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Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934

Filed by the Registrant þ

Filed by a Party other than the Registrant o

Check the appropriate box:

þ

 

Preliminary Proxy Statement

o

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

o

 

Definitive Proxy Statement

o

 

Definitive Additional Materials

o

 

Soliciting Material Pursuant to Section 240.14a-12

 

LaSalle Hotel Properties

 

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

o

 

No fee required.

þ

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

 

 

(1)

 

Title of each class of securities to which transaction applies:

 

 

 

 

 

 

LaSalle Hotel Properties' Common Shares of Beneficial Interest, par value $0.01 per share ("Common Shares")
            LaSalle Hotel Properties' 6.375% Series I Cumulative Redeemable Preferred Shares of Beneficial Interest, par value $0.01 per share ("Series I Preferred Shares")
            LaSalle Hotel Properties' 6.3% Series J Cumulative Redeemable Preferred Shares of Beneficial Interest, par value $0.01 per share ("Series J Preferred Shares") 

 

 

 

 

(2)

 

Aggregate number of securities to which transaction applies:

 

 

 

 

 

 

110,382,519 outstanding Common Shares (including 266,749 restricted share awards)

 

 

 

 

 

 

103,935 Common Shares issuable pursuant to outstanding awards of deferred Common Shares

 

 

 

 

 

 

550,118 Common Shares issuable upon the automatic vesting of 550,118 outstanding awards of performance shares with respect to Common Shares

 

 

 

 

 

 

145,223 Common Shares issuable upon conversion of 145,223 outstanding partnership common units (other than common units held by LaSalle Hotel Properties) in LaSalle Hotel Operating Partnership, L.P.

 

 

 

 

 

 

4,400,000 outstanding Series I Preferred Shares

 

 

 

 

 

 

6,000,000 outstanding Series J Preferred Shares 

 

 

 

 

(3)

 

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

 

 

 

 

 

The proposed maximum aggregate value of the transaction for purposes of calculating the filing fee is $3,984,590,132.50. The filing fee was calculated by adding (a) the product of 111,181,795 Common Shares (including restricted share awards and shares issuable upon conversion of operating partnership units, deferred shares and performance shares) that are exchangeable for cash in the mergers and the merger consideration of $33.50 to be paid with respect to each Common Share outstanding immediately prior to the mergers plus (b) the product of 10,400,000 Preferred Shares that are exchangeable for cash in the mergers and the merger consideration of $25.00 to be paid with respect to each Preferred Share outstanding immediately prior to the mergers (the "Total Consideration"). The filing fee equals the product of .0001245 multiplied by the Total Consideration. 

 

 

 

 

(4)

 

Proposed maximum aggregate value of transaction: $3,984,590,132.50 

 

 

 

 

(5)

 

Total fee paid: $496,081.47 

o

 

Fee paid previously with preliminary materials.

o

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

 

 

(1)

 

Amount Previously Paid: 

 

 

 

 

(2)

 

Form, Schedule or Registration Statement No.: 

 

 

 

 

(3)

 

Filing Party: 

 

 

 

 

(4)

 

Date Filed: 

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SUBJECT TO COMPLETION — PRELIMINARY PROXY STATEMENT DATED JUNE 18, 2018

LOGO

7550 Wisconsin Avenue, 10th Floor
Bethesda, Maryland 20814

[    ·    ], 2018

Dear Shareholder,

              Holders of LaSalle Hotel Properties' common shares of beneficial interest are cordially invited to attend a special meeting of shareholders of LaSalle Hotel Properties, a Maryland real estate investment trust, to be held on [    ·    ], 2018 at [    ·    ], local time, at [    ·    ]. At the special meeting, you will be asked to consider and vote on the merger of LaSalle Hotel Properties with and into BRE Landmark L.P., an affiliate of The Blackstone Group L.P., which we refer to as the merger, and 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. and affiliates of The Blackstone Group L.P., which we refer to as the merger agreement. If the merger is completed, you, as a holder of common shares of LaSalle Hotel Properties, will be entitled to receive $33.50 in cash, without interest and less any applicable withholding taxes, in exchange for each common share you own, as more fully described in the enclosed proxy statement.

              After careful consideration, our board of trustees has unanimously (1) approved the merger agreement, the merger and the other transactions contemplated by the merger agreement, (2) determined and declared that the merger agreement, the merger and the other transactions contemplated by the merger agreement are advisable and in the best interests of LaSalle Hotel Properties, its shareholders and the limited partners of LaSalle Hotel Operating Partnership, L.P. and (3) resolved to recommend that the shareholders of LaSalle Hotel Properties approve the merger and the other transactions contemplated by the merger agreement. Our board of trustees recommends that you vote "FOR" the approval of the merger and the other transactions contemplated by the merger agreement.

              The merger and the other transactions contemplated by the merger agreement must be approved by the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of our outstanding common shares as of the record date for the special meeting, which was the close of business on [    ·    ], 2018. The proxy statement accompanying this letter provides you with more specific information concerning the special meeting, the merger, the merger agreement and the other transactions contemplated by the merger agreement. We encourage you to read carefully the enclosed proxy statement, including the exhibits. You may also obtain more information about LaSalle Hotel Properties from us or from documents we have filed with the Securities and Exchange Commission.

              Your vote is very important regardless of the number of common shares that you own. Whether or not you plan to attend the special meeting, we request that you authorize your proxy to vote your common shares by either completing and returning the enclosed proxy card as promptly as possible or authorizing your proxy or providing voting instructions by telephone or through the Internet. The enclosed proxy card contains instructions regarding voting. If you attend the special meeting, you may continue to have your common shares voted as instructed in your proxy, or you may withdraw your proxy at the special meeting and vote your common shares in person. If you fail to vote by proxy or in person, or fail to instruct your broker on how to vote, it will have the same effect as a vote "AGAINST" approval of the merger and the other transactions contemplated by the merger agreement.

              On behalf of the board of trustees, thank you for your continued support.

  Sincerely,

 

Michael D. Barnello

  President and Chief Executive Officer

              This proxy statement is dated [    ·    ], 2018 and is first being mailed to our shareholders on or about [    ·    ], 2018.


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LASALLE HOTEL PROPERTIES
7550 Wisconsin Avenue, 10th Floor
Bethesda, Maryland 20814


NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON [    
·    ], 2018


To the Shareholders of LaSalle Hotel Properties:

              Holders of LaSalle Hotel Properties' common shares of beneficial interest are cordially invited to attend a special meeting of shareholders of LaSalle Hotel Properties, a Maryland real estate investment trust, to be held on [    ·    ], 2018 at [    ·    ], local time, at [    ·    ]. The special meeting is being held for the purpose of acting on the following matters:

              The foregoing items of business are more fully described in the attached proxy statement, which forms a part of this notice and is incorporated herein by reference. Pursuant to our bylaws, no business may be transacted at the special meeting except as specifically designated in this Notice of Special Meeting. Our board of trustees has fixed the close of business on [    ·    ], 2018 as the record date for the determination of shareholders entitled to notice of and to vote at the special meeting or any postponement or adjournment thereof.

              Our board of trustees has unanimously (1) approved the merger agreement, the merger and the other transactions contemplated by the merger agreement, (2) determined and declared that the merger agreement, the merger and the other transactions contemplated by the merger agreement are advisable and in the best interests of LaSalle Hotel Properties, its shareholders and the limited partners of LaSalle Hotel Operating Partnership, L.P. and (3) resolved to recommend that the shareholders of LaSalle Hotel Properties approve the merger and the other transactions contemplated by the merger agreement. Our board of trustees recommends that you vote "FOR" the proposal to approve the merger and the other transactions contemplated by the merger agreement, "FOR" the proposal to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the merger, and "FOR" the proposal 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.


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              All holders of record of our common shares and our preferred shares as of the record date, which was the close of business on [    ·    ], 2018, are entitled to receive notice of the special meeting or any postponement or adjournment of the special meeting. However, only holders of our common shares as of the record date are entitled to attend and vote at the special meeting or any postponement or adjournment of the special meeting. Holders of our preferred shares are entitled to notice of the special meeting, but are not entitled to attend or vote at the special meeting and no vote or proxy is being solicited from the holders of our preferred shares.

              The merger and the other transactions contemplated by the merger agreement must be approved by the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of our outstanding common shares as of the record date for the special meeting. Accordingly, your vote is very important regardless of the number of common shares that you own. Whether or not you plan to attend the special meeting, we request that you authorize your proxy to vote your common shares by either marking, signing, dating and promptly returning the enclosed proxy card in the postage-paid envelope or authorizing your proxy or voting instructions by telephone or through the Internet. If you attend the special meeting, you may continue to have your common shares voted as instructed in the proxy, or you may withdraw your proxy at the special meeting and vote your common shares in person. If you fail to vote by proxy or in person, or fail to instruct your broker, bank or other nominee on how to vote, the effect will be that the common shares that you own will not be counted for purposes of determining whether a quorum is present at the special meeting and will have the same effect as a vote "AGAINST" the proposal to approve the merger and the other transactions contemplated by the merger agreement.

              The approval of the proposal regarding the non-binding, advisory vote on the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the merger and the approval of the proposal regarding 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 each requires the affirmative vote of a majority of the votes cast on the proposal. If you fail to vote by proxy or in person, or fail to instruct your broker on how to vote, such failure will have no effect on the outcome of such proposals. Abstentions are not considered votes cast and therefore will have no effect on the outcome of such proposals.

              Any proxy may be revoked at any time prior to its exercise by delivery of a properly executed, later-dated proxy card, by authorizing your proxy or voting instructions by telephone or through the Internet at a later date than your previously authorized proxy, by submitting a written revocation of your proxy to our Corporate Secretary, or by voting in person at the special meeting. Attendance alone will not be sufficient to revoke a previously authorized proxy.

              Under Maryland law, because our common shares were listed on the New York Stock Exchange at the close of business on the record date, you do not have any appraisal rights, dissenters' rights or the rights of an objecting shareholder in connection with the merger. In addition, common shareholders may not exercise any appraisal rights, dissenters' rights or the rights of an objecting shareholder to receive the fair value of the shareholder's common shares in connection with the merger because, as permitted by Maryland law, our 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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              We encourage you to read the accompanying proxy statement in its entirety and to submit a proxy or voting instructions so that your common shares will be represented and voted even if you do not attend the special meeting. If you have any questions or need assistance in submitting a proxy or your voting instructions, please call our proxy solicitor, Innisfree M&A Incorporated, toll-free at (888) 750-5834.


