In the evening on May 17, 2018, representatives of Hunton spoke by telephone with representatives of LaSalle’s legal advisors to ask for an explanation of the terms of LaSalle’s May 16, 2018 draft of the merger agreement. LaSalle’s legal advisors stated that the LaSalle Board wanted Pebblebrook to make a specific proposal with respect to the composition of the board of trustees of the combined company. Hunton stated that Pebblebrook was not currently in a position to determine which of LaSalle’s trustees should join the board of trustees of the combined company. LaSalle’s legal advisors again requested that Pebblebrook present a revised draft of the merger agreement to LaSalle by noon on May 18, 2018.

According to the LaSalle Proxy Statement, the LaSalle advisory transaction committee concluded during its meeting on May 17, 2018 that both Blackstone’s proposal (then at $33.00 per share) and Pebblebrook’s proposal (then at a 0.9085 fixed exchange ratio (or an implied price of $34.58 per share) with a cash election option for up to 20% of the LaSalle Common Shares) would, if consummated, provide greater certainty of value (and less risk) at that time to LaSalle shareholders relative to the potential trading price of LaSalle Common Shares over a longer period as a standalone company. According to the LaSalle Proxy Statement, the LaSalle Board had established the transaction advisory committee to assist the LaSalle Board, in between meetings of the LaSalle Board, in considering the March 6 proposal and the range of alternative actions available to LaSalle.

On May 18, 2018, a representative of BAML called a representative of LaSalle’s legal advisors and requested an update on the status of LaSalle’s sale process and the LaSalle Board’s deliberations. The representative of LaSalle’s legal advisors indicated that the LaSalle Board was meeting at that time but that representatives of LaSalle’s financial advisors would contact Pebblebrook’s financial advisors following the conclusion of that meeting. In response, the representative of BAML stated that in order to make progress in the negotiations, LaSalle should delineate specific terms that the LaSalle Board was requesting from Pebblebrook. Representatives of LaSalle’s legal advisors responded that they would discuss this request with LaSalle and revert back afterwards.

According to the LaSalle Proxy Statement, the LaSalle Board concluded during its meeting on May 18, 2018 that both Blackstone’s proposal (then at $33.00 per share) and Pebblebrook’s May 16 proposal (then at a 0.9085 fixed exchange ratio (or an implied price of $34.58 per share) with a cash election option for up to 20% of the LaSalle Common Shares) would, if consummated, provide greater certainty of value (and less risk) to LaSalle shareholders relative to the potential trading price of LaSalle Common Shares over a longer period after accounting for the long-term risks to LaSalle’s business resulting from operational execution risk and evolving industry dynamics.

In the early afternoon of May 18, 2018, representatives of LaSalle’s financial advisors contacted representatives of Raymond James and BAML and informed them of the feedback from the LaSalle Board on Pebblebrook’s proposal. The representatives of LaSalle’s financial advisors indicated that the LaSalle Board was seeking an increase in the exchange ratio and more protection for LaSalle’s shareholders in the event that Pebblebrook’s share price declined between the signing and the closing of the transaction.

Shortly thereafter, representatives of Hunton provided to LaSalle’s legal advisors a revised draft of the merger agreement that LaSalle’s legal advisors had provided to Hunton on May 14, 2018. The revised draft reflected, among other things, Pebblebrook’s position not to treat the LaSalle Common Shares held by LaSalle’s executive officers preferentially compared to the LaSalle Common Shares held by the rest of LaSalle’s shareholders. That is, although Pebblebrook would agree to permit the LaSalle executive officers’ performance shares and restricted shares to vest in connection with the acquisition of LaSalle by Pebblebrook (notwithstanding that the agreements pursuant to which such shares had been awarded would not have automatically permitted vesting upon such acquisition), Pebblebrook required that such shares should receive the same merger consideration—the fixed exchange ratio of Pebblebrook common shares with the option to elect cash, subject to pro rata cutbacks—as the rest of LaSalle’s shareholders and not automatically be exchanged for all cash, as LaSalle’s May 14, 2018 draft of the merger agreement had contemplated. On May 18, 2018, the Pebblebrook common share closing price on the NYSE was $39.01.

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Later in the afternoon of May 18, 2018, after discussions with Pebblebrook management, representatives of Raymond James and BAML conveyed to representatives of LaSalle’s financial advisors that Pebblebrook was not willing to increase the exchange ratio, the cash component (or cap), or provide a pricing collar, as a pricing collar was not appropriate or customary in a REIT industry stock-for-stock transaction when the target’s common shares are listed on a major stock exchange. Representatives of Raymond James and BAML indicated that Pebblebrook maintained its most recent proposal.

At approximately 10:45 p.m. on May 18, 2018, representatives of one of LaSalle’s financial advisors had a discussion with representatives of BAML and indicated that the next morning LaSalle would provide Pebblebrook, through representatives of LaSalle’s financial advisors, specific guidance on what changes Pebblebrook would need to make to its proposal in order to increase its chance of being successful.

At approximately 9:00 a.m. on May 19, 2018, representatives of LaSalle’s financial advisors orally communicated to Raymond James and BAML the following terms:

	•		Pebblebrook would need to increase its proposed exchange ratio from 0.9085 to 0.9250;
	•		Pebblebrook would need to agree to an asymmetrical collar with 10% downside protection for LaSalle; and
	•		Pebblebrook would need to submit a new revised draft of the merger agreement reflecting more of LaSalle’s proposed terms than the draft merger agreement provided by Hunton to LaSalle’s legal advisors on May 18, 2018.

In these discussions, Raymond James and BAML stated that Pebblebrook would not provide a pricing collar, whether symmetrical or asymmetrical, because such collars are not appropriate or customary in a REIT industry stock-for-stock transaction when the target’s common shares are listed on a major stock exchange. Raymond James and BAML further stated that a collar would be particularly inappropriate in this situation because Pebblebrook’s several offers to merge with LaSalle had already been publicly disclosed and supported by research analysts and institutional investors and Pebblebrook’s shares thus traded at price levels that reflected the potential of a merger.

Also in these discussions, representatives of LaSalle’s financial advisors indicated to Raymond James and BAML that LaSalle would need responses from Pebblebrook by noon on May 19, 2018. Representatives of LaSalle’s financial advisors further indicated that if Pebblebrook did not agree to these terms the LaSalle Board was likely to move forward with a proposal from another party.

Shortly before noon on May 19, 2018, as requested by LaSalle’s financial advisors, representatives of Raymond James and BAML orally provided representatives of LaSalle’s financial advisors with a revised proposal consisting of the following terms (which we refer to as the May 19 proposal) and indicated that this was Pebblebrook’s best and final offer:

	•		Pebblebrook would improve its proposed exchange ratio to 0.92 (representing an implied price of $35.89 per LaSalle Common Share based on the May 18, 2018 Pebblebrook common share closing price on the NYSE of $39.01);
	•		Pebblebrook would provide LaSalle shareholders the option to elect to receive a cash amount per LaSalle Common Share, up to a maximum of 20% of the aggregate number of LaSalle Common Shares outstanding immediately prior to the closing, subject to proration;
	•		Pebblebrook continued to believe that a pricing collar was not appropriate or customary but remained open to negotiating alternative methods to address LaSalle’s stated concern; and
	•		Pebblebrook wanted to have a call to discuss the merger agreement rather than submitting another revised draft.

Soon thereafter, on May 19, 2018, representatives of the financial and legal advisors of both companies had a call to discuss the open issues in the merger agreement. Thereafter, Pebblebrook and its financial and legal advisors received no further communication from LaSalle or its financial and legal advisors prior to LaSalle’s May 21, 2018 press release announcing the execution of the BRE Merger Agreement.

