Palogic Value Fund Withdraws Nominees and Shareholder Proposal at Pebblebrook Hotel Trust

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Key Terms

net asset value financial

Net asset value is the total value of an investment fund's assets minus any liabilities, divided by the number of shares or units outstanding. It represents the per-share worth of the fund, similar to how the value of a house is determined by its total worth after debts are subtracted. Investors use it to gauge the true value of their holdings and to compare different investment options.

nav financial

Net asset value (NAV) is the total value of all the investments and assets in a fund or company, minus any debts or liabilities, divided by the number of shares or units outstanding. It represents the per-share worth, giving investors an idea of what each share is truly worth based on the underlying assets. Think of it like a company's total worth divided among its shares, helping investors assess whether a share is fairly priced.

ebitda financial

EBITDA stands for earnings before interest, taxes, depreciation, and amortization. It measures a company's profitability by focusing on the money it makes from its core operations, ignoring expenses like taxes and accounting adjustments. Investors use EBITDA to compare how well different companies are performing financially, as it provides a clearer picture of operational success without the influence of financial structure or accounting choices.

ffo financial

Funds from operations (FFO) is a performance metric used mainly for real estate companies that measures the cash generated by their core rental and property-management activities, while removing accounting items such as building depreciation and one-time gains or losses from property sales. Investors rely on FFO to assess a real estate firm's ability to pay and sustain dividends and fund growth—similar to checking how much actual rent a landlord collects each month rather than paper profits.

reit financial

A real estate investment trust (REIT) is a company that owns, operates, or finances income-producing real estate, like shopping centers, apartments, or office buildings. For investors, REITs offer a way to invest in real estate without having to buy property directly, often providing regular income through dividends. They function like a mutual fund for real estate, making it easier for people to add property investments to their portfolio.

deleveraging financial

Deleveraging is the process of a company reducing the amount of debt it carries relative to its assets or equity, either by paying down loans, selling assets, or raising fresh equity. For investors it matters because lower debt typically means less financial risk and steadier cash flow—like removing weight from a backpack to make a hike safer and easier—while it can also slow growth if borrowing had been funding expansion.

02/18/2026 - 08:00 AM

Highlights Persistent Concerns About NAV Accretion, Executive Accountability, and Economic Alignment

Encourages Board to Explore Asset Sales to Accelerate Share Buyback Program or Consider Sale of Company

DALLAS--(BUSINESS WIRE)-- Palogic Value Fund, LP and Palogic Value Management, LP (collectively, “Palogic,” “we” or “our”) issued the following letter on February 17, 2026, to the Board of Trustees (the “Board”) of Pebblebrook Hotel Trust (“Pebblebrook,” or the “Company”) (NYSE: PEB).

February 17, 2026

Pebblebrook Hotel Trust
c/o Corporate Secretary
4747 Bethesda Avenue, Suite 1100
Bethesda, Maryland 20814

Dear Members of the Board:

Palogic is highly encouraged by the steps Pebblebrook has recently taken to enhance corporate governance. As we have communicated previously, we believe the persistent discount to Net Asset Value (NAV) has been exacerbated by governance issues, specifically regarding extended Board tenures and the alignment of economic incentives.

The addition of directors Nina P. Jones and Bill Bayless last week as part of a Board refreshment is a welcome development for unaffiliated shareholders, many of whom have experienced negative total returns since the Company’s initial public offering in 2009. Creating a tenure-based framework for Board refreshment was also a positive step, as we feel that the lengthy tenure of five of the seven existing directors has potentially compromised Board independence.

We acknowledge the professionalism shown by Jon E. Bortz, Raymond D. Martz, Thomas C. Fisher, Cydney C. Donnell, Bonny W. Simi, and Michael J. Schall during our engagement. In recognition of these positive steps, Palogic is formally withdrawing its two director nominees and the shareholder proposal previously submitted for inclusion at the 2026 Annual Meeting of Shareholders.

We Continue to Question Pebblebrook’s NAV Accretion Narrative and Have Significant Capital Allocation Concerns

While we applaud these governance changes, Palogic retains significant concerns regarding the pursuit of NAV accretion, executive accountability, and economic alignment.