 

 

BY ORDER OF THE BOARD OF TRUSTEES

 

 

 

 

 

Michael D. Barnello
President and Chief Executive Officer

 

 

 

Bethesda, Maryland
[
·], 2018

 

 

TABLE OF CONTENTS

 
  Page

SUMMARY

  1

The Parties to the Mergers

  1

The Special Meeting

  3

The Mergers

  4

Recommendation of Our Board of Trustees

  5

Opinions of Our Financial Advisors

  5

Treatment of Common Shares, Restricted Share Awards, Performance Shares, Deferred Shares and Preferred Shares

  6

Treatment of Interests in the Operating Partnership

  8

Financing

  8

Interests of Our Trustees, Executive Officers and Employees in the Mergers

  9

Restriction on Solicitation of Acquisition Proposals

  11

Conditions to the Mergers

  11

Termination of the Merger Agreement

  12

Termination Fees

  14

Limited Guarantee and Remedies

  15

Regulatory Matters

  15

No Dissenters' Rights of Appraisal

  15

Material U.S. Federal Income Tax Consequences

  16

Delisting and Deregistration of Our Common Shares and Preferred Shares

  16

Market Price of Our Common Shares

  16

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGERS

  17

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

  24

PROPOSAL 1: PROPOSAL TO APPROVE THE MERGER

  26

PROPOSAL 2: PROPOSAL TO APPROVE THE MERGER-RELATED COMPENSATION

  27

PROPOSAL 3: PROPOSAL TO APPROVE ADJOURNMENT OF THE MEETING

  28

THE PARTIES TO THE MERGERS

  29

LaSalle Hotel Properties

  29

LaSalle Hotel Operating Partnership, L.P.

  29

BRE Landmark Parent L.P.

  29

BRE Landmark L.P.

  30

BRE Landmark Acquisition L.P.

  30

THE SPECIAL MEETING

  31

Date, Time and Purpose of the Special Meeting

  31

Record Date, Notice and Quorum

  31

Required Vote

  31

How to Authorize a Proxy

  32

Proxies and Revocation

  33

Solicitation of Proxies

  34

Adjournments

  34

Postponements

  34

THE MERGERS

  35

General Description of the Mergers

  35

Background of the Mergers

  35

Reasons for the Mergers

  64

Recommendation of Our Board of Trustees

  68

Certain Prospective Financial Information—Financial Projections

  68

i


 
  Page

Opinions of Our Financial Advisors

  72

Financing

  84

Interests of Our Trustees, Executive Officers and Employees in the Mergers

  85

Regulatory Matters

  91

Material U.S. Federal Income Tax Consequences

  91

Delisting and Deregistration of Our Common Shares and Preferred Shares

  96

THE MERGER AGREEMENT

  97

Structure

  97

Effective Times; Closing Date

  98

Organizational Documents

  98

Trustees and Officers; General Partner and Limited Partners

  99

Treatment of Common Shares, Restricted Share Awards, Performance Shares, Deferred Shares and Preferred Shares

  99

Treatment of Interests in the Operating Partnership

  100

No Further Ownership Rights

  101

Exchange and Payment Procedures

  101

Representations and Warranties

  102

Conduct of Our Business Pending the Mergers

  107

Shareholders' Meeting

  110

Agreement to Take Certain Actions

  112

Restriction on Solicitation of Acquisition Proposals

  113

Obligation of the Board of Trustees with Respect to Its Recommendation

  115

Employee Benefits

  119

Financing Cooperation

  120

Pre-Closing Transactions

  122

Certain Other Covenants

  123

Conditions to the Mergers

  124

Termination of the Merger Agreement

  125

Termination Fees

  127

Limited Guarantee and Remedies

  127

Amendment and Waiver

  128

MARKET PRICE OF OUR COMMON SHARES

  129

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

  131

NO DISSENTERS' RIGHTS OF APPRAISAL

  133

SUBMISSION OF SHAREHOLDER PROPOSALS

  133

SHAREHOLDERS SHARING THE SAME ADDRESS

  134

OTHER MATTERS

  134

WHERE YOU CAN FIND MORE INFORMATION

  134

Exhibits:

 
 

Exhibit A—Agreement and Plan of Merger, dated as of May 20, 2018, by and 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.

 
A-1

Exhibit B—Opinion of Citigroup Global Markets Inc., dated May 20, 2018.

 
B-1

Exhibit C—Opinion of Goldman Sachs & Co. LLC, dated May 20, 2018.

 
C-1

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SUMMARY

              This summary highlights only selected information from this proxy statement relating to (1) the merger of LaSalle Hotel Properties with and into BRE Landmark L.P., which we refer to as the merger, (2) the merger of BRE Landmark Acquisition L.P. with and into LaSalle Hotel Operating Partnership, L.P., which we refer to as the partnership merger, and (3) 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. and affiliates of The Blackstone Group L.P., which we refer to as the merger agreement. References to the mergers refer to both the merger and the partnership merger. In this proxy statement, we refer to the date on which the closing of the mergers occurs as the closing date.

              This summary does not contain all of the information about the mergers and related transactions contemplated by the merger agreement that is important to you. As a result, to understand the mergers and the related transactions fully and for a more complete description of the terms of the mergers and related transactions, you should read carefully this proxy statement in its entirety, including the exhibits and the other documents to which we have referred you, including the merger agreement attached as Exhibit A. Each item in this summary includes a page reference directing you to a more complete description of that item. This proxy statement is first being mailed to our shareholders on or about [    ·    ], 2018.

The Parties to the Mergers (page 29)

LaSalle Hotel Properties
7550 Wisconsin Avenue, 10th Floor
Bethesda, Maryland 20814
(301) 941-1500

              LaSalle Hotel Properties, which we refer to as "we," "our," "us," or "the Company," was organized as a Maryland real estate investment trust on January 15, 1998, and primarily buys, owns, redevelops and leases upscale and luxury full-service hotels located in convention, resort and major urban business markets. The Company is a self-administered and self-managed real estate investment trust, which we refer to as a REIT, as defined in the Internal Revenue Code of 1986, as amended, which we refer to as the Code.

LaSalle Hotel Operating Partnership, L.P.
7550 Wisconsin Avenue, 10th Floor
Bethesda, Maryland 20814
(301) 941-1500

              LaSalle Hotel Operating Partnership, L.P., which we refer to as the Operating Partnership, was formed as a Delaware limited partnership on January 13, 1998. We are the sole general partner of the Operating Partnership, and, as of March 31, 2018, we owned, through a combination of direct and indirect interests, approximately 99.9% of the common units of the Operating Partnership. The remaining 0.1% is held by limited partners who owned 145,223 common units of the Operating Partnership as of March 31, 2018.

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BRE Landmark Parent L.P.
c/o The Blackstone Group
345 Park Avenue
New York, New York 10154
(212) 583-5000

              BRE Landmark Parent L.P., which we refer to as Parent, is a Delaware limited partnership and an affiliate of Blackstone Real Estate Partners VIII L.P. We refer to Blackstone Real Estate Partners VIII L.P. as the Sponsor. Parent was formed solely for the purpose of acquiring us and has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the transactions contemplated by the merger agreement. The Sponsor is an affiliate of The Blackstone Group L.P., which we refer to as Blackstone.

              Blackstone is a global leader in real estate investing. Blackstone's real estate business was founded in 1991 and has approximately $120 billion in investor capital under management. Blackstone's real estate portfolio includes hotel, office, retail, industrial and residential properties in the U.S., Europe, Asia and Latin America. Major holdings include Hilton Worldwide, Invitation Homes (single family homes), Logicor (pan-European logistics) and prime office buildings in the world's major cities. Blackstone real estate also operates one of the leading real estate finance platforms, including management of the publicly traded Blackstone Mortgage Trust, Inc.

BRE Landmark L.P.
c/o The Blackstone Group
345 Park Avenue
New York, New York 10154
(212) 583-5000

              BRE Landmark L.P., which we refer to as Merger Sub, is a Delaware limited partnership. BRE Landmark LLC, which we refer to as Merger Sub GP, a Delaware limited liability company, is the sole general partner of Merger Sub. Merger Sub was formed solely for purposes of facilitating Parent's acquisition of us and has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the transactions contemplated by the merger agreement. Pursuant to the merger agreement, on the closing date, we will merge with and into Merger Sub, and Merger Sub will continue as the surviving entity.

BRE Landmark Acquisition L.P.
c/o The Blackstone Group
345 Park Avenue
New York, New York 10154
(212) 583-5000

              BRE Landmark Acquisition L.P., which we refer to as Merger OP, is a Delaware limited partnership. BRE Landmark Acquisition LLC, which we refer to as Merger OP GP, is a Delaware limited liability company, and is the sole general partner of Merger OP. Merger OP was formed solely for purposes of facilitating Parent's acquisition of us and has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the transactions contemplated by the merger agreement. Pursuant to the merger agreement, on the closing date, Merger OP will merge with and into the Operating Partnership, and the Operating Partnership will continue as the surviving partnership.

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The Special Meeting (page 31)

The Proposals

              The special meeting of our shareholders will be held on [    ·    ], 2018 at [    ·    ], local time, at [    ·    ]. At the special meeting, holders of our common shares of beneficial interest, par value $0.01 per share, which we refer to as our common shares, will be asked to consider and vote on (1) a proposal to approve the merger and the other transactions contemplated by the merger agreement, (2) a proposal to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the merger and (3) a proposal 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.

              Pursuant to our bylaws, no business may be transacted at the special meeting except as specifically designated in the Notice of Special Meeting.

Record Date, Notice and Quorum

              All holders of record of our common shares and preferred shares as of the record date, which was the close of business on [    ·    ], 2018, are entitled to receive notice of the special meeting or any postponement or adjournment of the special meeting. Each common shareholder will be entitled to cast one vote on each matter presented at the special meeting for each common share that such holder owned as of the record date. On the record date, there were [    ·    ] common shares outstanding and entitled to vote at the special meeting. Only holders of our common shares as of the record date are entitled to attend and vote at the special meeting or any postponement or adjournment of the special meeting. Holders of our preferred shares are entitled to notice of the special meeting, but are not entitled to attend or vote at the special meeting and no vote or proxy is being solicited from the holders of our preferred shares.

              The presence in person or by proxy of our common 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. If a quorum is not present at the special meeting, we expect that the special meeting will be adjourned to a later date.

Required Vote

              Completion of the mergers requires approval of the merger and the other transactions contemplated by the merger agreement by the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of our outstanding common shares as of the record date for the special meeting, which we refer to as shareholder approval. Because the required vote for this proposal is based on the number of votes our common shareholders are entitled to cast rather than on the number of votes cast, if you fail to vote by proxy or in person (including by abstaining), or fail to instruct your broker on how to vote, such failure will have the same effect as voting "AGAINST" the proposal to approve the merger and the other transactions contemplated by the merger agreement.

              In addition, the approval of the proposal regarding the non-binding, advisory vote on the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the merger and the approval of the proposal regarding 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 each requires the affirmative vote of a majority of the votes cast on the proposal. Approval

3


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of these proposals is not a condition to completion of the mergers. For the purpose of each of these proposals, if you fail to vote by proxy or in person, or fail to instruct your broker on how to vote, such failure will not have any effect on the outcome of such proposal. Abstentions are not considered votes cast and therefore will have no effect on the outcome of such proposals.

              As of the record date, our trustees and executive officers owned and are entitled to vote an aggregate of approximately [    ·    ] common shares, entitling them to exercise approximately [    ·    ]% of the voting power of our common shares entitled to vote at the special meeting. Our trustees and executive officers have informed us that they intend to vote the common shares that they own in favor of the proposal to approve the merger and the other transactions contemplated by the merger agreement, in favor of the proposal regarding the non-binding, advisory vote on the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the merger, and in favor of the proposal 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, although they have no obligation to do so.

