Market Overview

Pebblebrook Hotel Trust Increases Terms of Offer to Merge with LaSalle Hotel Properties

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Increases Number of LaSalle Common Shares that Can Receive Cash to
30% of Outstanding

Enhanced Pebblebrook Offer Will Remain Outstanding Assuming
Blackstone Proposal Is Voted Down by LaSalle Shareholders

Pebblebrook Hotel Trust (NYSE:PEB) ("Pebblebrook") today released a
letter dated August 21, 2018 to the Board of Trustees of LaSalle Hotel
Properties (NYSE:LHO) ("LaSalle") in which Pebblebrook submitted an
enhanced merger proposal for a strategic combination with LaSalle. Under
the enhanced terms, Pebblebrook has increased the number of LaSalle
common shares that may receive $37.80 in cash per share to up to 30% of
LaSalle common shares in aggregate, representing a 50% increase in the
number of shares that may receive cash compared to Pebblebrook's prior
offer. The increased cash component of the Pebblebrook offer provides
additional certainty and greater downside protection to LaSalle's
shareholders while also increasing the overall value of the offer. This
enhanced proposal was unanimously approved by Pebblebrook's Board of
Trustees and will remain outstanding following a rejection by LaSalle
shareholders of the proposed transaction between LaSalle and affiliates
of The Blackstone Group L.P. (NYSE:BX) ("Blackstone"), which is
scheduled to be voted on by LaSalle shareholders on September 6, 2018.

The increased Pebblebrook offer provides LaSalle shareholders with the
option to elect to receive for each LaSalle common share they own either
a) a fixed amount of $37.80 in cash or b) a fixed exchange ratio of 0.92
Pebblebrook common share. Under the increased terms, the maximum amount
of LaSalle shares eligible to receive cash is increased from 20% to 30%
of the outstanding shares, a 50% increase, in the aggregate subject to
pro rata cutbacks. The $37.80 cash option is $4.30 per share, or 13%,
higher than the Blackstone cash merger price of $33.50 per share, and
represents a strong anchor providing increased downside protection.
Based on the closing price per Pebblebrook common share of $39.17 on
August 21, 2018, and assuming 30% of the LaSalle common shares receive
cash in lieu of Pebblebrook common shares, the implied price of the
increased Pebblebrook offer is $36.57, or 9.2%, above the Blackstone
take-under price of $33.50. With the increased cash offering,
Pebblebrook common shares would have to decline by $4.76, or 12.2%, from
today's closing price, in order for the premium of Pebblebrook's offer
to be eliminated. The Pebblebrook proposal takes into account the $112
million cost of the termination fee LaSalle agreed to pay to Blackstone.

"The terms of our enhanced offer are clearly superior to the Blackstone
proposal, as was our prior offer. It provides enhanced certainty to
LaSalle's shareholders through the increased fixed-cash portion, which
also increases the overall value we are delivering to LaSalle's
shareholders," said Jon E. Bortz, Chairman, President and Chief
Executive Officer of Pebblebrook Hotel Trust. "We've recently entered
into an agreement to sell certain LaSalle properties in connection with
the closing of a Pebblebrook-LaSalle merger. These strategic sales will
allow us to continue to focus on properties and markets that are core to
our go-forward strategy and also enable us to materially increase the
cash component of our offer—and the overall value of our offer—without
increasing our leverage compared to our prior proposal. For those who
receive Pebblebrook shares, our offer continues to provide significant
long-term financial and strategic upside opportunity, as well as
increased dividend income, neither of which can be matched by the
Blackstone take-under. The proceeds from the asset sales will
effectively be delivered back to LaSalle shareholders as a benefit
through the increased 30% cash component of our proposal. This proposal
is not contingent on those property sales, and Pebblebrook is prepared
to move forward immediately upon acceptance of our proposal by LaSalle's
Board. We strongly encourage LaSalle's Board to engage in discussions
with us to execute a merger agreement and seize this unique opportunity
to combine our two companies to create the industry leader that
shareholders so strongly desire."

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.

For more information, please visit investor.pebblebrookhotels.com.

The full text of Pebblebrook's letter to LaSalle's Board of Trustees
dated August 21, 2018 follows.