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On the morning of May 20, 2018, a representative of BAML tried to speak with a representative of one of LaSalle’s financial advisors, but the LaSalle financial advisor did not answer his telephone and the representative of BAML left a voicemail message requesting a return call to discuss LaSalle’s response to Pebblebrook’s increased offer terms. Pebblebrook’s financial advisors did not receive a return call from LaSalle’s financial advisors.

On the morning of May 21, 2018, prior to the opening of trading on the NYSE, LaSalle and BRE issued a joint press release announcing the execution of the BRE Merger Agreement.

Also on May 21, 2018, Pebblebrook issued a statement in response to LaSalle’s announcement regarding the execution of the BRE Merger Agreement, indicating Pebblebrook had increased its offer to merge with LaSalle at a fixed exchange ratio of 0.92 Pebblebrook common share for each LaSalle Common Share and the option for LaSalle shareholders to elect to receive a cash amount per LaSalle Common Share, up to a maximum of 20% of the aggregate number of LaSalle Common Shares outstanding immediately prior to the closing, subject to proration. The implied offer price in the statement was $35.89 per LaSalle Common Share, representing a premium of $2.39 per LaSalle Common Share, or 7.1%, above the $33.50 fixed cash price agreed to by LaSalle in the BRE Merger Agreement.

On June 10, 2018, the Pebblebrook Board met telephonically to discuss, among other things, LaSalle’s announced BRE Merger Agreement and Pebblebrook’s ongoing interest in combining with LaSalle and to authorize Pebblebrook’s management to submit another increased proposal to LaSalle. Members of Pebblebrook’s management team and representatives of Hunton, Raymond James and BAML were present during the telephonic meeting.

On the morning of June 11, 2018, prior to the opening of trading on the NYSE, Mr. Bortz, on behalf of Pebblebrook and as authorized by the Pebblebrook Board, sent a letter to the LaSalle Board (which we refer to as the June 11 letter, and the proposal set forth therein as the June 11 proposal). The June 11 proposal provided for a fixed exchange ratio of 0.92 Pebblebrook common share for each LaSalle Common Share (the same exchange ratio as set forth in Pebblebrook’s proposal on May 19, 2018), which represented an implied price of $37.80 per share based on Pebblebrook’s 5-day VWAP as of June 8, 2018, a premium of $4.30, or 13%, above the $33.50 agreed to by LaSalle in the BRE Merger Agreement. The June 11 proposal also provided that LaSalle’s shareholders would have the option to elect a fixed amount of cash of $37.80 per LaSalle Common Share for up to a maximum of 20% of the aggregate number of LaSalle Common Shares outstanding immediately prior to the closing, subject to proration. The letter also included a summary of certain proposed key terms which included: Pebblebrook executives would manage the combined company; the June 11 proposal was not contingent on financing or further due diligence; a break-up fee of $112 million (which is the same amount of the break-up fee agreed to in the BRE Merger Agreement); and no payments or vesting under change in control severance agreements for Pebblebrook’s executive officers. The June 11 letter also stated that Pebblebrook was prepared to enter into a merger agreement essentially identical to the BRE Merger Agreement adapted to reflect the terms of the June 11 proposal and that Pebblebrook would send a draft of such merger agreement under separate cover. Shortly before 9:00 a.m. that morning, Hunton sent the draft merger agreement to LaSalle’s legal advisors.

The full text of the June 11 letter follows:

Letter from Pebblebrook to LaSalle dated June 11, 2018

June 11, 2018

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

Ladies and Gentlemen,

The Board of Trustees of Pebblebrook Hotel Trust remains highly focused on a strategic combination of our company with LaSalle Hotel Properties. We are providing this revised

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higher offer today and urge you to objectively consider the merits and benefits to LaSalle shareholders of the strategic combination and accept our offer.

Our acquisition proposal is superior, by far, to the agreement LaSalle entered into with Blackstone. Under our proposal, LaSalle shareholders will receive consideration of substantially greater value today and will be able to participate in the value creation of the combined company in the future.

Offer and Form of Consideration: Our offer of a combination of shares and cash equals an implied price of $37.80¹ based on a fixed exchange ratio of 0.92 Pebblebrook common share for each LaSalle common share. LaSalle shareholders will have the option for each share they own to elect either a) a fixed amount of $37.80 in cash; or b) a fixed exchange ratio of 0.92 Pebblebrook share. A maximum of 20% of the outstanding LaSalle shares will receive cash and those electing cash will be subject to pro rata cutbacks in the event more than 20% of LaSalle shares elect cash. Our proposal takes into account the $112 million termination fee agreed to in the current agreement with Blackstone.

•

Our $37.801 per share offer represents a premium of 13% to the current Blackstone agreement of $33.50 per share.

Our offer clearly represents a superior value proposition to LaSalle shareholders and we urge you to exercise your fiduciary duty and termination rights and enter into a merger agreement with Pebblebrook to allow LaSalle shareholders the opportunity to approve our higher offer. We are not aware of any listed equity REIT M&A transaction since 2006 in which a target has agreed to a cash offer at a discount of greater than 1% compared to a competing share or share and cash offer.²

We are prepared to enter into a merger agreement essentially identical to the Blackstone agreement adapted merely to reflect our proposed merger terms. The key terms of our proposed agreement are set forth in the attached Exhibit A, and we are simultaneously sending you the full merger agreement under separate cover.

Pebblebrook’s track record of success as a public company and our significant knowledge of LaSalle’s assets and markets make us the perfect and obvious strategic partner for LaSalle. Our plan is to retain the vast majority of LaSalle’s non-executive employees and grow the value of the combined entity. LaSalle shareholders and employees will both have an opportunity to benefit from the materially higher current value of our proposal compared to the Blackstone price and the ability to participate in the future upside of our combined world-class portfolio.

It is clear that the value of our offer is substantially greater than the value of the Blackstone agreement. It is also clear that LaSalle shareholders expect to receive far more value for their shares than Blackstone’s agreement will provide given that LaSalle shares have been trading at a significant premium to the $33.50 per share offer price since the Blackstone deal was announced. In addition, any shareholders who wanted cash at $33.50 per share have likely already received it as over 70 million of LaSalle’s outstanding shares have traded since the Blackstone deal announcement, and all of them at prices above $33.50 per share. Therefore, we request that you enter into discussions with us to finalize a merger agreement so that LaSalle shareholders can realize far greater value for their shares.

Sincerely yours,

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

 

	1		Based on Pebblebrook’s 5-day VWAP of $41.09 as of June 8, 2018.
	2		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

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Equity Office Properties in 2007; Blackstone’s offer represented a less than 1% discount to the competing stock/cash offer.

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 20% of the outstanding LaSalle shares will receive cash):

•

For each LaSalle common share held, each LaSalle shareholder may elect to receive:

	o		$37.80 in cash; or
	o		a fixed exchange ratio of 0.92 Pebblebrook share

	•		A maximum of 20% of the outstanding LaSalle shares will receive cash and those electing cash will be subject to pro rata cutbacks in the event more than 20% 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 with respect to a merger transaction unless and until each party executes a definitive merger agreement.

 

On June 11, 2018, prior to the opening of trading on the NYSE, Pebblebrook issued a press release disclosing the June 11 letter. On June 11, 2018, Pebblebrook also publicly disclosed a presentation relating to the merits of the proposed strategic business combination of Pebblebrook and LaSalle.

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Also on June 11, 2018, prior to the opening of trading on the NYSE, LaSalle issued a press release confirming receipt of Pebblebrook’s June 11 proposal and indicating that the LaSalle Board would review Pebblebrook’s June 11 proposal in accordance with the provisions of the BRE Merger Agreement.

Pebblebrook and its financial and legal advisors received no communication from LaSalle or its financial and legal advisors between the time Pebblebrook sent the June 11 letter and proposed merger agreement and LaSalle’s June 18, 2018 press release announcing that the LaSalle Board had determined that Pebblebrook’s June 11 proposal did not constitute, and could not reasonably be expected to lead to, a “Superior Proposal” as defined in the BRE Merger Agreement.