Proxies; Revocation

              Any of our common shareholders of record entitled to vote may authorize a proxy to vote his, her or its common shares by returning the enclosed proxy card, authorizing your proxy or voting instructions by telephone or through the Internet, or by appearing and voting at the special meeting in person. If the common shares that you own are held in "street name" by your broker, you should instruct your broker on how to vote your common shares using the instructions provided by your broker.

              Any proxy may be revoked at any time prior to its exercise by your delivery of a properly executed, later-dated proxy card, by authorizing your proxy by telephone or through the Internet at a later date than your previously authorized proxy, by your filing a written revocation of your proxy with our Corporate Secretary or by your voting in person at the special meeting. Attendance alone will not be sufficient to revoke a previously authorized proxy.

The Mergers (page 35)

              Pursuant to the merger agreement, on the closing date, Merger OP will be merged with and into the Operating Partnership and the separate existence of Merger OP will cease. The Operating Partnership will continue as the surviving partnership in the partnership merger. We use the term Surviving Partnership in this proxy statement to refer to the Operating Partnership following the partnership merger effective time.

              The partnership merger will become effective on the date and time at which such certificate of merger has been duly filed with the Secretary of State of the State of Delaware, or at such other date and time agreed between the parties to the merger agreement and specified in such certificate of merger. We use the term partnership merger effective time in this proxy statement to refer to the time the partnership merger becomes effective.

              Also on the closing date, immediately after the partnership merger effective time, we will be merged with and into Merger Sub and the separate existence of the Company will cease. Merger Sub will continue as the surviving entity in the merger. We use the term Surviving Entity in this proxy statement to refer to Merger Sub following the merger effective time.

              We and Merger Sub will execute articles of merger and cause them to be accepted for record by the State Department of Assessments and Taxation of the State of Maryland, and cause a certificate

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of merger to be executed, acknowledged, and filed with the Secretary of State of the State of Delaware. The merger will become effective after the partnership merger effective time on the date and time at which the articles of merger have been filed with, and accepted for record by, the State Department of Assessments and Taxation of the State of Maryland or at such other date and time as is agreed between the parties to the merger agreement and specified in the articles of merger. We use the term merger effective time in this proxy statement to refer to the time the merger becomes effective.

Recommendation of Our Board of Trustees (page 68)

              Our board of trustees has unanimously:

Opinions of Our Financial Advisors (page 72)

Opinion of Citigroup Global Markets Inc.

              In connection with the transactions contemplated by the merger agreement, on May 20, 2018, Citigroup Global Markets Inc., which we refer to as Citi, delivered an oral opinion, subsequently confirmed by the delivery of a written opinion dated May 20, 2018, to our board of trustees as to the fairness, from a financial point of view and as of the date of the opinion, of the $33.50 in cash per outstanding common share to be paid to the holders (other than Parent and its affiliates) of our outstanding common shares pursuant to the merger agreement. The full text of Citi's written opinion dated May 20, 2018, which describes the assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken, is attached as Exhibit B to this proxy statement and is incorporated herein by reference. The description of Citi's opinion set forth in the section entitled "The Mergers—Opinions of Our Financial Advisors—Opinion of Citi" is qualified in its entirety by reference to the full text of Citi's opinion. Citi's opinion was provided for the information of our board of trustees (in its capacity as such) in connection with its evaluation of the per share merger consideration from a financial point of view and did not address any other terms, aspects or implications of the transactions contemplated by the merger agreement. Citi was not requested to consider, and its opinion did not address, our underlying business decision to effect the mergers, the relative merits of the mergers as compared to any alternative business strategies that might exist for us or the effect of any other transaction in which we might engage. Citi's opinion is not intended to be and does not constitute a recommendation to any shareholder as to how such shareholder should vote or act on any matters relating to the proposed mergers or otherwise. Pursuant to an engagement letter between us and Citi, we have agreed to pay Citi an aggregate fee of approximately $20 million, $3 million of which became payable at or prior to the announcement of the mergers (including $1.5 million of which that became payable upon Citi's delivery of the opinion described in the section entitled "The Mergers—Opinions of Our Financial Advisors—Opinion of Citi") and the remainder of which is contingent upon the closing of the mergers.

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Opinion of Goldman Sachs & Co. LLC

              At a meeting of our board of trustees held on May 20, 2018, Goldman Sachs & Co. LLC, which we refer to as Goldman Sachs, delivered to our board of trustees its opinion, subsequently confirmed in writing, that, as of May 20, 2018 and based upon and subject to the factors and assumptions set forth therein, the $33.50 in cash per outstanding common share to be paid to the holders (other than Parent and its affiliates) of our outstanding common shares pursuant to the merger agreement was fair from a financial point of view to such holders.

              The full text of the written opinion of Goldman Sachs, dated May 20, 2018, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Exhibit C and is incorporated herein by reference. Goldman Sachs provided advisory services and its opinion for the information and assistance of our board of trustees in connection with its consideration of the transactions contemplated by the merger agreement. The Goldman Sachs opinion is not a recommendation as to how any holder of our common shares should vote with respect to the transactions contemplated by the merger agreement or any other matter. Pursuant to an engagement letter between us and Goldman Sachs, we have agreed to pay Goldman Sachs an aggregate fee of approximately $20 million, $1.5 million of which became payable at or prior to the announcement of the mergers and the remainder of which is contingent upon the closing of the mergers.

              For further information, see the section entitled "The Mergers—Opinions of Our Financial Advisors" and Exhibit B and Exhibit C.

Treatment of Common Shares, Restricted Share Awards, Performance Shares, Deferred Shares and Preferred Shares (page 99)

Common Shares

              The merger agreement provides that, at the merger effective time, each common share issued and outstanding immediately prior to the merger effective time (other than (1) common shares held by us in our treasury or owned by Parent, Merger Sub, Merger OP or any of their respective subsidiaries, which will be cancelled and retired and will cease to exist, and no consideration will be delivered in exchange therefor, and (2) any of our outstanding restricted share awards, which will receive the treatment described in the section entitled "The Merger Agreement—Treatment of Common Shares, Restricted Share Awards, Performance Shares, Deferred Shares and Preferred Shares—Restricted Share Awards") will be automatically cancelled and converted into the right to receive an amount in cash equal to $33.50 (which per share amount we refer to as the merger consideration), without interest. If we declare a distribution to our shareholders that we determine in good faith to be required to be distributed to qualify as a REIT under the Code or to avoid the incurrence of income or excise tax as permitted under the merger agreement, the merger consideration will be decreased by an amount equal to such distribution.

Restricted Share Awards

              In accordance with the terms of the restricted share agreements, the merger agreement provides that, immediately prior to the merger effective time, each outstanding restricted share award will automatically become fully vested and all restrictions and repurchase rights will lapse, and all of our common shares represented thereby will be considered outstanding for all purposes of the merger agreement and subject to the right to receive the merger consideration, less any required tax withholdings.

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Performance Shares

              The performance-based share award agreements provide that the number of common shares subject to each award that would become vested upon a change in control is based on the measurement of certain performance criteria as of the closing date of the change in control. Accordingly, the number of earned performance shares under each such performance award could range between zero to 200% of the target number of common shares subject to such performance award. Based on the $33.50 per share merger consideration, the Company calculated at the time the merger agreement was executed that, Michael D. Barnello, our President and Chief Executive Officer, and Alfred L. Young, Jr., our Executive Vice President and Chief Operating Officer, would have received 180% of their target number of common shares and Kenneth G. Fuller, our Executive Vice President, Chief Financial Officer, Secretary and Treasurer, would have received 175% of his target number of common shares. In connection with entering into the merger agreement, the Company and Parent evaluated the number of common shares that could be earned and vested upon the closing of the mergers and, in order to avoid uncertainty, the Company and Parent agreed, and the merger agreement provides, that, immediately prior to the merger effective time, each outstanding performance award, including those held by our executive officers, will automatically become earned and vested with respect to 150% of the target number of common shares subject to such performance award. Such provision does not apply to an aggregate of 24,613 unearned and unvested performance awards (assuming "target" performance) held by Messrs. Barnello and Young that are expected to vest pursuant to the terms of the applicable award agreements in July 2018. Immediately prior to the merger effective time, each earned performance share will be cancelled in exchange for the merger consideration, without interest and less any required tax withholdings. Additionally, in accordance with the terms of the performance-based share award agreements, in connection with the mergers, on the closing date, the Company will pay each holder of a performance award an amount equal to all accrued and unpaid cash dividends that would have been paid on such earned performance shares as if such earned performance shares had been issued and outstanding from the grant date up to, and including, the merger effective time, less any required tax withholdings.

Deferred Shares

              In accordance with the terms of our Trustee Fee Deferral Program, which we refer to as the trustee fee deferral program, the merger agreement provides that, immediately prior to the merger effective time, each outstanding deferred share award will automatically be cancelled and, in exchange therefor, the Company will pay each former holder of any such cancelled deferred common share, including any of our common shares attributable to dividend equivalent rights accrued with respect thereto, an amount equal to the merger consideration, without interest and less any required tax withholdings.

Preferred Shares

              The merger agreement provides that, at Parent's request, we will deliver notices of redemption to the holders of record of (1) our 6.375% Series I Cumulative Redeemable Preferred Shares of Beneficial Interest and (2) our 6.3% Series J Cumulative Redeemable Preferred Shares of Beneficial Interest, which we collectively refer to as our preferred shares, in accordance with the articles supplementary related to such preferred shares. The redemption notices will be prepared by Parent, in form and substance reasonably approved by the Company, and will state that each preferred share held by such holder immediately prior to the merger effective time will be redeemed in the merger on the closing date through the payment of an amount, without interest and less any required tax withholdings, equal to $25.00 plus accrued and unpaid dividends. The redemption notices will include the other information required by the articles supplementary. If Parent has not requested us to provide the redemption notices prior to the 32nd day before the scheduled closing date and if we have asked

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Parent to make such request or requests prior to such day, we may provide the redemption notices as described above.

Treatment of Interests in the Operating Partnership (page 100)

Limited Partner Interests

              At the partnership merger effective time, each common unit of the Operating Partnership issued and outstanding immediately prior to the partnership merger effective time (other than common units of the Operating Partnership held by us or our subsidiaries immediately prior to the partnership merger effective time) will be converted into, and will be cancelled in exchange for, the right to receive an amount in cash equal to the merger consideration, without interest. Each common unit of the Operating Partnership held by us immediately prior to the partnership merger effective time will be unaffected by the partnership merger and will remain outstanding as common units of the Surviving Partnership held by the Surviving Entity. At the partnership merger effective time, each preferred unit of the Operating Partnership issued and outstanding immediately prior to the partnership merger effective time will be cancelled and will no longer be outstanding. This proxy statement does not constitute any solicitation of consents in respect of the partnership merger.

              As described below, if we declare a distribution to our shareholders that we determine in good faith to be required to be distributed to qualify as a REIT under the Code or to avoid the incurrence of income or excise tax as permitted under the merger agreement, the merger consideration will be decreased by an amount equal to such distribution.