Letter from Pebblebrook to LaSalle dated August
21, 2018

August 21, 2018

Michael D. Barnello
Stuart L. Scott
Denise M. Coll
Jeffrey
T. Foland
Darryl Hartley-Leonard
Jeffrey L. Martin
Donald
A. Washburn

LaSalle Hotel Properties
7550 Wisconsin Avenue, 10th Floor
Bethesda,
MD 20814

Ladies and Gentlemen,

The commitment of the Board of Trustees of Pebblebrook Hotel Trust to
executing a strategic combination with LaSalle is as strong as ever, and
we are confident that a combination of our two companies will deliver
both immediate value that is far superior to the proposed all-cash
Blackstone transaction and, we believe, exceptional long-term upside
potential. Therefore, we are providing this new, enhanced merger
proposal today with a materially increased cash option component and
urge you to carefully and completely consider the merits and benefits of
this strategic combination to LaSalle shareholders and accept our
proposal.

Under our enhanced offer, LaSalle shareholders will receive
consideration of substantially greater value at closing than under the
Blackstone proposal and will also have the option to participate in the
value creation of the combined company going forward.

Revised Terms of Proposal and Form of Consideration: Each LaSalle
shareholder will have the option to elect to receive for each LaSalle
common share owned either a) a fixed amount of $37.80 in cash or b) a
fixed exchange ratio of 0.92 Pebblebrook common share. An increased
maximum of 30% of outstanding LaSalle common shares may be exchanged for
cash (and elections of cash will be subject to pro rata cutbacks if
holders of more than 30% of LaSalle common shares elect cash). Assuming
LaSalle shareholders receive cash for 30% of the shares, the implied
price of our offer now represents the following premiums to the
Blackstone price:

  • $3.07 per share, or 9.2%, based on the closing price of Pebblebrook
    common shares on August 21, 2018
  • $2.79 per share, or 8.3%, based on the 5-day VWAP of Pebblebrook
    common shares on August 21, 20181
  • $2.77 per share, or 8.3%, based on the 30-day VWAP of Pebblebrook
    common shares on August 21, 20182
  • $3.15 per share, or 9.4%, based on the 60-day VWAP of Pebblebrook
    common shares on August 21, 20183; and
  • $2.52 per share, or 7.5%, based on the 90-day VWAP of Pebblebrook
    common shares on August 21, 20184

The fixed cash price of $37.80 is $4.30, or 13%, above the Blackstone
price of $33.50. The new 30% cash cap is a 50% increase in the potential
cash consideration compared to our prior proposal, which is an aggregate
increase in the cash consideration of approximately $420 million. This
increased cash component provides LaSalle shareholders with additional
certainty and greater downside protection, as well as increased overall
value. Moreover, LaSalle common shareholders who exchange their LaSalle
common shares for Pebblebrook common shares will do so tax-free compared
to a taxable cash exchange.

Since LaSalle executed its merger agreement with Blackstone on May 20,
2018, lodging industry performance has continued to improve and investor
support for our merger proposal has been overwhelming. As we are sure
you have learned through your conversations with LaSalle shareholders,
it seems there is virtually no support from them for the existing
agreement with Blackstone. LaSalle's shares have consistently traded at
a substantial premium to the Blackstone price because LaSalle
shareholders deem Pebblebrook's offer as significantly more attractive.
In addition, Pebblebrook's shares have continued to trade at levels
consistent with providing LaSalle shareholders with a very significant
premium to the Blackstone price, based on our proposal, as described in
detail above. Due to the substantial cash portion of our enhanced offer,
which is fixed at $37.80 per share, in order for the Blackstone
transaction price to be equivalent to Pebblebrook's proposal,
Pebblebrook's common shares would have to decline by $4.76, or 12.2%,
from today's closing price. Given the terms of our revised proposal, the
rationale for agreeing to a merger with Pebblebrook is more compelling
today than ever before. Our offer affords you, as the LaSalle Board, an
opportunity and ability to provide increased value to LaSalle
shareholders by accepting a superior proposal which is clearly in their
best interest and which they have plainly communicated is what they
desire.

On June 11, 2018, we provided you with a merger agreement essentially
identical to the Blackstone proposal, adapted only to reflect the
superior economics of our offer of the same date and our merger
structure. We remain willing to work with you to finalize that merger
agreement, changed to reflect the increase in the cash component of the
merger consideration from 20% to 30%. Working together, we believe we
can complete a transaction within the next 75 to 90 days, including
receiving approvals from shareholders of each company within that
timeframe. Our ability to move quickly to complete a transaction,
coupled with the significantly increased cash component of this enhanced
offer, provides LaSalle's shareholders with a significant premium to the
Blackstone transaction as well as a high degree of certainty with a low
level of risk deemed completely acceptable by your shareholders.