On June 12, 2018, HG Vora filed an amendment to its Schedule 13D reporting beneficial ownership of 9.1% of the outstanding LaSalle Common Shares. The amendment to HG Vora’s Schedule 13D also disclosed a letter that it had sent to the LaSalle Board stating that HG Vora believed that Pebblebrook’s June 11 proposal constituted a superior proposal as contemplated by the BRE Merger Agreement.

On June 18, 2018, prior to the opening of trading on the NYSE, LaSalle issued a press release disclosing that the LaSalle Board had determined that Pebblebrook’s June 11 proposal did not constitute, and could not reasonably be expected to lead to, a “Superior Proposal” as defined in the BRE Merger Agreement. The press release further disclosed that the LaSalle Board had reaffirmed its recommendation in support of the BRE Merger Agreement.

On June 22, 2018, Pebblebrook filed a Schedule 13D reporting beneficial ownership, through the Operating Partnership, of 10,809,215 LaSalle Common Shares, or 9.8% of the outstanding LaSalle Common Shares.

On June 28, 2018, Pebblebrook publicly disclosed an updated presentation relating to the merits of the proposed strategic business combination of Pebblebrook and LaSalle.

Also on June 28, 2018, BTIG LLC, or BTIG, facilitated a conference call with Pebblebrook management and investors, during which Pebblebrook management discussed, among other things, Pebblebrook’s continuing desire to acquire LaSalle. On June 29, 2018, Pebblebrook learned that BTIG had published an equity research report regarding the conference call and the Pebblebrook Proposal and included a hyperlink to a recording of the conference call. Subsequently on June 29, 2018, Pebblebrook filed with the SEC a transcript of the conference call.

On July 10, 2018, prior to the opening of trading on the NYSE, Pebblebrook filed this Proxy Statement in preliminary form with the SEC.

On the morning of July 20, 2018, prior to the opening of trading on the NYSE, Mr. Bortz, on behalf of Pebblebrook and as authorized by the Pebblebrook Board, sent a letter to the LaSalle Board (which we refer to as the July 20 letter, and the proposal set forth therein as the July 20 proposal). The July 20 proposal provided for a fixed exchange ratio of 0.92 Pebblebrook common share for each LaSalle Common Share (the same exchange ratio as set forth in Pebblebrook’s proposal on June 11, 2018), which represented an implied price of $36.40 per share based on Pebblebrook’s 5-day VWAP as of July 19, 2018, a premium of $2.90, or 9%, above the $33.50 agreed to by LaSalle in the BRE Merger Agreement. The July 20 proposal also provided that LaSalle’s shareholders would have the option to elect a fixed amount of cash of $37.80 per LaSalle Common Share for up to a maximum of 20% of the aggregate number of LaSalle Common Shares outstanding immediately prior to the closing, subject to proration. The letter also included a summary of certain proposed key terms which included: Pebblebrook executives would manage the combined company; the July 20 proposal was not contingent on financing or further due diligence; a break-up fee of $112 million (which is the same amount of the break-up fee agreed to in the BRE Merger Agreement); and no payments or vesting under change in control severance agreements for Pebblebrook’s executive officers. The July 20 letter also stated that Pebblebrook had already provided to the LaSalle Board a merger agreement essentially identical to the BRE Merger Agreement adapted to reflect the terms of the July 20 proposal.

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The full text of the July 20 letter follows:

Letter from Pebblebrook to LaSalle Dated July 20, 2018

July 20, 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,

Given the change in facts and circumstances, including the market’s reaction to the Blackstone agreement, it is absolutely clear that LaSalle shareholders will not approve LaSalle’s merger with Blackstone. That is good, since it affords you, as the LaSalle Board, an opportunity and ability to provide increased value to the LaSalle shareholders by finalizing a merger agreement with us regarding our superior proposal. We strongly believe that LaSalle shareholders will readily approve a strategic combination of our two companies on the terms set forth in our offer, if you give them a chance to do so. Accordingly, we are reconfirming our superior offer, which has remained outstanding, for a strategic combination of our two companies, a combination that we and LaSalle shareholders believe will deliver materially higher value to them.

As I’m sure you are aware, since the execution of LaSalle’s agreement with Blackstone, lodging industry performance has continued to improve and investor support for our cash/stock proposal has been overwhelming. LaSalle shareholders clearly see the upside in the industry and from strategically combining our two similar companies. Furthermore, investors have made it clear through their trading of LaSalle common shares that LaSalle’s stated rationale for rejecting our offer of June 11 (i.e., the need to provide certainty of the $33.50 fixed cash price) is certainly not valid or desired by LaSalle shareholders. Indeed, since the announcement of the Blackstone agreement, over 109 million LaSalle common shares have traded above the proposed transaction price of $33.50. Therefore, it is almost certain that all investors who wanted that certainty have already captured that value and more, and existing LaSalle shareholders recognize and prefer the higher value of our offer. With LaSalle common shares consistently trading at a substantial premium to what is now a take-under price from Blackstone, LaSalle shareholders are, in effect, voting with their wallets. LaSalle’s continued promotion of a transaction at a price per LaSalle common share lower than every trading price of LaSalle common shares since the Blackstone transaction announcement as well as the current market price, is a disservice to all LaSalle shareholders and ignores the clear desires of the holders of the vast majority of LaSalle common shares. And, they have been clear about their strong preference for our offer through the many public and private letters you have likely received since announcing the Blackstone agreement.

Pursuant to our proposal, LaSalle shareholders would be able 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 share. A maximum of 20% of the outstanding LaSalle shares will receive cash and those electing cash will be subject to pro rata cutbacks in the event more than 20% of LaSalle shares elect cash. Our proposal takes into account the $112 million termination fee agreed to in the current agreement with Blackstone. LaSalle shareholders who receive Pebblebrook common shares will be able to participate in the future upside potential of the combined company, including significantly higher dividend income than LaSalle shareholders have received.

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We have already provided you with a draft merger agreement essentially identical to the Blackstone agreement, adapted of course to reflect the superior economics of our offer and our merger structure. Working with you, 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. Pursuant to our proposal, the combined company would also retain a substantial number of the current LaSalle employees post-merger. We have attached as Exhibit A to this letter a summary of the key terms of our offer and the process for entering into a definitive agreement.

Our offer provides LaSalle shareholders with materially superior value to that of the Blackstone agreement. As of market close on July 19, 2018, the implied price per share of our offer provides premiums to the Blackstone price of:

	•		$3.29 per share, or 9.8%, based on the closing price per Pebblebrook common share1;
	•		$2.90 per share, or 8.6%, based on the 5-day VWAP of Pebblebrook common shares1;
	•		$2.99 per share, or 8.9%, based on the 30-day VWAP of Pebblebrook common shares1; and
	•		$2.48 per share, or 7.4%, based on the 60-day VWAP of Pebblebrook common shares1

Given the consistent trading of Pebblebrook common shares over the last 90 days, each of these premiums has either continued to increase over time, as has been the case for the 30-, and 60- day VWAPs, or remained substantial as compared to the Blackstone price.

The strong trading levels in both LaSalle’s and Pebblebrook’s common shares are not simply the result of deal speculation. Macro trends in our industry are favorable and recognized as such by the investment community. We believe shareholders have made it clear that they desire the upside inherent in a combination of our two companies.

Of course, assuming you designate our offer as superior, Blackstone has the right to increase its cash offer price to a level that LaSalle shareholders ultimately find acceptable. However, we caution that 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 share/cash offer. In fact, a survey of trends in public REIT M&A transactions recently published by your legal counsel clearly states that cash transaction prices are generally less attractive than shares or cash/share alternatives.³ Their research has shown that all-cash buyers typically pay higher premiums than cash/stock buyers in public M&A transactions⁴, not the other way around. Currently, Blackstone’s cash offer represents a significant discount to the implied price of our offer, regardless of which time period is considered. We have attached as Exhibit B to this letter a copy of the relevant section from your legal counsel’s advisory publication and provide the URL to the entire report in the footnote below.