General Partnership Interests

              At the partnership merger effective time, the general partnership interests of Merger OP outstanding immediately prior to the partnership merger effective time and owned by Merger OP GP will be converted into general partnership interests of the Surviving Partnership. Immediately following the partnership merger effective time, by virtue of the merger, Merger OP GP will be the general partner of the Surviving Partnership and will have such rights, duties and obligations as are more fully set forth in the limited partnership agreement of the Surviving Partnership.

Financing (page 84)

              In connection with the closing of the mergers, Parent will cause an aggregate of approximately $3.7 billion to be paid to the holders of our common shares, including holders of our restricted share awards, performance shares and deferred shares, and the limited partners (other than the Company) of the Partnership. In connection with our redemption of the preferred shares as described under "The Merger Agreement—Common Shares, Restricted Share Awards, Performance Shares, Deferred Shares and Preferred Shares," Parent will cause us to deliver notices of redemption to the holders of our preferred shares and we will pay approximately $260 million (plus accrued and unpaid dividends to, but not including, the redemption date) to the holders of our preferred shares immediately prior to the mergers. In addition, Parent has informed us that in connection with the closing of the mergers, Parent expects to cause all of our outstanding term loans and all of the outstanding indebtedness under our senior unsecured credit facility and unsecured revolving credit facility to be prepaid in full at the closing. Parent has informed us that it expects our mortgage loans to be repaid or remain outstanding. As of May 31, 2018, we had approximately $855 million in aggregate principal amount of consolidated indebtedness under our term loans and senior unsecured credit facility and $225 million in aggregate principal amount of consolidated indebtedness under our mortgage loans.

              Parent has informed us that it is currently in the process of obtaining debt financing to be provided in connection with the mergers. In addition, it is expected that the Sponsor and its affiliates will contribute equity to Parent for the purpose of funding the acquisition costs (including the merger consideration) that are not covered by such debt financing.

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              Parent has informed us that in addition to the payment of the merger consideration, the funds to be obtained from the debt and equity financing may be used for purposes such as reserves, the refinancing of certain of our existing debt, and for other costs and expenses related to the financing and the mergers. Parent has informed us that it currently believes that the funds to be borrowed under the debt financing would be secured by, among other things, a first priority mortgage lien on certain properties which are wholly owned by us, escrows, reserves, a cash management account, or a first priority pledge of and security interest in the direct or indirect ownership interests in the owners of the properties, in each case, together with such other pledges and security required by the lender to secure and perfect their interest in the applicable collateral and that such debt financing would be conditioned on the mergers being completed and other customary conditions for similar financings.

              The merger agreement does not contain a financing condition or a "market MAC" condition to the closing of the mergers. We have agreed to use commercially reasonable efforts to provide, and to cause our subsidiaries to use their commercially reasonable efforts to provide, all cooperation reasonably necessary and customary in connection with the arrangement of debt financing with respect to us or our subsidiaries, or our or our subsidiaries' real property. For more information, see the sections entitled "The Merger Agreement—Financing Cooperation" and "The Merger Agreement—Conditions to the Mergers".

Interests of Our Trustees, Executive Officers and Employees in the Mergers (page 85)

              Our trustees, executive officers and employees have certain interests in the mergers that are different from, or in addition to, the interests of our shareholders generally. These interests may create potential conflicts of interest. The board was aware of these interests and considered them, among other matters, in reaching its decision to approve the mergers and the merger agreement. These interests include the following:

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Restriction on Solicitation of Acquisition Proposals (page 113)

              Under the terms of the merger agreement, we and our subsidiaries are subject to restrictions on our ability to solicit any acquisition proposal or acquisition inquiry (each as defined in the section entitled "The Merger Agreement—Shareholders' Meeting"), including, among others, restrictions on our ability to furnish to any third parties any non-public information in connection with any acquisition proposal or acquisition inquiry, engage in any discussions or negotiations regarding any acquisition proposal or acquisition inquiry, or propose or agree to do any of the foregoing. Subject to the terms of the merger agreement, we or our subsidiaries may furnish non-public information to, and engage in discussions or negotiations with, a third party if we receive an unsolicited bona fide written acquisition proposal from such third party after the date of the merger agreement that did not result from a breach of our obligations described in the sections entitled "The Merger Agreement—Restriction on Solicitation of Acquisition Proposals" and "The Merger Agreement—Obligation of the Board of Trustees with Respect to Its Recommendation" and our board of trustees determines in good faith, after consultation with our outside legal counsel and financial advisor, that such acquisition proposal either constitutes a superior proposal or could reasonably be expected to lead to a superior proposal (as defined in the section entitled "The Merger Agreement—Restriction on Solicitation of Acquisition Proposals"). Under certain circumstances and after following certain procedures and adhering to certain restrictions, we are permitted to terminate the merger agreement if our board of trustees approves, and concurrently with the termination of the merger agreement, we enter into, a definitive agreement providing for the implementation of a superior proposal (provided that such termination will not be effective until we have paid the $112 million company termination fee (as described in the section entitled "The Merger Agreement—Termination Fees")).

Conditions to the Mergers (page 124)

              Completion of the mergers depends upon the satisfaction or waiver of a number of conditions, including, among others, that:

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Termination of the Merger Agreement (page 125)

              We and Parent may mutually agree to terminate the merger agreement and abandon the mergers at any time prior to the closing of the mergers, even after we have obtained shareholder approval.

Termination by Either the Company or Parent

              In addition, we, on the one hand, or Parent, on the other hand, may terminate the merger agreement upon written notice to the other at any time prior to the closing of the mergers, even after we have obtained shareholder approval, if:

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Termination by the Company

              We may also terminate the merger agreement by written notice to Parent at any time prior to the closing of the mergers, even after we have obtained shareholder approval, if:

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Termination by Parent

              Parent may also terminate the merger agreement by written notice to us at any time prior to the closing of the mergers, even after we have obtained shareholder approval, if:

Termination Fees (page 127)

Termination Fee Payable by the Company

              We have agreed to pay a termination fee as directed by Parent of $112 million, which we refer to as the company termination fee, if:

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Termination Fee Payable by Parent

              Parent has agreed to pay to us a termination fee of $336 million, which we refer to as the parent termination fee, if we terminate the merger agreement pursuant to the provisions described in the first bullet or third bullet in the section entitled "The Merger Agreement—Termination of the Merger Agreement—Termination by the Company."

Limited Guarantee and Remedies (page 127)

              In connection with the merger agreement, the Sponsor entered into a limited guarantee in our favor to guarantee Parent's payment obligations with respect to the parent termination fee and certain expense reimbursement and indemnification obligations of Parent under the merger agreement, subject to the terms and limitations set forth in the limited guarantee.

              The maximum aggregate liability of the Sponsor under the limited guarantee will not exceed $336 million, plus all reasonable and documented third-party costs and out-of-pocket expenses (including reasonable fees of counsel) actually incurred by us relating to any litigation or other proceeding brought by us to enforce our rights under the limited guarantee, if we prevail in such litigation or proceeding.

              We and the Operating Partnership cannot seek specific performance to require Parent, Merger Sub or Merger OP to consummate the mergers and, except with respect to enforcing confidentiality provisions, our sole and exclusive remedy against Parent, Merger Sub or Merger OP relating to any breach of the merger agreement or otherwise will be the right to receive the parent termination fee under the conditions described in the section entitled "The Merger Agreement—Termination Fees—Termination Fee Payable by Parent." Parent, Merger Sub and Merger OP may, however, seek specific performance to require us and the Operating Partnership to consummate the mergers.

Regulatory Matters (page 91)

              We are unaware of any material federal, state or foreign regulatory requirements or approvals that are required for the execution of the merger agreement or the completion of either the merger or the partnership merger, other than the acceptance for record of the articles of merger with respect to the merger by the State Department of Assessments and Taxation of the State of Maryland, and the filing of the certificate of merger with respect to each of the merger and the partnership merger with the Secretary of State of the State of Delaware.

No Dissenters' Rights of Appraisal (page 133)

              We are organized as a real estate investment trust under Maryland law. Under Section 3-202 of the Maryland General Corporation Law, which we refer to as the MGCL, made applicable through Section 8-501.1(j) of the Maryland REIT Law, which we refer to as the MRL (and we refer to the MGCL and the MRL together as Maryland law), because our common shares were listed on the New York Stock Exchange, which we refer to as the NYSE, on the record date for determining shareholders entitled to vote at the special meeting, our common shareholders who object to the merger do not have any appraisal rights, dissenters' rights or the rights of an objecting shareholder in connection with the merger. In addition, holders of our common shares may not exercise any appraisal rights, dissenters' rights or the rights of an objecting shareholder to receive the fair value of the shareholder's shares in connection with the merger because, as permitted by Maryland law, our declaration of trust provides that shareholders are not entitled to exercise such rights unless expressly required by the MRL.

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Material U.S. Federal Income Tax Consequences (page 91)

              The receipt of the merger consideration for each common share pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes. Generally, for U.S. federal income tax purposes, you will recognize gain or loss as a result of the merger measured by the difference, if any, between the merger consideration you receive and your adjusted tax basis in your common shares. In addition, under certain circumstances, we may be required to withhold a portion of your merger consideration under applicable tax laws, including pursuant to the Foreign Investment in Real Property Tax Act of 1980, which we refer to as FIRPTA. Tax matters can be complicated, and the tax consequences of the merger to you will depend on your particular tax situation. We encourage you to consult your tax advisor regarding the tax consequences of the merger to you.

Delisting and Deregistration of Our Common Shares and Preferred Shares (page 96)

              If the mergers are completed, our common shares and preferred shares will no longer be traded on the NYSE and will be deregistered under the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act.

Market Price of Our Common Shares (page 129)

              Our common shares have been listed on the NYSE under the symbol "LHO" since April 24, 1998. On May 18, 2018, the last trading day prior to the date of the public announcement of the merger agreement, the closing price of our common shares reported on the NYSE was $31.90. On [    ·    ], 2018, the last trading day before the date of this proxy statement, the closing price of our common shares reported on the NYSE was $[    ·    ]. You are encouraged to obtain current market quotations for our common shares.

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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGERS

              The following questions and answers address briefly some questions you may have regarding the special meeting and the proposed mergers. These questions and answers may not address all questions that may be important to you as a shareholder. Please refer to the more detailed information contained elsewhere in this proxy statement, as well as the additional documents to which it refers or which it incorporates by reference, including the merger agreement, a copy of which is attached to this proxy statement as Exhibit A.

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Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
Toll-Free: (888) 750-5834

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

              This proxy statement and the documents that we incorporate by reference herein contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act). Also, documents we subsequently file with the SEC and incorporate by reference may contain forward-looking statements. These forward-looking statements include, among others, statements about the expected benefits of the mergers, the expected timing and completion of the mergers and our future business, performance and opportunities. Forward-looking statements involve numerous risks and uncertainties, and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise, and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project," "may," "plan," "seek," "should," "will," "likely" or similar expressions. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond our control and which could materially affect actual results, performances or achievements. Factors that may cause actual results to differ materially from current expectations include, but are not limited to:

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              While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For a further discussion of these and other factors that could impact our future results, performance or transactions, see the section entitled "Risk Factors" included in our Annual Report on Form 10-K for the year ended December 31, 2017, as updated in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 and by our future filings with the SEC.

