, is included in the LaSalle
Proxy Statement and may be included in other relevant materials to be
filed with the SEC. Pebblebrook and its trustees and executive officers
and other members of management and employees may be deemed to be
participants in the solicitation of proxies in respect of the Proposed
BRE Merger. You can find information about Pebblebrook's executive
officers and trustees in Pebblebrook's definitive proxy statement filed
with the SEC on April 27, 2018. You may obtain free copies of this
document as described above.

This document shall not constitute an offer to sell or the solicitation
of an offer to buy any securities, nor shall there be any sale of
securities in any jurisdiction in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of securities
shall be made except by means of a prospectus meeting the requirements
of Section 10 of the Securities Act of 1933, as amended.

Forward-Looking Statements

This communication may include "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements include, but are not limited to, statements
regarding Pebblebrook's offer to acquire LaSalle, its financing of the
proposed transaction, its expected future performance (including
expected results of operations and financial guidance), and the combined
company's future financial condition, operating results, strategy and
plans. Forward-looking statements may be identified by the use of the
words "anticipates," "expects," "intends," "plans," "should," "could,"
"would," "may," "will," "believes," "estimates," "potential," "target,"
"opportunity," "tentative," "positioning," "designed," "create,"
"predict," "project," "seek," "ongoing," "upside," "increases" or
"continue" and variations or similar expressions. These statements are
based upon the current expectations and beliefs of management and are
subject to numerous assumptions, risks and uncertainties that change
over time and could cause actual results to differ materially from those
described in the forward-looking statements. These assumptions, risks
and uncertainties include, but are not limited to, assumptions, risks
and uncertainties discussed in Pebblebrook's most recent annual or
quarterly report filed with the SEC and assumptions, risks and
uncertainties relating to the proposed transaction, as detailed from
time to time in Pebblebrook's and LaSalle's filings with the SEC, which
factors are incorporated herein by reference. Important factors that
could cause actual results to differ materially from the forward-looking
statements made in this communication are set forth in other reports or
documents that Pebblebrook may file from time to time with the SEC, and
include, but are not limited to: (i) the ultimate outcome of any
possible transaction between Pebblebrook and LaSalle, including the
possibilities that LaSalle will reject a transaction with Pebblebrook,
(ii) the ultimate outcome and results of integrating the operations of
Pebblebrook and LaSalle if a transaction is consummated, (iii) the
ability to obtain regulatory approvals and meet other closing conditions
to any possible transaction, including the necessary shareholder
approvals, and (iv) the risks and uncertainties detailed by LaSalle with
respect to its business as described in its reports and documents filed
with the SEC. All forward-looking statements attributable to Pebblebrook
or any person acting on Pebblebrook's behalf are expressly qualified in
their entirety by this cautionary statement. Readers are cautioned not
to place undue reliance on any of these forward-looking statements.
These forward-looking statements speak only as of the date hereof.
Pebblebrook undertakes no obligation to update any of these
forward-looking statements to reflect events or circumstances after the
date of this communication or to reflect actual outcomes.

For additional information or to receive press releases via email,
please visit our website at

1 Based on Pebblebrook's 5-day VWAP of $38.93, the 30-day
VWAP of $39.07 and the 60-day VWAP of $39.21 as of July 27, 2018.
The only listed equity REIT M&A transaction since 2006 in which a lower
cash offer was accepted compared to a competing stock and cash offer was
Blackstone's acquisition of Equity Office Properties in 2007. In that
transaction, Blackstone's offer represented a discount to the competing
cash/stock offer of less than 1%.
3 Goodwin Insights, Trends
in Public REIT M&A 2012-2017,
published by Goodwin Procter.

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