As the holder of 10.8 million LaSalle common shares (9.8%), it is our view that if you accept a revised take-under price from Blackstone and agree to a higher termination fee, for which there would be no logical rationale, you would clearly be acting against the best interests of LaSalle shareholders. In that case, you would be enabling an egregious transfer of LaSalle’s value to Blackstone while disadvantaging our superior proposal with artificial and unnecessary transaction costs and not allowing shareholders to vote on our more attractive offer. This tactic would be a gross disservice to all LaSalle shareholders, and in our view, a violation of your fiduciary duties.

In stark contrast to the discounted take-under price of the Blackstone agreement, we are offering to pay a full and fair price to LaSalle shareholders for a strategic combination with immediate higher value and long-term upside potential. Moreover, we want to point out that if you choose to move forward with a shareholder vote of the existing agreement, and shareholders reject the current Blackstone take-under agreement–an outcome we believe is

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all but certain, and as set forth in LaSalle’s preliminary proxy, you have already deemed our proposal superior to remaining independent, and shareholders will expect you to immediately enter into an agreement with us on the terms we have offered, which we will be prepared to do.

We want to give LaSalle shareholders greater value for their shares now and unlock the true potential of LaSalle over the long-term as a combined company with Pebblebrook. We remain ready to move quickly to complete a transaction and urge you to engage with us to designate our offer as superior, and finalize a merger agreement. Our extensive knowledge of LaSalle’s assets and markets makes us the best partner to maximize value for LaSalle shareholders and the shareholders of a combined company.

Sincerely yours,

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

 

	1		Based on Pebblebrook’s closing price of $39.72, 5-day VWAP of $39.18, 30-day VWAP of $39.31 and 60-day VWAP of $38.61, all as of July 19, 2018.
	2		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, January 29, 2018. https://www.goodwinlaw.com/-/media/files/publications/goodwin-insights_trends-in-public-reit-ma.pdf
	4		Ibid

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 20% of the outstanding LaSalle shares will receive cash):

	•		For each LaSalle common share held, each LaSalle shareholder may elect to receive:

	o		$37.80 in cash; or
	o		a fixed exchange ratio of 0.92 Pebblebrook share

	•		A maximum of 20% of the outstanding LaSalle shares will receive cash and those electing cash will be subject to pro rata cutbacks in the event more than 20% 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

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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 with respect to a merger transaction unless and until each party executes a definitive merger agreement.

Exhibit B

Excerpt from: Goodwin Insights, Trends in Public REIT M&A 2012-2017,
published by Goodwin Procter, January 29, 2018.

https://www.goodwinlaw.com/-/media/files/publications/goodwin-insights_trends-in-public-reit-ma.pdf

“As evident in the table above, premiums logically tend to decrease when stock is included as a component of the merger consideration, with the highest premiums coming in all-cash go-private transactions and the lowest premiums coming in all stock so-called “merger of equal” transactions. When shareholders are exchanging their shares for all cash in a “no tomorrow” transaction, buyers will pay as robust a premium as the market will bear in exchange for capturing all future upside in the target business. Conversely, when shareholders are receiving shares in the combined company, which will almost always be a larger and more diverse company, buyers have less of a compelling reason to provide target shareholders with a robust up-front premium because they will receive the future economic benefits of the combined enterprise.”

In the afternoon of July 20, 2018, LaSalle announced that it had set July 20, 2018 as the record date for the Special Meeting and confirmed that it had received the July 20 letter.

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On July 30, 2018, LaSalle issued a press release announcing that the LaSalle Board has determined that the Pebblebrook Proposal does not constitute, and could not reasonably be expected to lead to, a “Superior Proposal” as defined in the BRE Merger Agreement. The press release further disclosed that the LaSalle Board had reaffirmed its recommendation in support of the BRE Merger Agreement.

On July 30, 2018, Pebblebrook filed this Proxy Statement with the SEC.

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CERTAIN INFORMATION REGARDING THE PROPOSED MERGER

According to the LaSalle Proxy Statement, pursuant to the BRE Merger Agreement, at the merger effective time, each LaSalle Common Share issued and outstanding immediately prior to the merger effective time will be automatically cancelled and converted into the right to receive an amount in cash equal to $33.50 per share.

The foregoing description is not complete and is qualified in its entirety by reference to the full text of the BRE Merger Agreement, a copy of which is included as Exhibit A to the LaSalle Proxy Statement. The Proposed BRE Merger and each of the Special Meeting Proposals are described in further detail in the LaSalle Proxy Statement which is available at www.sec.gov and LaSalle’s website at www.lasallehotels.com.

CERTAIN INFORMATION REGARDING PARTICIPANTS IN THIS PROXY SOLICITATION

Pebblebrook is a participant in this solicitation of proxies for the Special Meeting. Certain other individuals identified in Schedule I to this Proxy Statement may also be deemed to be participants in such solicitation. Information concerning Pebblebrook and other persons who may be deemed to be participants in this solicitation of proxies for the Special Meeting is set forth in Schedule I to this Proxy Statement and is incorporated into this Proxy Statement by reference. Information that would be required by Item 403 of Regulation S-K is set forth in Schedule II to this Proxy Statement and is incorporated into this Proxy Statement by reference.

NO OTHER MATTERS

Other than as set forth above, Pebblebrook currently is not aware of any other proposals to be brought before the Special Meeting. If any Adjournment Proposal is made at the Special Meeting, Pebblebrook will use its proxies to vote “AGAINST” such Adjournment Proposal. Should other proposals be brought before the Special Meeting, the persons named on the GOLD proxy card will vote on such proposals in their discretion consistent with Rule 14a-4(c)(3) promulgated under the Securities Exchange Act of 1934, as amended and the rules promulgated thereunder (the “Exchange Act”). Rule 14a-4(c)(3) of the Exchange Act governs our use of discretionary proxy voting authority with respect to matters that are not known by us a reasonable time before our solicitation of proxies. It provides that if we do not know, a reasonable time before making our solicitation, that a matter is to be presented at the Special Meeting, then we are allowed to use our discretionary voting authority when the proposal is raised at the Special Meeting, without providing any discussion of the matter in this Proxy Statement.

VOTING PROCEDURES

To vote “AGAINST” the BRE Proposal, the Payout Proposal and the Adjournment Proposal at the Special Meeting, please sign and date the enclosed GOLD proxy card and return it to Okapi in the enclosed postage-paid envelope. Submitting a proxy will not affect your right to attend the Special Meeting and vote in person.

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THIS PROXY SOLICITATION

1. When and where is the Special Meeting?

The Special Meeting will be held on September 6, 2018, at 10:00 a.m., local time, at the Sofitel Washington DC Lafayette Square, 806 15^th Street NW, Washington, DC 20005.

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2. How do I vote my shares at the Special Meeting?

By Mail

If you hold LaSalle Common Shares directly in your name as a shareholder of record, you will need to 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.

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 record.

3. What should I do if I receive a proxy card from LaSalle?

If you submit a proxy to us by signing and returning the enclosed GOLD proxy card, we request that you not sign or return any proxy card or follow any voting instructions provided by LaSalle unless you intend to change your vote, because only your latest-dated proxy will be counted.

If you have already sent a proxy card to LaSalle and voted in favor of the BRE Proposal, the Payout Proposal or the Adjournment Proposal, you may revoke it and vote against the BRE Proposal, the Payout Proposal and the Adjournment Proposal simply by signing, dating and returning the enclosed GOLD proxy card.