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PROPOSAL 1

PROPOSAL TO APPROVE THE MERGER

              We are asking our common shareholders to vote on a proposal to approve the merger of the Company with and into Merger Sub and the other transactions contemplated by the merger agreement.

              For detailed information regarding this proposal, see the information about the mergers and the merger agreement throughout this proxy statement, including the information set forth in the sections entitled "The Mergers" and "The Merger Agreement." A copy of the merger agreement is attached as Exhibit A to this proxy statement.

              Approval of the proposal to approve the merger and the other transactions contemplated by the merger agreement requires the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of our outstanding common shares as of the record date for the special meeting. If you properly authorize your proxy by mail, by telephone or through the Internet, but do not indicate instructions to vote your common shares "FOR," "AGAINST" or "ABSTAIN" on this Proposal 1, your common shares will be voted in accordance with the recommendation of our board of trustees. Because the required vote for this proposal is based on the number of votes our common shareholders are entitled to cast rather than on the number of votes cast, failure to vote your 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 proposal to approve the merger and the other transactions contemplated by the merger agreement.

              Approval of this proposal is a condition to the completion of the mergers. In the event this proposal is not approved, the mergers cannot be completed.

Recommendation of Our Board of Trustees

              Our board of trustees unanimously recommends that our common shareholders vote "FOR" the proposal to approve the merger and the other transactions contemplated by the merger agreement.

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PROPOSAL 2

PROPOSAL TO APPROVE THE MERGER-RELATED COMPENSATION

              Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and Rule 14a-21(c) under the Exchange Act, we are asking our common shareholders to vote at the special meeting on an advisory basis regarding the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the merger. Information intended to comply with Item 402(t) of Regulation S-K concerning this compensation, subject to certain assumptions described therein, is presented in the section entitled "The Mergers—Interests of Our Trustees, Executive Officers and Employees in the Mergers—Quantification of Payments and Benefits."

              The shareholder vote on executive compensation is an advisory vote only, and it is not binding on us or our board of trustees. Further, the underlying arrangements are contractual in nature and not, by their terms, subject to shareholder approval. Accordingly, regardless of the outcome of the advisory vote, if the mergers are completed, our named executive officers will be eligible to receive the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the merger, in accordance with the terms and conditions applicable to such compensation. Approval of this proposal is not a condition to the completion of the mergers.

              We are asking our common shareholders to vote "FOR" the following resolution:

              Adoption of the above resolution, on a non-binding, advisory basis, requires the affirmative vote of a majority of the votes cast on the proposal. If you properly authorize your proxy by mail, by telephone or through the Internet, but do not indicate instructions to vote your common shares "FOR," "AGAINST" or "ABSTAIN" on this Proposal 2, your common shares will be voted in accordance with the recommendation of our board of trustees. An abstention or failure to vote on this proposal will have no effect on the approval of this proposal.

Recommendation of Our Board of Trustees

              Our board of trustees unanimously recommends that our common shareholders vote "FOR" the proposal to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the merger.

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PROPOSAL 3

PROPOSAL TO APPROVE ADJOURNMENT OF THE MEETING

              We are asking our common shareholders to vote on a proposal to approve any adjournments 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.

              Approval of the proposal to approve any such adjournment of the special meeting requires the affirmative vote of a majority of the votes cast on the proposal. Approval of this proposal is a not a condition to the completion of the mergers. If you properly authorize your proxy by mail, by telephone or through the Internet, but do not indicate instructions to vote your common shares "FOR," "AGAINST" or "ABSTAIN" on this Proposal 3, your common shares will be voted in accordance with the recommendation of our board of trustees. An abstention or failure to vote on this proposal will have no effect on the approval of this proposal.

              In addition, even if a quorum is not present at the special meeting, our board of trustees or the shareholders by the affirmative vote of a majority of the votes cast at the special meeting may adjourn the meeting to another place, date or time (subject to certain restrictions in the merger agreement, including that the special meeting may not be held, without Parent's consent, on a date that is more than 30 days after the date on which the special meeting was originally scheduled).

Recommendation of Our Board of Trustees

              Our board of trustees unanimously recommends that our common shareholders vote "FOR" the proposal 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.

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THE PARTIES TO THE MERGERS

LaSalle Hotel Properties
7550 Wisconsin Avenue, 10th Floor
Bethesda, Maryland 20814
(301) 941-1500

              The Company was organized as a Maryland real estate investment trust on January 15, 1998, and primarily buys, owns, redevelops and leases upscale and luxury full-service hotels located in convention, resort and major urban business markets. The Company is a self-administered and self-managed REIT as defined in the Code. Additional information about us is available on our website at www.lasallehotels.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. Our common shares are listed on the NYSE under the symbol "LHO." For additional information about us and our business, please refer to the section entitled "Where You Can Find More Information."

LaSalle Hotel Operating Partnership, L.P.
7550 Wisconsin Avenue, 10th Floor
Bethesda, Maryland 20814
(301) 941-1500

              The Operating Partnership was formed as a Delaware limited partnership on January 13, 1998. We are the sole general partner of the Operating Partnership, and, as of March 31, 2018, we owned, through a combination of direct and indirect interests, approximately 99.9% of the common units of the Operating Partnership. The remaining 0.1% is held by limited partners who owned 145,223 common units of the Operating Partnership as of March 31, 2018.

BRE Landmark Parent L.P.
c/o The Blackstone Group
345 Park Avenue
New York, New York 10154
(212) 583-5000

              Parent is a Delaware limited partnership and an affiliate of the Sponsor. Parent was formed solely for the purpose of acquiring us and has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the transactions contemplated by the merger agreement. The Sponsor is an affiliate of Blackstone.

              Blackstone is a global leader in real estate investing. Blackstone's real estate business was founded in 1991 and has approximately $120 billion in investor capital under management. Blackstone's real estate portfolio includes hotel, office, retail, industrial and residential properties in the U.S., Europe, Asia and Latin America. Major holdings include Hilton Worldwide, Invitation Homes (single family homes), Logicor (pan-European logistics) and prime office buildings in the world's major cities. Blackstone real estate also operates one of the leading real estate finance platforms, including management of the publicly traded Blackstone Mortgage Trust, Inc.

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BRE Landmark L.P.
c/o The Blackstone Group
345 Park Avenue
New York, New York 10154
(212) 583-5000

              Merger Sub is a Delaware limited partnership. Merger Sub GP is a Delaware limited liability company and the sole general partner of Merger Sub. Merger Sub was formed solely for purposes of facilitating Parent's acquisition of us and has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the transactions contemplated by the merger agreement. Pursuant to the merger agreement, on the closing date, we will merge with and into Merger Sub, and Merger Sub will continue as the surviving entity.

BRE Landmark Acquisition L.P.
c/o The Blackstone Group
345 Park Avenue
New York, New York 10154
(212) 583-5000

              Merger OP is a Delaware limited partnership. Merger OP GP is a Delaware limited liability company and the sole general partner of Merger OP. Merger OP was formed solely for purposes of facilitating Parent's acquisition of us and has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the transactions contemplated by the merger agreement. Pursuant to the merger agreement, on the closing date, Merger OP will merge with and into the Operating Partnership, and the Operating Partnership will continue as the Surviving Partnership.

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THE SPECIAL MEETING

Date, Time and Purpose of the Special Meeting

              This proxy statement is being furnished to our shareholders in connection with the solicitation of proxies from holders of our common shares by our board of trustees to be exercised at a special meeting to be held on [    ·    ], 2018 at [    ·    ], local time. The special meeting will be held at [    ·    ]. The purpose of the special meeting is for you to consider and vote on the following matters:

              No other business may be acted upon at the special meeting or any postponement or adjournment thereof. Holders of at least sixty-six and two-thirds percent (66 2/3%) of our outstanding common shares entitled to vote at the special meeting must approve the merger and the other transactions contemplated by the merger agreement for the mergers to occur. A copy of the merger agreement is attached as Exhibit A to this proxy statement, which we encourage you to read carefully in its entirety.

Record Date, Notice and Quorum

              All holders of record of our common shares as of the record date, which was the close of business on [    ·    ], 2018, are entitled to receive notice of and attend and vote at the special meeting or any postponement or adjournment of the special meeting. Each common shareholder will be entitled to cast one vote on each matter presented at the special meeting for each common share that such holder owned as of the record date. On the record date, there were [    ·    ] common shares outstanding and entitled to vote at the special meeting.

              The presence in person or by proxy of 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. If a quorum is not present at the special meeting, we expect that the special meeting will be adjourned to a later date.

Required Vote

              Completion of the mergers requires approval of the merger and the other transactions contemplated by the merger agreement by the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of our outstanding common shares as of the record date for the special meeting. Each common shareholder is entitled to cast one vote on each matter presented at the special meeting for each common share owned by such shareholder on the record date. Because the required vote for this proposal is based on the number of votes our common shareholders are entitled to cast rather than on the number of votes cast, failure to vote your common shares (including failure to give voting instructions to your broker, bank or other nominee) and abstentions will have the same effect as

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voting "AGAINST" the proposal to approve the merger and the other transactions contemplated by the merger agreement.

              In addition, the approval of the proposal regarding the non-binding, advisory vote on the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the merger and the approval of the proposal regarding 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 each 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 mergers. For the purpose of each of these proposals, if a common 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. Abstentions are not considered votes cast and therefore will have no effect on the outcome of such proposals.

              Accordingly, in order for your common shares to be included in the vote, if you are a shareholder of record of our common shares, you must either return the enclosed proxy card, authorize your proxy or voting instructions by telephone or through the Internet or vote in person at the special meeting.

              As of the record date, our trustees and executive officers owned and are entitled to vote an aggregate of approximately [    ·    ] common shares, entitling them to exercise approximately [    ·    ]% of the voting power of our common shares entitled to vote at the special meeting. Our trustees and executive officers have informed us that they intend to vote our common shares that they own in favor of the proposal to approve the merger and the other transactions contemplated by the merger agreement, in favor of the proposal regarding the non-binding, advisory vote on the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the merger and in favor of the proposal 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.

              Votes cast by proxy or in person at the special meeting will be counted by the person appointed by us to act as inspector of election for the special meeting. The inspector of election will also determine the number of common shares represented at the special meeting, in person or by proxy.

How to Authorize a Proxy

              Holders of record of our common shares may vote or cause their shares to be voted by proxy using one of the following methods:

              Regardless of whether you plan to attend the special meeting, we request that you authorize a proxy to vote your common shares as described above as promptly as possible.