Since highlighting the discount to NAV in 2021, the Company has reduced the share count by approximately 14% over a four-year period. With a de minimis cash payout of one cent per quarter, we view its share buybacks over the last four years as a standard payout rather than an accelerated capital return.

Our concerns regarding NAV pursuit remain, and we are hopeful that the refreshed Board will make the following questions a centerpiece of the ongoing strategic discussion and communicate a timely framework to address them:

Why does the NAV gap exist?
If NAV accretion is a key priority, why is management not more aggressively pursuing a strategy of acquiring shares?
What assets could be readily sold to accelerate NAV accretion?
Would shareholders benefit more from a sale of the entire Company to provide certainty and realize NAV?

The episodic nature of Pebblebrook’s previous buybacks suggests to the market that the Company lacks the financial capacity to pursue NAV accretion without prior deleveraging. Our research indicates deep institutional demand for Florida-based hospitality assets. While we understand the hesitancy to sell high cash flow, stabilized resorts, it is our opinion that public markets don’t currently appreciate the resort/leisure focused portion of the Pebblebrook portfolio and are too focused on the structural and cyclical challenges presented by the San Francisco, Santa Monica, West Hollywood, and Portland submarkets. Although the sale of a high EBITDA asset creates a natural cash drag against the costs of the existing financial leverage and somewhat fixed corporate general and administrative portion of the expense base, the accelerated deleveraging that will occur would increase the Company’s ability to more systematically repurchase shares.

To maximize value, the Board must accept that it is difficult to serve "two masters." Prioritizing traditional REIT metrics like FFO and FFO growth may need to be secondary to the massive accretion available by purchasing shares at an approximate 50% discount to NAV.

Additionally, while we acknowledge the intangible benefits that come from exiting a market like Chicago (e.g., increased corporate focus, monetization of trapped capital etc.), the continued sale of these assets at large discounts to book value entrenches the narrative of misallocated capital. We believe an accelerated deleveraging through the sale of high-EBITDA, in-demand assets would better enable a systematic and aggressive buyback program.

We Encourage a Review of Executive Compensation Structure

We also remain concerned by the concentration of decision-making power among Chairman and Chief Executive Officer Mr. Bortz and co-Presidents Mr. Martz and Mr. Fisher. In our opinion, while their institutional expertise is undeniable, the disparity between executive compensation and shareholder outcomes is stark.

Mr. Bortz’s total compensation since Pebblebrook went public is $83.7 million through 2024.
Mr. Martz and Mr. Fisher have each been compensated close to $40 million through 2024.¹

In our opinion, it is difficult for unaffiliated shareholders to maintain confidence when management is afforded a compensation structure that has not translated into value for the owners of the Company. Despite the approximate 50% NAV discount, we have observed very limited insider buying outside of purchases by Mr. Bortz and fellow trustee Mr. Schall.

We encourage the Board to review the existing compensation structure to ensure that management is not being incentivized with deeply discounted shares at the expense of unaffiliated shareholders.

Looking Ahead

Given the persistent concerns raised above, we wonder if Pebblebrook’s strategy – focused on full-service, high-barrier to entry coastal markets – would ultimately be better suited for a buyer with a lower cost of capital. The public hotel REIT space has been unforgiving. The corporate strategy may just not align with the current desires of the public markets for portfolios with significantly higher EBITDA margins and less cyclicality, a more consistent corporate theme (e.g., convention/entertainment), or operational leverage and deep relationships with specific brands as the building blocks for value creation. As such, we encourage the Board to consider the sale of the entire Company.

We look forward to seeing how the refreshed Board will challenge the status quo and accelerate the realization of shareholder value.

Respectfully,

Ryan Vardeman, Principal
Scott Williams, Principal
Palogic Value Management, LP

About Palogic

Palogic Value Management, LP, is an investment advisor founded in 2006 that seeks to achieve long-term capital appreciation while limiting the risk of permanent capital impairment by investing in securities the principals believe are trading at a significant discount to intrinsic value, often due to industry dislocation or market misperception of a company’s prospects.