4. What if I want to revoke a proxy or change my voting instructions?

You may change or revoke a proxy at any time prior to the vote on the matters at the Special Meeting. If you are a record holder of LaSalle Common Shares, you may revoke your proxy by (1) sending a signed notice stating that you revoke your proxy to Okapi Partners LLC, 1212 Avenue of the Americas, 24th Floor, New York, NY 10036, that bears a date later than the date of the proxy you want to revoke and is received prior to the Special Meeting, or (2) submitting another valid proxy card with a later date, including by signing, dating and returning the enclosed GOLD proxy card, or (3) attending the Special Meeting (or, if the Special Meeting is adjourned or postponed, attending the adjourned or postponed meeting) and voting in person, which will automatically cancel any proxy previously given, or revoking your proxy in person, but your attendance alone will not revoke any proxy previously given. If your LaSalle Common Shares are held in street name, you must contact your broker, bank, nominee or other holder of record in order to revoke your proxy.

If you choose to revoke a proxy by delivering a written revocation or a later-dated proxy to LaSalle or by submitting new voting instructions to the record holder of your LaSalle Common Shares, we would appreciate it if you would assist us in representing the interests of LaSalle shareholders on an informed basis by sending a copy of your revocation, proxy or new voting instructions to Okapi Partners LLC, 1212 Avenue of the Americas, 24th Floor, New York,

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NY 10036 or by calling Okapi toll-free at (855) 305-0855 (banks and brokers may call collect at (212) 297-0720). Please remember, your latest-dated proxy is the only one that counts.

5. If I plan to attend the Special Meeting, should I still submit a proxy?

Whether you plan to attend the Special Meeting or not, we urge you to submit the enclosed GOLD proxy card. Returning the enclosed GOLD proxy card will not affect your right to attend the Special Meeting and vote.

6. Who can vote?

Only record holders of LaSalle Common Shares at the close of business on the Record Date are entitled to notice of, and to vote at, the Special Meeting. No other shares of LaSalle capital stock are entitled to notice of and to vote at the Special Meeting. At the close of business on the Record Date, LaSalle had outstanding and entitled to vote 110,382,519 LaSalle Common Shares.

Even if you sell your LaSalle Common Shares after the Record Date, you will retain the right to vote those shares at the Special Meeting.

7. How many votes do I have?

Holders of LaSalle Common Shares have one vote per share on each matter voted upon at the Special Meeting.

8. How will my shares be voted?

If you sign, date and return the enclosed GOLD proxy card, your shares will be voted as you direct. If you submit a signed GOLD proxy card without instructions, your shares will be voted “AGAINST” the Special Meeting Proposals. Consistent with Rule 14a-4(c)(3) promulgated under the Securities Exchange Act of 1934, as amended, or the Exchange Act, submitting a signed GOLD proxy card without instructions will also entitle the persons named on the GOLD proxy card to vote your shares in accordance with their discretion on matters not described in this Proxy Statement that properly come before the Special Meeting.

If LaSalle shareholders holding LaSalle Common Shares in street name do not provide voting instructions or vote their LaSalle Common Shares in person at the Special Meeting, their shares will not be voted.

Unless a proxy specifies otherwise, it will be presumed to relate to all LaSalle Common Shares held of record on the Record Date by the person who submitted it.

9. What is required for a quorum at the Special Meeting?

All holders of record of LaSalle Common Shares as of the Record Date, which was the close of business on July 20, 2018, are entitled to receive notice of, attend and vote at the Special Meeting. Each LaSalle common shareholder will be entitled to cast one vote on each matter presented at the Special Meeting for each LaSalle Common Share that such holder owned as of the Record Date. On the Record Date, there were 110,382,519 LaSalle Common Shares outstanding and entitled to vote at the Special Meeting. The presence in person or by proxy of LaSalle shareholders entitled to cast a majority of all the votes entitled to be cast as of the close of business on the Record Date will constitute a quorum for purposes of the Special Meeting. A quorum is necessary to transact business at the Special Meeting. Abstentions will be counted as shares present for the purposes of determining the presence of a quorum.

10. What are the vote requirements for the Special Meeting Proposals?

Approval of the BRE Proposal requires the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of the LaSalle Common Shares outstanding as of the Record Date. Because the required vote for the BRE Proposal is based on the number of votes LaSalle common

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shareholders are entitled to cast, rather than on the number of votes cast, failure to vote your LaSalle Common Shares (including failure to give voting instructions to your broker, bank or other nominee) and abstentions will have the same effect as voting “AGAINST” the BRE Proposal and the other transactions contemplated by the BRE Merger Agreement.

The approval of each of the Payout Proposal and the Adjournment Proposal requires the affirmative vote of a majority of the votes cast on the proposal. Approval of these proposals is not a condition to completion of the BRE Proposal. For each of these proposals, if a LaSalle shareholder fails to cast a vote on such proposal, in person or by authorizing a proxy, such failure will not have any effect on the outcome of such proposal if a quorum is present at the Special Meeting. Abstentions are not considered votes cast and therefore will have no effect on the outcome of such proposals.

Under NYSE rules, all of the Special Meeting Proposals are non-routine matters, so there can be no broker non-votes at the Special Meeting. A broker non-vote occurs when shares held by a bank, broker, trust or other nominee are represented at a meeting, but the bank, broker, trust or other nominee has not received voting instructions from the beneficial owner and does not have the discretion to direct the voting of the shares on a particular proposal but has discretionary voting power on other proposals at such meeting.

Votes cast by proxy or in person at the Special Meeting will be counted by the person appointed by LaSalle to act as inspector of election for the Special Meeting. The inspector of election will also determine the number of LaSalle Common Shares represented at the Special Meeting, in person or by proxy.

11. How can I receive more information?

If you have any questions about giving your proxy to cast your vote or about our solicitation, or if you require assistance, please call Okapi toll-free at (855) 305-0855 (banks and brokers may call collect at (212) 297-0720).

12. How can I receive more information regarding LaSalle?

You can find additional business and financial information about LaSalle in reports and documents previously filed by LaSalle with the SEC. Such information is available to you without charge at the SEC’s website at www.sec.gov and LaSalle’s website at www.lasallehotels.com. The principal executive offices of LaSalle are located at 7550 Wisconsin Avenue, 10th Floor, Bethesda, Maryland 20814.

13. How can I receive more information regarding Pebblebrook?

You can find additional business and financial information about Pebblebrook in reports and documents previously filed by Pebblebrook with the SEC. Such information is available to you without charge at the SEC’s website at www.sec.gov and on our website at www.pebblebrookhotels.com. The information found on, or otherwise accessible through, our website is not incorporated into, and does not form a part of, this proxy statement or any other report or document we file with or furnish to the SEC. You can also request copies of these documents from us. See the section entitled “Where You Can Find More Information.” Our principal executive offices are located at 7315 Wisconsin Avenue, Suite 1100 West, Bethesda, Maryland 20814.

NO DISSENTERS’ RIGHTS OF APPRAISAL

Holders of LaSalle Common Shares who object to the Special Meeting Proposals do not have any appraisal rights, dissenters’ rights or rights of an objecting shareholder in connection with the Special Meeting Proposals. In addition, holders of LaSalle Common Shares may not exercise any appraisal rights, dissenters’ rights or rights of an objecting shareholder to receive the fair value of the shareholder’s shares in connection with the BRE Proposal because LaSalle’s declaration of trust provides that shareholders are not entitled to exercise such rights unless expressly required by the Maryland REIT Law.

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SOLICITATION OF PROXIES

Proxies will be solicited by mail, telephone, facsimile, telegraph, the internet, e-mail, newspapers and other publications of general distribution and in person. Trustees, officers and certain employees of Pebblebrook may assist in the solicitation of proxies without any additional remuneration.