              Under NYSE rules, all of the proposals in this proxy statement 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

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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. Accordingly, if you own common shares through a broker, bank or other nominee (i.e., in "street name"), you must provide voting instructions in accordance with the instructions on the voting instruction card that your broker, bank or other nominee provides to you, as brokers, banks and other nominees do not have discretionary voting authority with respect to any of the three proposals described in this proxy statement. You should instruct your broker, bank or other nominee as to how to vote your common shares following the directions contained in such voting instruction card. If you have not received such voting instructions or require further information regarding such voting instructions, contact your broker, bank or other nominee who can give you directions on how to vote your common shares. If you hold your common shares through a broker, bank or other nominee and wish to vote in person at the special meeting, you must obtain a "legal proxy," executed in your favor, from the broker, bank or other nominee (which may take several days). Because the proposal to approve the merger and the other transactions contemplated by the merger agreement requires the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of our outstanding common shares, the failure to provide your bank, broker, trust or other nominee with voting instructions will have the same effect as voting "AGAINST" the proposal to approve the merger and the other transactions contemplated by the merger agreement. Because the approval of each of (1) the non-binding compensation advisory proposal and (2) the proposal to adjourn the special meeting if necessary or appropriate requires the affirmative vote of a majority of the votes cast on such proposal, and because your bank, broker, trust or other nominee does not have discretionary authority to vote on either proposal, the failure to provide your bank, broker, trust or other nominee with voting instructions will have no effect on approval of either proposal, assuming a quorum is present.

              If you are a holder of our restricted share awards, your common shares will be voted as you specify on your proxy card and will not be voted if the proxy card is not returned or if you do not vote in person or authorize a proxy to vote your common shares by telephone or through the Internet.

Proxies and Revocation

              If you authorize a proxy to vote your common shares, your common shares will be voted at the special meeting as you indicate on your proxy. If no instructions are indicated when you authorize your proxy, your common shares will be voted in accordance with the recommendations of our board of trustees. Our board of trustees recommends that you vote "FOR" the proposal to approve the merger and the other transactions contemplated by the merger agreement, "FOR" the proposal to approve, on a non-binding, advisory basis, the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the merger and "FOR" the proposal 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.

              You may revoke your proxy at any time, but only before the proxy is voted at the special meeting, in any of three ways:

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              Attendance at the special meeting will not, in itself, constitute revocation of a previously granted proxy. If you own common shares in "street name," you may revoke or change previously granted voting instructions by following the instructions provided by the broker, bank or other nominee that is the registered owner of the shares.

              No matters other than the proposals set forth above may be brought before the special meeting.

Solicitation of Proxies

              We will bear the cost of solicitation of proxies for the special meeting. In addition to the use of mails, proxies may be solicited by personal interview, telephone, facsimile, e-mail or otherwise, by our officers, trustees and other employees, for which they will not receive additional compensation. We have engaged Innisfree M&A Incorporated to assist in the solicitation of proxies for a fee of $17,000 and an additional fee of $8,500 per month after the first two months of the engagement until the engagement is terminated by the Company at its discretion, plus reimbursement of reasonable expenses and we have agreed to indemnify Innisfree M&A Incorporated against certain losses, costs and expenses. We also will request persons, firms and corporations holding shares in their names, or in the names of their nominees, that are beneficially owned by others to send or cause to be sent proxy materials to, and obtain proxies from, such beneficial owners and will reimburse such holders for their reasonable expenses in so doing.

Adjournments

              Although it is not currently expected, the special meeting may be adjourned for the purpose of soliciting additional proxies if the holders of a sufficient number of common shares are not present at the special meeting, in person or by proxy, to constitute a quorum or if we believe it is reasonably likely that the merger and the other transactions contemplated by the merger agreement will not be approved at the special meeting when convened on [    ·    ], or when reconvened following any adjournment. Any adjournments may be made to a date not more than 120 days after the original record date without notice (other than by an announcement at the special meeting), by the affirmative vote of a majority of the votes cast on the proposal to approve any adjournment, whether or not a quorum exists, or by our board of trustees for any reason (subject to certain restrictions in the merger agreement, including that the special meeting may not be held, without Parent's consent, on a date that is more than 30 days after the date on which the special meeting was originally scheduled).

Postponements

              At any time prior to convening the special meeting, our board of trustees may postpone the special meeting for any reason without the approval of our common shareholders (subject to certain restrictions in the merger agreement, including that the special meeting may not be held, without Parent's consent, on a date that is more than 30 days after the date on which the special meeting was originally scheduled).

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THE MERGERS

General Description of the Mergers

              Under the terms of the merger agreement, affiliates of Blackstone will acquire us and our subsidiaries, including the Operating Partnership, through the merger of us with and into Merger Sub and the merger of Merger OP with and into the Operating Partnership. Pursuant to the terms of the merger agreement, Merger OP will merge with and into the Operating Partnership, with the Operating Partnership continuing as the Surviving Partnership. Immediately following the effective time of the partnership merger, we will merge with and into Merger Sub, with Merger Sub continuing as the Surviving Entity.

              This proxy statement does not constitute any solicitation of consents in respect of the partnership merger.

Background of the Mergers

              The following chronology summarizes the key meetings and events that led to the signing of the merger agreement. The following chronology does not purport to catalogue every conversation among our board of trustees, the transaction committee, members of our management or our representatives and other parties.

              Our board of trustees, together with our management, regularly reviews and, when advisable, revises our long-term strategies and objectives in light of developments in real estate and lodging markets, capital market conditions and our business and capabilities. In the course of reviewing our long-term strategies and objectives, our board of trustees and management have considered various potential strategic alternatives with the goal of maximizing shareholder value, including potential acquisitions, dispositions and business combination transactions, and have recognized that we continue to face challenges as a public company. These challenges include the cyclical nature of the lodging industry and the advanced stage of the lodging industry's current economic recovery cycle, the risk of a slowdown of the economy, expected increases in interest rates which could increase the cost of debt, the increase in supply in the lodging industry which over time could drive down both hotel occupancy and room rates and the challenges of acquiring assets on an accretive basis to expand the portfolio in light of the intensely competitive environment and strong price appreciation for luxury, upper upscale and upscale hotels in our core markets. Our board of trustees considered the potential negative impact of such factors on the results of the operations of the lodging industry, including the Company, and the related downside risks in our common share price.

              On February 20, 2018, we announced our results of operations for the three months and year ended December 31, 2017, including a decrease in room revenue per available room and adjusted earnings before interest, taxes, depreciation and amortization for the fourth quarter and full year 2017 as compared with the fourth quarter and full year 2016. In addition, we provided earnings guidance for the first time in two years and, based on such outlook, disclosed that our board of trustees expected to reduce our quarterly dividend rate during 2018. On February 21, 2018, the closing price of our common shares on the NYSE was $25.37, which represented a 10% decline from the previous trading day's closing price of $28.25.

              On the evening of March 5, 2018, while attending the Citi 2018 Global Property CEO Conference in Hollywood, Florida, Michael D. Barnello, who serves as our President and Chief Executive Officer and is a member of our board of trustees, and Jon E. Bortz, Chairman of the Board, President and Chief Executive Officer of Pebblebrook Hotel Trust (which we refer to as Pebblebrook), met for dinner at the invitation of Mr. Bortz. During this dinner, Mr. Bortz stated that Pebblebrook

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was interested in a business combination with the Company and that he would be sending a written acquisition proposal to our board of trustees. Mr. Barnello responded that our board of trustees was always open to considering opportunities to maximize shareholder value and would review Pebblebrook's written proposal. Following the dinner, Mr. Barnello informed the other members of our board of trustees about Pebblebrook's expression of interest.

              On March 6, 2018, our board of trustees met to discuss, among other things, Mr. Barnello's dinner with Mr. Bortz. Members of our management and representatives of our outside corporate securities counsel, DLA Piper, were present. Mr. Barnello summarized for our board of trustees his discussion with Mr. Bortz. Representatives of DLA Piper reviewed with our board of trustees their fiduciary duties under applicable law. In light of the imminent written proposal from Pebblebrook, our board of trustees determined that it would be appropriate for the Company to retain outside financial advisors and additional outside legal counsel to assist our board of trustees in its evaluation of the Pebblebrook proposal and related matters. Our board of trustees discussed that management, in consultation with several members of our board of trustees, had contacted financial and legal advisor candidates, including Citi and Goldman Sachs, as financial advisors, and Goodwin Procter LLP (which we refer to as Goodwin), as additional outside legal counsel. Our board of trustees authorized management to continue discussions with representatives of Citi and Goldman Sachs regarding their candidacy to serve as financial advisors. Our board of trustees considered Citi as a potential investment banking firm candidate to assist and advise our board of trustees because of Citi's qualifications, experience and reputation, long-standing relationship with the Company (serving as an underwriter in our equity offerings and as a lender under our credit facility and term loans) and substantial knowledge of the lodging REIT industry. Our board of trustees considered Goldman Sachs as a potential investment banking firm candidate to assist and advise our board of trustees because of Goldman Sachs' qualifications, experience and reputation, its knowledge of the lodging REIT industry and its involvement in recent transactions in the REIT industry and its experience with shareholder activism and acquisition transactions generally.

              Later on March 6, 2018, Stuart L. Scott, Chairman of our board of trustees, and Mr. Barnello received a letter from Mr. Bortz on behalf of Pebblebrook (which we refer to as the March 6 letter, and the proposal set forth therein as the March 6 proposal). The March 6 letter stated that Pebblebrook had believed for several years that there would be tremendous benefits from merging the two companies. The March 6 letter proposed an all-stock business combination of the Company and Pebblebrook at an implied price of $30.00 per share for 100% of our outstanding common shares based on a 10-day volume weighted average price of Pebblebrook's common shares ending on March 5, 2018, paid in Pebblebrook common shares utilizing a fixed exchange ratio of 0.8655 Pebblebrook common shares for each Company common share. The letter stated that the proposal represented a premium of 17.5% to our current common share price. The letter also stated that Pebblebrook had accumulated a 4.8% position in our common shares through open market purchases and proposed that the companies enter into a mutual exclusivity agreement for a mutually-agreed upon duration. In the letter, Pebblebrook requested a response from us by March 16, 2018. The March 6 letter was circulated to our board of trustees. On March 6, 2018, our common share closing price on the NYSE was $25.39.

              On March 7, 2018, our board of trustees met to discuss, among other things, Pebblebrook's March 6 proposal. Members of our management and representatives of DLA Piper were present. Our board of trustees reviewed the terms and conditions of Pebblebrook's March 6 proposal. In reviewing Pebblebrook's March 6 proposal, our board of trustees considered, among other things, that the Pebblebrook common shares being offered as consideration could fluctuate (positively or negatively) prior to the closing of the transaction, and that the proposal therefore lacked the price certainty of a cash proposal or a proposal with a meaningful cash component or a pricing collar or similar type of pricing protection mechanism. Our board of trustees also discussed its concerns that Pebblebrook's

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common shares trade at a significantly higher EBITDA multiple as compared to other publicly-traded lodging REITs and whether this would continue in the future. Our board of trustees also discussed that Pebblebrook had acquired a 4.8% position in our common shares and that there was significant turnover in our shareholder base following our announcement of financial results on February 20, 2018. After discussion, our board of trustees determined that it should further review Pebblebrook's March 6 proposal and any potential response to Pebblebrook in the context of our standalone plan.