The Pebblebrook offer is a viable superior alternative and is available
for you to accept. We firmly believe that LaSalle shareholders will
readily approve a strategic combination of the two companies on the
terms outlined in our proposal if you give them a chance to do so. We
urge you to do so now. There is no reason to wait for the Blackstone
merger proposal to be rejected by LaSalle's shareholders. Nevertheless,
should you not choose to move forward with us now, our revised offer for
a strategic combination of our two companies will remain available—for
the benefit of LaSalle shareholders—on the same terms, following a
rejection of the Blackstone proposal by LaSalle shareholders.

We look forward to hearing from you.

Sincerely yours,

/s/ Jon E. Bortz
Chairman, President & CEO
Pebblebrook
Hotel Trust

Exhibit A

Summary of Key Terms of Non-Binding Proposed Combination of
Pebblebrook
Hotel Trust ("Pebblebrook") and LaSalle Hotel Properties ("LaSalle")

1. Merger Consideration (cash or
shares; maximum of 30% of LaSalle common shares will receive cash):

  • For each LaSalle common share held, each LaSalle shareholder may elect
    to receive:
    • $37.80 in cash; or
    • a fixed exchange ratio of 0.92 Pebblebrook common share
  • A maximum of 30% of the outstanding LaSalle shares will receive cash
    and shareholders' elections of cash will be subject to pro rata
    cutbacks in the event holders of more than 30% of LaSalle shares elect
    cash
  • Pebblebrook to exchange new preferred shares for LaSalle's existing
    preferred shares (with substantially identical terms)

2. Management:

  • Pebblebrook senior executives to manage combined company

3. Financing Sources (no financing
contingencies):

  • Pebblebrook to assume or repay LaSalle's term loans and first mortgage
    loans

4. Due Diligence (no diligence
contingencies):

  • Proposal is not contingent on further due diligence

5. Representations, Warranties and
Covenants (customary and reciprocal):

  • Customary and reciprocal to both LaSalle and Pebblebrook

6. Break-up Fee:

  • $112.0 million

7. Pebblebrook Board Approval:

  • Pebblebrook's Board of Trustees has approved the terms contained herein

8. Above terms subject to the following
assumptions and conditions:

  • Termination of the Blackstone agreement and concurrent execution of a
    definitive merger agreement
  • No payments or vesting under change in control severance agreements
    for Pebblebrook's executive officers

This summary is non-binding and neither party shall be under any legal
obligation concerning a merger transaction unless and until each party
executes a definitive merger agreement.

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 www.pebblebrookhotels.com
and follow us on Twitter at @PebblebrookPEB.

ADDITIONAL INFORMATION

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
AND SECURITY HOLDERS OF PEBBLEBROOK AND LASALLE ARE URGED TO READ ANY
SUCH PROXY STATEMENT, REGISTRATION STATEMENT, TENDER OR EXCHANGE OFFER
STATEMENT, PROSPECTUS AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY
AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE AS THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Any
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 http://www.sec.gov.

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
Merger. BEFORE MAKING ANY VOTING DECISION, INVESTORS AND SECURITY
HOLDERS OF LASALLE ARE URGED TO READ THE LASALLE PROXY STATEMENT, THE
PEBBLEBROOK PROXY STATEMENT AND OTHER DOCUMENTS FILED WITH THE SEC
CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN IMPORTANT
INFORMATION ABOUT PEBBLEBROOK, LASALLE, THE PROPOSED BRE MERGER AND
RELATED MATTERS. Investors and security holders can 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 http://www.sec.gov.
Copies of the documents filed by LaSalle with the SEC are also available
free of charge on LaSalle's website at www.lasallehotels.com,
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 www.pebblebrookhotels.com,
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 concerning 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
www.pebblebrookhotels.com.

______________________________

1   Premium based on the 5-day volume-weighted average price per
Pebblebrook common share on August 21, 2018
2 Premium based on the 30-day volume-weighted average price per
Pebblebrook common share on August 21, 2018
3 Premium based on the 60-day volume-weighted average price per
Pebblebrook common share on August 21, 2018
4 Premium based on the 90-day volume-weighted average price per
Pebblebrook common share on August 21, 2018
 

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