Pebblebrook has retained Okapi for solicitation and advisory services in connection with solicitations relating to the Special Meeting, for which Okapi is to receive a fee of $100,000, plus an additional fee of $100,000 if Pebblebrook acquires LaSalle. Up to 15 people may be employed by Okapi in connection with the solicitation of proxies for the Special Meeting. Pebblebrook has also agreed to reimburse Okapi for out-of-pocket expenses and to indemnify Okapi against certain liabilities and expenses, including reasonable legal fees and related charges. Okapi will solicit proxies for the Special Meeting from individuals, brokers, banks, bank nominees and other institutional holders.

Pebblebrook may reimburse banks, brokers, custodians or other record holders for their reasonable out-of-pocket expenses incurred in connection with forwarding, at Pebblebrook’s request, all materials related to this solicitation of proxies to the beneficial owners of LaSalle Common Shares they hold of record.

The entire expense of soliciting proxies for the Special Meeting by or on behalf of Pebblebrook is being borne by Pebblebrook.

If you have any questions concerning this Proxy Statement or the procedures to be followed to execute and deliver a proxy, please contact Okapi at 1212 Avenue of the Americas, 24th Floor, New York, NY 10036 or by calling Okapi toll-free at (855) 305-0855 (banks and brokers may call collect at (212) 297-0720).

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, dividends, synergies, 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 and terms of any possible transaction between Pebblebrook and LaSalle, including the possibility that LaSalle will reject any transaction with Pebblebrook, even if the Special Meeting Proposals are not approved; (ii) the ultimate outcome and results of integrating the operations of Pebblebrook and LaSalle if an agreement is signed and a transaction is consummated, including Pebblebrook’s ability to obtain expected synergies in a timely manner; (iii) the ability to meet other closing conditions to any possible transaction, including the necessary shareholder approvals; and (iv) the risks and uncertainties detailed by LaSalle and Pebblebrook with respect to their respective businesses as described in their respective 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

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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 except to the extent required by law.

OTHER INFORMATION IN THIS PROXY STATEMENT

Information concerning LaSalle and the Proposed BRE Merger contained in this Proxy Statement (including Schedule II except with respect to the information set forth therein regarding Pebblebrook) has been taken from, or is based upon, publicly available documents on file with the SEC and other publicly available information, or is based upon information provided by LaSalle and its legal and financial advisors to Pebblebrook and its legal and financial advisors. Although Pebblebrook has no knowledge that would indicate that statements relating to LaSalle or the Proposed BRE Merger contained in this Proxy Statement, in reliance upon publicly available information or information provided by LaSalle and its legal and financial advisors, are inaccurate or incomplete, to date it has not had access to the full books and records of LaSalle, was not involved in the preparation of such information and statements and is not in a position to verify any such information or statements.

Pursuant to Rule 14a-5 promulgated under the Exchange Act, reference is made to the LaSalle Proxy Statement for information concerning the BRE Merger Agreement, the Proposed BRE Merger, financial information regarding BRE, LaSalle and the proposed combined company, the Special Meeting Proposals, the beneficial ownership of LaSalle Common Shares by the principal holders thereof, certain information about LaSalle and BRE, other information concerning LaSalle’s management, the procedures for submitting proposals for consideration at the next annual meeting of LaSalle shareholders, the delivery of proxy materials to shareholders sharing the same address and certain other matters regarding LaSalle and the Special Meeting. Pebblebrook assumes no responsibility for the accuracy or completeness of any such information.

LaSalle files annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any document LaSalle files with the SEC at the public reference room of the SEC, 100 F Street, N.E., Washington, D.C. 20549. Information about the operation of the public reference room may be obtained by calling the SEC at 1-800-SEC-0330. LaSalle’s SEC filings, including LaSalle Proxy Statement, are also available to you on the SEC’s website at www.sec.gov and LaSalle’s website at www.lasallehotels.com.

Information regarding proposals Pebblebrook made to LaSalle on March 6, 2018, April 13, 2018, April 20, 2018, May 19, 2018, June 11, 2018 and July 20, 2018 regarding a merger transaction pursuant to which LaSalle would be acquired by Pebblebrook, including the Pebblebrook Proposal, has been disclosed by Pebblebrook in the following documents, which are hereby incorporated herein by reference (which does not include information deemed to have been furnished and not filed in accordance with SEC rules):

	•		Press Release filed by Pebblebrook with the SEC on March 28, 2018 pursuant to Rule 425 under the Securities Act of 1933, as amended, or the Securities Act;
	•		Current Reports on Form 8-K filed by Pebblebrook with the SEC on April 16, 2018, April 24, 2018, April 26, 2018, June 11, 2018, June 18, 2018, June 28, 2018, July 2, 2018, July 10, 2018, July 20, 2018 and July 25, 2018; and

•

the following documents, each of which was filed with the SEC on the date indicated pursuant to Rule 425 under the Securities Act and deemed filed pursuant to Rule 14a-12 under the Exchange Act:

	o		press release filed on March 28, 2018;
	o		excerpt of Earnings Call Transcript filed on April 27, 2018.

We will provide without charge to each person to whom this Proxy Statement is delivered, on written or oral request of that person, a copy of any or all of the documents we are incorporating by reference into this Proxy Statement, other than exhibits to those documents unless those exhibits

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are specifically incorporated by reference into those documents. A request should be addressed to Pebblebrook Hotel Trust, 7315 Wisconsin Avenue, Suite 1100 West, Bethesda, Maryland 20814, Attn: Chief Financial Officer, Telephone: (240) 507-1330.

If you have any questions about this Proxy Statement or the Special Meeting, or if you would like additional copies of this Proxy Statement, please contact Okapi, our proxy solicitor, at:

Okapi Partners LLC
1212 Avenue of the Americas, 24th Floor
New York, NY 10036
(212) 297-0720
Shareholders may call toll free: (855) 305-0855
E-mail: info@okapipartners.com

If you would like to request documents, in order to ensure timely delivery, you must do so at least five business days before the Special Meeting. This means you must request this information no later than August 29, 2018. Pebblebrook will mail properly requested documents, without charge, to requesting shareholders by first-class mail, or another equally prompt means, within one business day after receipt of such request.

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY REFERENCE INTO THIS PROXY STATEMENT TO VOTE YOUR LASALLE COMMON SHARES AT THE SPECIAL MEETING. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM, OR IN ADDITION TO, WHAT IS CONTAINED IN THIS PROXY STATEMENT OR IN ANY OF THE MATERIALS THAT ARE INCORPORATED BY REFERENCE INTO THIS PROXY STATEMENT. THIS PROXY STATEMENT IS DATED JULY 30, 2018. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROXY STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THAT DATE, UNLESS THE INFORMATION SPECIFICALLY INDICATES THAT ANOTHER DATE APPLIES, AND THE MAILING OF THIS PROXY STATEMENT TO LASALLE SHAREHOLDERS DOES NOT CREATE ANY IMPLICATION TO THE CONTRARY.

ADDITIONAL INFORMATION

This Proxy Statement does not constitute an offer to buy or solicitation of an offer to sell any securities. This Proxy Statement relates solely to the Special Meeting Proposals to be voted upon by LaSalle common shareholders at the Special Meeting.

None of the communications in this Proxy Statement relating to the Pebblebrook Proposal constitutes an offer to buy or solicitation of an offer to sell any securities. The Pebblebrook Proposal is a proposal Pebblebrook has made to the LaSalle Board for a business combination transaction with LaSalle. In furtherance of such proposed transaction 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 Proxy Statement is not a substitute for any proxy statement, registration statement, tender or exchange offer statement, prospectus or other 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 www.sec.gov and Pebblebrook’s website at www.pebblebrookhotels.com.