              Mr. Barnello also updated our board of trustees on his recent discussions with representatives of Citi, Goldman Sachs and Goodwin. Our board of trustees determined that it would be appropriate for the Company to retain these financial and legal advisors to assist our board of trustees in its evaluation of the financial and legal aspects of Pebblebrook's March 6 proposal, respectively, any response thereto and related matters. Our board of trustees authorized management to negotiate engagement letters with each of Citi and Goldman Sachs, subject to confirmation by our board of trustees that Citi and Goldman Sachs, respectively, did not have any engagements that would interfere with the ability of Citi and Goldman Sachs to serve as our financial advisors. Our board of trustees also determined that all communications by the Company with Pebblebrook regarding its March 6 proposal would be made solely through Mr. Barnello, so that we communicated with one voice.

              Also at the meeting, our board of trustees established an advisory transaction committee (which we refer to as the transaction committee) to assist our board of trustees, in between board meetings, in considering the Pebblebrook proposal and the range of alternative actions available to the Company, including discussing such matters with Mr. Barnello. Mr. Scott, Jeffery T. Foland and Darryl Hartley-Leonard, all of whom are non-management, independent trustees and have significant experience with acquisition transactions, were appointed to the transaction committee. Throughout the transaction committee's evaluation of Pebblebrook's proposals and a potential sale of the Company, the transaction committee conducted formal meetings, but its members were also in regular informal communication with Mr. Barnello, representatives of our financial and legal advisors and with each other. In addition, the transaction committee, as well as our board of trustees, frequently met in executive session with only the independent trustees and, on certain occasions, representatives of Goodwin and DLA Piper present.

              Later in the week of March 5, 2018, we engaged Goodwin to act as additional outside legal counsel to our board of trustees. In the following weeks, representatives of Goodwin and DLA Piper reviewed our board of trustees' duties under the circumstances and representatives of Citi and Goldman Sachs reviewed various preliminary financial analyses with our board of trustees and the transaction committee to assist our board of trustees and the transaction committee in evaluating Pebblebrook's March 6 proposal and to prepare for a potential public disclosure of the proposal by Pebblebrook.

              On March 8, 2018, Mr. Bortz sent an email to Mr. Scott and indicated that he would be interested in discussing Pebblebrook's March 6 proposal with Mr. Scott. Consistent with our board of trustees' determination on March 7, Mr. Scott replied that all communications between the companies on this topic should be made through Mr. Barnello.

              On March 12, 2018, our board of trustees met to discuss, among other things, Pebblebrook's March 6 proposal. Members of our management and representatives of Citi, Goldman Sachs, Goodwin and DLA Piper were present. Representatives of Goodwin provided our board of trustees with an overview of their fiduciary duties under applicable law and applied these principles to considering Pebblebrook's March 6 proposal. Representatives of Citi and Goldman Sachs reviewed with our board of trustees their preliminary financial analyses of certain financial aspects of Pebblebrook's March 6 proposal based in part on publicly-available Wall Street research consensus estimates of the Company's

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and Pebblebrook's financial prospects. Representatives of Citi and Goldman Sachs also provided an update on lodging industry fundamentals and an update on trading performance in the lodging REIT sector. In response to questions from our board of trustees about Citi's and Goldman Sachs' relationships with Pebblebrook, representatives of Citi and Goldman Sachs responded in such a manner that satisfied our board of trustees in determining that any such relationships would not interfere with either Citi's or Goldman Sachs' ability to serve as a financial advisor to the Company, subject to review by our board of trustees of customary written relationships disclosure regarding Pebblebrook.

              Our board of trustees discussed the implications of the unsolicited nature of Pebblebrook's proposal, its acquisition of 4.8% of our common shares and the potential courses of action that Pebblebrook might pursue, including publicly disclosing its unsolicited proposal for an acquisition of the Company. Our board of trustees discussed that if Pebblebrook's proposal became public, we could receive additional acquisition offers.

              Following discussion of these topics with management and consultation with representatives of Citi, Goldman Sachs, Goodwin and DLA Piper, our board of trustees noted that we had an existing 2018 budget which included forecasts for the year ending December 31, 2018 and directed management to prepare a five-year standalone plan for consideration in connection with Pebblebrook's March 6 proposal and any other strategic alternatives to be considered by our board of trustees. Our board of trustees decided to meet to discuss these topics in further detail on March 20, 2018. Our board of trustees also directed Goodwin to request that each of Citi and Goldman Sachs provide to our board of trustees its customary written relationships disclosure letter regarding Pebblebrook.

              At the conclusion of the meeting, the independent board members participating in the meeting met in executive session with Goodwin and DLA Piper to further discuss Pebblebrook's March 6 proposal and potential strategic alternatives available to the Company.

              On March 16, 2018, at the direction of our board of trustees, representatives of Citi and Goldman Sachs contacted representatives of Pebblebrook's financial advisor, and indicated that the Company had received the March 6 letter and would respond to Pebblebrook in due course.

              On March 19, 2018, representatives of Pebblebrook's financial advisor contacted representatives of Citi and Goldman Sachs and, as instructed by our board of trustees, the representatives of Citi and Goldman Sachs confirmed that we were carefully reviewing the merits of Pebblebrook's March 6 proposal in consultation with representatives of its financial and legal advisors.

              On March 20, 2018, our board of trustees met to further discuss Pebblebrook's March 6 proposal and our standalone plan. Members of our management and representatives of Citi, Goldman Sachs, Goodwin and DLA Piper were present. Representatives of Goodwin provided our board of trustees with an overview of their fiduciary duties under applicable law and the application of those principles to Pebblebrook's March 6 proposal. Our management discussed with our board of trustees our standalone plan developed at the direction of our board of trustees, which included management's forecasts for the fiscal years ended December 31, 2018 through December 31, 2022 (which are summarized below under the section entitled "—Certain Prospective Financial Information—Financial Projections" and which we refer to as the preliminary projections), and the underlying assumptions to these forecasts. Our board of trustees discussed the risks, challenges and strategic opportunities facing the Company in the context of reviewing the preliminary projections. Following discussion and questions of management about the assumptions on which the plan was based, our board of trustees approved the preliminary projections.

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              Our board of trustees then considered the option of the Company continuing as an independent public company and discussed the expected performance of the Company in the future. Our board of trustees discussed the increase in supply and competition in our markets and the expected future negative impact on hotel occupancy and room rates. Our board of trustees also discussed current lodging REIT valuations and our common share price as compared to the valuation proposed in Pebblebrook's March 6 proposal. Our board of trustees reviewed the current macro-environment, the current performance of the REIT industry and lodging REIT sector in particular and observations regarding the perception of the Company and Pebblebrook in the investment community.

              Our board of trustees, with the assistance of our management and in consultation with representatives of our board of trustees' financial and legal advisors, discussed other strategic alternatives available to the Company that could potentially enhance shareholder value, including whether to continue to execute the long-term plan as a standalone company, accelerate the return of capital to shareholders and pursue hotel acquisitions and dispositions, or whether to engage in a process to explore interest in a potential sale of the Company (with both strategic and financial buyers).

              Our board of trustees, with the assistance of our management and in consultation with representatives of the financial and legal advisors, also further discussed Pebblebrook's March 6 proposal, including Pebblebrook's financial prospects based on Pebblebrook's public guidance for 2018 at the time, Wall Street research consensus estimates and the preliminary projections, as well as recent trading prices of Pebblebrook common shares, and the implied value of the share consideration proposed by Pebblebrook. Our board of trustees and management reviewed the possibility of a business combination with Pebblebrook, including the geographical markets in which the Company and Pebblebrook own properties, long-term growth, short- and long-term financial benefits, views of the strengths and weaknesses of the both companies and other factors. Our board of trustees also discussed potential risks regarding the use of Pebblebrook common shares as consideration to be received by our shareholders, including that Pebblebrook's common shares traded at prices between $27.01 and $39.74 over the previous 12 months, Pebblebrook's common shares trade at a significantly higher EBITDA multiple as compared to other publicly-traded lodging REITs and whether this would continue in the future, and the inherent risk associated with a potential decline in the trading price of Pebblebrook's common shares before the closing of a potential transaction. Our board of trustees also considered that Pebblebrook would be the ultimate surviving entity in the proposed combination, and that Company shareholders would own approximately 57% of the combined company. Following these discussions, our board of trustees deliberated potential paths forward to maximize value for shareholders and determined that, given the potential risks associated with Pebblebrook's common share consideration, it would not be in the best interests of shareholders to engage in discussions with Pebblebrook at that time. Our board of trustees authorized and directed our management and representatives of its advisors to contact Pebblebrook and its advisors to express its determination.

              Our board of trustees also discussed potential disruptions to our business if Pebblebrook's March 6 proposal were to be publicly disclosed, including the potential loss of business partners, customers and employees. Following this discussion, our board of trustees approved a cash retention bonus plan for certain of our employees, other than our senior officers (which is summarized under the section entitled "—Interests of Our Trustees, Executive Officers and Employees in the Mergers—Payment of Employee Bonuses").

              Later on March 20, 2018, Messrs. Scott and Barnello received a letter from Mr. Bortz (which we refer to as the March 20 letter) stating that Pebblebrook had not received a response to its March 6 proposal, other than the courtesy call from representatives of our financial advisors to Pebblebrook's

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financial advisor on March 16, 2018, and reiterating Pebblebrook's interest in pursuing a merger with the Company. The March 20 letter was circulated to our board of trustees that evening.

              On March 21, 2018, as directed by our board of trustees, representatives of Citi and Goldman Sachs informed Pebblebrook's financial advisor that our board of trustees would provide a response to Pebblebrook's March 6 letter on March 22, 2018.

              On March 21, 2018, our board of trustees met to discuss, among other things, Pebblebrook's March 20 letter. Members of our management and representatives of Citi, Goldman Sachs, Goodwin and DLA Piper were present. Mr. Barnello reviewed with our board of trustees Pebblebrook's March 20 letter and a proposed response letter to Pebblebrook's March 6 letter based on our board of trustees' discussions at our board meeting on March 20, 2018. Mr. Barnello also reviewed with our board of trustees the proposed communications plans that our management had prepared with the assistance of our advisors to respond to a public disclosure of Pebblebrook's March 6 proposal. Our board of trustees directed Mr. Barnello to send the proposed response letter to Pebblebrook and representatives of Citi and Goldman Sachs to contact Pebblebrook's financial advisor to express the determination made by our board of trustees at its meeting on March 20, 2018 and summarized in the proposed response letter.

              On March 22, 2018, in accordance with the direction from our board of trustees, Messrs. Scott and Barnello sent the response letter to Mr. Bortz, which stated that after careful consideration our board of trustees had unanimously determined that Pebblebrook's March 6 proposal was insufficient from both price and mix of consideration perspectives and was therefore not in the best interests of our shareholders.

              On March 22, 2018, Mr. Barnello received a call from Tyler Henritze, a Senior Managing Director in Blackstone's real estate group, in which Mr. Henritze indicated that in the course of Blackstone's regular review of public companies in the REIT industry, Blackstone noticed an apparent dislocation of our share price to its net asset value. Mr. Henritze indicated that Blackstone would be interested in discussing a potential strategic transaction with the Company if there was mutual interest from our board of trustees. Mr. Barnello responded that our board of trustees was always open to considering opportunities to maximize shareholder value and that he would inform our board of trustees of this discussion.