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SCHEDULE I

CERTAIN INFORMATION REGARDING PARTICIPANTS IN THIS SOLICITATION OF PROXIES

Pebblebrook is an internally managed hotel investment company, organized in October 2009 to opportunistically acquire and invest in hotel properties located primarily in major U.S. cities, with an emphasis on the major gateway coastal markets.

Substantially all of Pebblebrook’s assets are held by, and all of its operations are conducted through, the Operating Partnership. Pebblebrook is the sole general partner of the Operating Partnership.

The following table sets forth the trustees and officers of Pebblebrook who are participants in the solicitations of proxies in connection with the Special Meeting. The current business address of each person is 7315 Wisconsin Avenue, Suite 1100 West, Bethesda, Maryland 20814.

Name		Present Position with Pebblebrook
Jon E. Bortz		President, Chief Executive Officer and Chairman of the Board of Trustees
Raymond D. Martz		Executive Vice President, Chief Financial Officer, Treasurer and Secretary
Thomas C. Fisher		Executive Vice President and Chief Investment Officer

The Operating Partnership’s sole general partner is Pebblebrook. The Operating Partnership has no officers.

Interests of Participants and Other Potential Participants

Pebblebrook is the beneficial owner of 10,809,215 LaSalle Common Shares as of the date of this filing. The shares are held by the Operating Partnership. As the sole general partner of the Operating Partnership, Pebblebrook has sole power to direct the vote, and to direct the disposition of, such shares and may be deemed to be the beneficial owner of such shares.

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SCHEDULE II

The following information, except for the information regarding Pebblebrook’s ownership of LaSalle Common Shares, is provided in reliance on the information set forth under “Security Ownership of Certain Beneficial Owners” in the LaSalle Proxy Statement.

SECURITY OWNERSHIP OF LASALLE HOTEL PROPERTIES PRINCIPAL SHAREHOLDERS AND MANAGEMENT

The following table sets forth as of July 20, 2018, except as otherwise set forth in the footnotes to the table, the beneficial ownership of LaSalle Common Shares, for (1) each person who is a beneficial owner of 5% or more of the outstanding LaSalle Common Shares, (2) each of LaSalle’s named executive officers, (3) each of LaSalle’s trustees and (4) LaSalle’s named executive officers and trustees as a group. In accordance with SEC rules, each listed person’s beneficial ownership includes all shares the person actually owns beneficially or of record, all shares over which the person has or shares voting or dispositive control (such as in the capacity as a general partner of an investment fund), and all shares the person has the right to acquire within 60 days, except as otherwise set forth in the footnotes to the table. LaSalle is not aware of any arrangements, including any pledge of LaSalle Common Shares, that could result in a change in control of LaSalle.

Name of Beneficial Owner		Common Shares Beneficially Owned(1)
		Number							Percent of Total
Pebblebrook Hotel Trust(2)					10,809,215							9.79
BlackRock, Inc.(3)					15,126,088							13.40
HG Vora Capital Management, LLC(4)					10,000,000							9.10
Long Pond Capital, LP/Long Pond Capital GP, LLC/John Khoury(5)					5,780,546							5.10
State Street Corporation(6)					5,904,588							5.22
The Vanguard Group—23-1945930(7)					18,257,393							16.12
Vanguard Specialized Funds—Vanguard REIT Index Fund—23-2834924(8)					7,623,462							6.73
Wellington Management Group LLP/Wellington Group Holdings LLP/Wellington Investment Advisors Holdings LLP/Wellington Management Company LLP(9)					6,421,305							5.67
Michael D. Barnello					240,751							*
Denise M. Coll					23,651							*
Jeffrey T. Foland					15,636							*
Darryl Hartley-Leonard(10)					9,697							*
Jeffrey L. Martin(10)					5,317							*
Stuart L. Scott(10)					76,022							*
Donald A. Washburn					66,330							*
Kenneth G. Fuller					34,270							*
Alfred L. Young, Jr.					108,698							*
All Trustees and Named Executive Officers as a group (9 persons)					580,372							*

 

	*		Represents less than one percent of class.
	(1)		For purposes of computing the percentage of outstanding LaSalle Common Shares held by each person, any LaSalle Common Shares which such person has the right to acquire within 60 days of June 4, 2018 are deemed to be outstanding, but are not deemed to be outstanding for the purpose of computing the percent ownership of any other person.
	(2)		The shares are held by the Operating Partnership. The Operating Partnership’s sole general partner is Pebblebrook. As the sole general partner of the Operating Partnership, Pebblebrook has sole power to direct the vote, and to direct the disposition of, such shares and may be deemed to be the beneficial owner of such shares. Pebblebrook has its principal business office at 7315 Wisconsin Avenue, Suite 1100 West, Bethesda, Maryland 20814.

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	(3)		As reflected in a statement on Schedule 13G/A filed by BlackRock, Inc., which we refer to as BlackRock, with the SEC on January 19, 2018. Based on information contained in the Schedule 13G/A, BlackRock, in its capacity as the parent holding company of several subsidiaries, is deemed to have the sole power to vote or to direct the vote with respect to 14,846,549 LaSalle Common Shares and is deemed to have the sole power to dispose or to direct the disposition with respect to 15,126,088 LaSalle Common Shares. BlackRock Fund Advisors, a subsidiary of BlackRock, beneficially owns 5% or more of the LaSalle Common Shares outstanding. BlackRock has its principal business office at 55 East 52nd Street, New York, New York 10055.
	(4)		As reflected in a statement on Schedule 13D/A filed by HG Vora with the SEC on June 12, 2018. Based on information contained in the Schedule 13D/A, HG Vora, in its capacity as investment manager of HG Vora Special Opportunities Master Fund, Ltd., is deemed to have the sole power to vote or to direct the vote with respect to 10,000,000 LaSalle Common Shares and is deemed to have the sole power to dispose or to direct the disposition with respect to 10,000,000 LaSalle Common Shares. HG Vora has its principal business office at 330 Madison Avenue, 20th Floor, New York, NY 10017.
	(5)		As reflected in a statement on Schedule 13G filed by Long Pond Capital, LP, which we refer to as Long Pond LP, Long Pond Capital GP, LLC, which we refer to as Long Pond LLC, and John Khoury with the SEC on February 13, 2018. Based on information contained in the Schedule 13G, each of Long Pond LP, in its capacity as an investment adviser, and Long Pond LLC and Mr. Khoury, in their capacity as a parent holding company or control person, is deemed to have the shared power to vote or direct the vote with respect to 5,780,546 LaSalle Common Shares and the shared power to dispose or direct the disposition with respect to 5,780,546 LaSalle Common Shares. Long Pond LP, Long Pond LLC and Mr. Khoury have their principal business office at 527 Madison Avenue, 15th Floor, New York, New York 10036.
	(6)		As reflected in a statement on Schedule 13G filed by State Street Corporation, which we refer to as State Street, with the SEC on February 14, 2018. Based on information contained in the Schedule 13G, State Street, in its capacity as a parent holding company, is deemed to have the shared power to vote or direct the vote with respect to 5,904,558 LaSalle Common Shares and the shared power to dispose or direct the disposition with respect to 5,904,558 LaSalle Common Shares. State Street has its principal business office at State Street Financial Center, One Lincoln Street, Boston, Massachusetts 02111.
	(7)		As reflected in a statement on Schedule 13G/A filed by The Vanguard Group—23-1945930, which we refer to as Vanguard, with the SEC on February 9, 2018. Based on information contained in the Schedule 13G/A, Vanguard, in its capacity as an investment adviser, is deemed to have the sole power to vote or direct the vote with respect to 253,439 LaSalle Common Shares, the shared power to vote or direct the vote with respect to 151,106 LaSalle Common Shares, the sole power to dispose or to direct the disposition with respect to 17,990,785 LaSalle Common Shares and the shared power to dispose or direct the disposition with respect to 266,608 LaSalle Common Shares. Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 115,502 LaSalle Common Shares or less than 1% of the LaSalle Common Shares outstanding as a result of its serving as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 289,043 LaSalle Common Shares or less than 1% of the LaSalle Common Shares outstanding as a result of its serving as investment manager of Australian investment offerings. Vanguard has its principal business office at 100 Vanguard Blvd., Malvern, Pennsylvania 19355.
	(8)		As reflected in a statement on Schedule 13G/A filed by Vanguard Specialized Funds—Vanguard REIT Index Fund—23-2834924, which we refer to as Vanguard Funds, with the SEC on February 2, 2018. Based on information contained in the Schedule 13G/A, Vanguard Funds, in its capacity as an investment company, is deemed to have the sole power to vote or to direct the vote with respect to 7,623,462 LaSalle Common Shares. Vanguard Funds has its principal business office at 100 Vanguard Blvd., Malvern, Pennsylvania 19355.

II-2

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	(9)		As reflected in a statement on Schedule 13G/A filed by Wellington Management Group LLP, Wellington Group Holdings LLP, Wellington Investment Advisors Holdings LLP, and Wellington Management Company LLP, which we collectively refer to as Wellington, with the SEC on February 8, 2018. Based on information contained in the Schedule 13G/A, (a) each of Wellington Management Group LLP, Wellington Group Holdings LLP, and Wellington Investment Advisors Holdings LLP, in its capacity as a parent holding company, are deemed to have the shared power to vote or direct the vote with respect to 4,438,554 LaSalle Common Shares and the shared power to dispose or direct the disposition with respect to 6,421,305 LaSalle Common Shares, and (b) Wellington Management Company LLP, in its capacity as an investment adviser, is deemed to have the shared power to vote or direct the vote with respect to 4,270,817 LaSalle Common Shares and the shared power to dispose or direct the disposition with respect to 6,033,075 LaSalle Common Shares. Wellington has its principal business office at c/o Wellington Management Company LLP, 280 Congress Street, Boston, Massachusetts 02210.
	(10)		The number of LaSalle Common Shares beneficially owned by the following persons does not include the number of LaSalle Common Shares deferred as a portion or all of such trustees’ annual retainer (as discussed in “Interests of Our Trustees, Executive Officers and Employees in the Merger—Deferred Shares” in the LaSalle Proxy Statement): Mr. Hartley-Leonard—16,675; Mr. Martin—1,384; and Mr. Scott—85,876. Holders of deferred shares receive additional deferred shares in an amount equal to the amount of any dividends paid on the LaSalle Common Shares exchangeable for the outstanding deferred shares, divided by the average closing price of LaSalle Common Shares on the NYSE during the ten trading days preceding the first day on which LaSalle Common Shares begin trading without entitlement to the applicable dividend. The total number of deferred shares for each trustee discussed in this footnote 10 includes additional deferred shares acquired through dividend reinvestment through June 4, 2018.

II-3

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GOLD PROXY CARD

 

SPECIAL MEETING OF SHAREHOLDERS
OF LASALLE HOTEL PROPERTIES

 

 

THIS PROXY IS SOLICITED BY PEBBLEBROOK HOTEL TRUST
AND NOT BY OR ON BEHALF OF THE BOARD OF TRUSTEES
OF LASALLE HOTEL PROPERTIES

 

The undersigned common shareholder of LaSalle Hotel Properties, a Maryland real estate investment trust (“LaSalle”), acknowledges receipt of the Proxy Statement of Pebblebrook Hotel Trust, a Maryland real estate investment trust (“Pebblebrook”), dated July 30, 2018, and the undersigned revokes all prior proxies delivered in connection with the special meeting of shareholders of LaSalle relating to the proposed combination of LaSalle with BRE Landmark L.P., a Delaware limited partnership, to be held on September 6, 2018, at 10:00 a.m., local time, at the Sofitel Washington DC Lafayette Square, 806 15th Street NW, Washington, DC 20005, and at any continuation, adjournment, postponement or rescheduling thereof (the “Special Meeting”), and hereby appoints Jon E. Bortz and Raymond D. Martz, or either of them, each with the full power of substitution, proxies for the undersigned to vote all common shares of LaSalle which the undersigned would be entitled to vote at the Special Meeting, and instructs said proxies to vote as follows:

 

EXCEPT AS PROVIDED HEREIN, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE. IF NO SPECIFICATIONS ARE MADE AND YOU HAVE SIGNED THIS GOLD PROXY CARD, THIS PROXY WILL BE VOTED “AGAINST” PROPOSALS 1, 2 AND 3. THIS PROXY WILL REVOKE (OR BE USED BY THE PROXIES TO REVOKE) ANY PRIOR PROXY DELIVERED IN CONNECTION WITH THE PROPOSALS SET FORTH HEREIN TO THE EXTENT IT IS VOTED AT THE SPECIAL MEETING AS STIPULATED BELOW. BY SIGNING, DATING AND RETURNING THE GOLD PROXY CARD YOU ARE AUTHORIZING THE PERSONS NAMED AS PROXIES TO REVOKE ALL PRIOR PROXIES ON YOUR BEHALF.

 

IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE SPECIAL MEETING (INCLUDING ANY CONTINUATION, ADJOURNMENT, POSTPONEMENT OR RESCHEDULING THEREOF) ON BEHALF OF THE UNDERSIGNED, CONSISTENT WITH RULE 14a-4(c)(3) OF THE EXCHANGE ACT.

 

PLEASE VOTE TODAY!

 

SEE REVERSE SIDE FOR EASY WAYS TO VOTE.

 

 

TO VOTE BY MAIL PLEASE DETACH PROXY CARD HERE AND SIGN, DATE AND RETURN IN THE POSTAGE-PAID ENVELOPE PROVIDED

 

YOUR VOTE IS VERY IMPORTANT—PLEASE VOTE TODAY.

(continued and to be signed and dated on reverse)

 

PEBBLEBROOK RECOMMENDS A VOTE “AGAINST” EACH OF THE FOLLOWING PROPOSALS.

 

1.

To approve the merger of LaSalle Hotel Properties with and into BRE Landmark L.P. and the other transactions contemplated by the Agreement and Plan of Merger, dated as of May 20, 2018 and as may be amended from time to time, among LaSalle Hotel Properties, LaSalle Hotel Operating Partnership, L.P., BRE Landmark Parent L.P., BRE Landmark L.P. and BRE Landmark Acquisition L.P.

 

 

 

 

 

 

 

 

 

o AGAINST     o ABSTAIN     o FOR

 

2.	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 merger.

 

o AGAINST     o ABSTAIN     o FOR

 

3.	To approve any adjournment of the Special Meeting for the purpose of soliciting additional proxies if there are not sufficient votes at the Special Meeting to approve the merger and the other transactions contemplated by the merger agreement.

 

o AGAINST     o ABSTAIN     o FOR

 

	Signature of Shareholder	Date:		Signature of Shareholder (if held jointly)	Title (if applicable)

 

Please sign exactly as your name or names appear hereon. If shares are held jointly, each shareholder should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or authorized officer. If a partnership, please sign in partnership name by authorized person.

 

 

PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.

 

YOUR VOTE IS IMPORTANT

 

Please take a moment now to vote your Common Shares of LaSalle Hotel Properties for the upcoming Special Meeting of Shareholders.

 

PLEASE REVIEW THE PROXY STATEMENT AND VOTE TODAY

 

Please complete, sign, date and return the GOLD proxy card in the envelope provided, or mail to: Pebblebrook Hotel Trust c/o Okapi Partners LLC, 1212 Avenue of the Americas, 24th Floor New York, NY 10036.

 

TO VOTE BY MAIL PLEASE DETACH THE GOLD PROXY CARD HERE AND SIGN, DATE AND RETURN IT IN THE POSTAGE-PAID ENVELOPE PROVIDED