              On March 23 and March 24, 2018, as directed by our board of trustees, representatives of Citi and Goldman Sachs had discussions with representatives of Pebblebrook's financial advisor regarding Pebblebrook's March 6 proposal and our response. During these discussions, Pebblebrook's financial advisor requested that the companies have an in-person meeting to discuss Pebblebrook's March 6 proposal. Representatives of Citi and Goldman Sachs, at the direction of the transaction committee and management, responded that we did not believe it would be appropriate to hold an in-person meeting at that time.

              On March 25, 2018, our board of trustees met to discuss, among other things, the interactions with Pebblebrook. Members of our management and representatives of Citi, Goldman Sachs, Goodwin and DLA Piper were present. Mr. Barnello and representatives of Citi and Goldman Sachs updated our board of trustees on the recent discussions with Pebblebrook's financial advisor. Mr. Barnello reviewed with our board of trustees the current communications plan prepared by our management with the assistance of our advisors in the event that Pebblebrook's proposal became public. Representatives of Citi and Goldman Sachs reviewed with our board of trustees certain preliminary financial analyses of both the Company and Pebblebrook. Our board of trustees also adopted a

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dividend policy for the remaining quarters of 2018. Mr. Barnello also apprised our board of trustees of his discussion with Blackstone.

              On March 28, 2018, prior to the opening of trading on the NYSE, Pebblebrook issued a press release disclosing its March 6 letter and March 20 letter, as well as our March 22 letter. On March 27, 2018, our common share closing price on the NYSE was $24.84, which was the last closing price prior to the public announcement of Pebblebrook's March 6 proposal.

              Subsequently on March 28, 2018, the Company issued a press release confirming that our board of trustees had unanimously rejected Pebblebrook's unsolicited proposal, and providing its rationale for doing so. The press release also indicated that our board of trustees continued to be open-minded and would consider any alternatives that enhance long-term shareholder value. The Company also announced its dividend policy for the remaining quarters of 2018.

              Also on March 28 and March 29, 2018, respectively, representatives of Goldman Sachs and Citi each received calls from a representative of Blackstone expressing Blackstone's possible interest in acquiring the Company. The representatives of Citi and Goldman Sachs indicated to Blackstone's representatives that they would inform us of Blackstone's possible interest.

              Beginning on March 28, 2018, in light of the public announcement of Pebblebrook's March 6 proposal, the Company and representatives of Citi and Goldman Sachs received unsolicited correspondence from potentially interested financial sponsors and strategic parties. During that time we also received correspondence from certain shareholders of the Company holding individually in the range of 3.0% to 9.1% of our outstanding common shares, including HG Vora Capital Management, LLC and certain affiliated investment funds (which we refer to, collectively, as HG Vora), which filed a Schedule 13D on April 2, 2018. During that time through May 20, 2018, our management, at the direction of, and in consultation with our board of trustees and the transaction committee, and with the assistance of our board of trustees' financial and legal advisors, held discussions with certain of these Company shareholders. During these discussions, several Company shareholders indicated that they expected our board of trustees would independently evaluate all available options to maximize shareholder value, including any proposals received from Pebblebrook.

              Later on March 28, 2018, our board of trustees held a meeting to discuss, among other things, the public announcement of Pebblebrook's March 6 proposal. Members of our management and representatives of Citi, Goldman Sachs, Goodwin and DLA Piper were present. Our board of trustees discussed, in consultation with representatives of its financial and legal advisors, the impact on our business of the public announcement of Pebblebrook's March 6 proposal and our public response. Mr. Barnello and representatives of Citi and Goldman Sachs also updated our board of trustees regarding unsolicited correspondence they had received from potentially interested financial and strategic parties and Company shareholders in light of the public announcement of Pebblebrook's March 6 proposal. Following these discussions, our board of trustees concluded that, in light of recent events and the issues and topics discussed at prior board meetings, our board of trustees should discuss at a subsequent meeting the process for exploration of a potential Company sale.

              On April 3, 2018, Mr. Barnello received a call from Mr. Henritze, in which Mr. Henritze expressed Blackstone's interest in acquiring the Company in an all-cash transaction in the range of $28.00 to $30.00 per share. Mr. Barnello said that he would inform our board of trustees of Blackstone's interest. On April 3, 2018, our common share closing price on the NYSE was $29.59.

              On April 3, 2018, our board of trustees met to discuss, among other things, the exploration of a potential Company sale. Members of our management and representatives of Citi, Goldman Sachs,

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Goodwin and DLA Piper were present. Mr. Barnello apprised our board of trustees of his discussion with Blackstone. The representatives of Citi and Goldman Sachs reviewed with our board of trustees potential strategic parties, financial sponsors and brand management companies who might have an interest in acquiring the Company. Our board of trustees discussed the potential risks and benefits of commencing a process in which parties would be invited to review confidential information and submit indications of interest with respect to a potential acquisition of the Company. In particular, our board of trustees discussed the potential disruptions to our business during a protracted process, the risk of leaks about the process that might arise from contacting other parties, and the potential impact of such leaks on our business, including the potential loss of business partners, customers and employees. Our board of trustees also discussed the potential need to disclose proprietary and confidential information to current and potential competitors during such process. Our board of trustees also considered the risks and challenges in conducting a strategic process in light of Pebblebrook's publicly disclosed March 6 proposal to acquire the Company.

              Based on the benefits and risks discussed at this meeting and the previous board and transaction committee meetings, our board of trustees determined, based on their knowledge of the lodging REIT industry and the Company, its discussions with representatives of the financial and legal advisors and the strategic alternatives potentially available to the Company, including pursuing a business combination with Pebblebrook and remaining as an independent public company, that it was in the best interests of our shareholders to take steps to further explore a potential sale of the Company.

              Following this discussion, representatives of Goodwin reviewed with our board of trustees their fiduciary duties under applicable law, particularly in the context of exploring a possible sale of the Company. Representatives of Goodwin also discussed the role of our board of trustees in overseeing the strategic review process and ways for doing so, including evaluating potentially forming a special committee of our board of trustees consisting solely of independent and disinterested trustees as well as our management being restricted from having discussions with financial sponsors regarding their future roles, compensation, retention or investment arrangements in connection with a proposed transaction. After discussion with Goodwin, our board of trustees determined that given the facts and circumstances of the situation a special committee was not necessary, but that during the strategic review process the independent trustees of our board of trustees would continue their practice of holding executive sessions and, at the invitation of the independent trustees, representatives of the financial advisors and outside legal counsel would participate in those sessions. Our board of trustees and members of our management then discussed the role of our management in the strategic process. They agreed that, except as otherwise instructed by our board of trustees, management would not engage in discussions regarding any compensation, retention or investment arrangements with bidders so as to avoid any potential conflict or concern of favoring any one bidder over other bidders.

              At the meeting, with input from representatives of Citi and Goldman Sachs and members of management, our board of trustees discussed the types of potential acquirers (strategic, financial and brand management) that might be interested in participating in a formal sale process for the Company. Our board of trustees considered various factors concerning such potential acquirers including, among other things, experience in executing public mergers and/or acquisitions or purchases of significant real estate portfolios, financial ability to pay and capacity to execute a transaction of this size, experience in the lodging REIT space, potential interest in acquiring the Company and confidentiality and competitive concerns.

              Also at the meeting, our board of trustees discussed the customary written relationships disclosure provided by each of Citi and Goldman Sachs at the request of our board of trustees and distributed to our board of trustees prior to the April 3 meeting. After discussion, including with Goodwin, our board of trustees determined that those relationships would not interfere with either

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Citi's or Goldman Sachs' ability to serve as a financial advisor to the Company. As part of this discussion, Goodwin outlined the material terms of the proposed engagements of each of Citi and Goldman Sachs. Following this discussion, our board of trustees determined to engage both Citi and Goldman Sachs as our financial advisors to assist our board of trustees in its evaluation of strategic alternatives, including with respect to proposals from Pebblebrook.

              At the conclusion of the meeting, the independent board members participating in the meeting met in executive session with Goodwin and DLA Piper to further discuss the strategic process.

              From April 5 through 17, 2018, at the direction of our board of trustees, representatives of Citi and Goldman Sachs together contacted 20 parties (six strategic parties (including Pebblebrook), nine financial sponsors (including Blackstone) and five brand management companies), that satisfied the criteria discussed and approved by our board of trustees at the April 3, 2018 meeting, to participate in a formal sale process for the Company. Ten of these parties (including Blackstone and Pebblebrook) entered into confidentiality agreements with the Company. These ten parties consisted of three strategic parties, six financial sponsors and one brand management company. Blackstone's confidentiality agreement was entered into on April 10, 2018. All of these confidentiality agreements contained standstill obligations that either automatically terminated upon our announcement of execution of a definitive agreement with a third party to effect the sale of the Company, or allowed the bidder to make confidential proposals to the Company at any time following our announcement of execution of a definitive agreement with a third party to effect the sale of the Company. Bidders that entered into a confidentiality agreement with the Company were provided access to an online data room containing nonpublic information regarding the Company and its properties, including the preliminary projections. Additionally, each such bidder was invited to attend a high-level management presentation conducted by members of our management. The ten parties that did not enter into a confidentiality agreement with the Company indicated that they were not interested in pursuing a transaction with the Company at that time. Pebblebrook's confidentiality agreement was entered into on May 5, 2018, as discussed below.

              On April 5, 2018, a draft mutual confidentiality agreement was distributed on behalf of the Company to Pebblebrook's financial advisor. Our draft confidentiality agreement provided for, among other things, (i) a standstill provision which prohibited us or Pebblebrook, as applicable, from taking various actions including making a proposal to acquire the other party until the earlier of 18 months after the execution of the confidentiality agreement or the public announcement by the other party of its execution of a definitive agreement to effect a Company sale (which we refer to as the standstill provision), (ii) making a public announcement or disclosure of a proposal to acquire the other party (which we refer to as the public acquisition proposal prohibition) and (iii) making any public announcement or disclosure concerning the discussions or negotiations taking place between the Company and Pebblebrook or any proposed terms being discussed (which we refer to as the public disclosure prohibition). This was our first attempt to enter into a confidentiality agreement with Pebblebrook in order to have Pebblebrook participate in the Company's sale process.

              On April 6, 2018, we executed engagement letters with Citi and Goldman Sachs, respectively, as our board of trustees authorized during the April 3, 2018 meeting.

              Also on April 6, 2018, at the direction of the transaction committee, representatives of Citi and Goldman Sachs had discussions with representatives of Pebblebrook's financial advisors regarding the proposed mutual confidentiality agreement. During these discussions, Pebblebrook's financial advisor expressed Pebblebrook's concern that if it were to enter into a confidentiality agreement with standstill obligations Pebblebrook would want assurance that Pebblebrook would be provided the same access to diligence materials and given the same opportunities to participate in the Company's sale process as

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the other potential bidders in the process. Per their earlier discussions with the transaction committee, representatives of Citi and Goldman Sachs confirmed that we wanted Pebblebrook to execute a mutual confidentiality agreement and participate in the sale process and that Pebblebrook would be provided access to exactly the same diligence information as the other bidders in the process.

              On April 9, 2018, Pebblebrook's outside legal counsel sent to Goodwin a revised draft of the mutual confidentiality agreement which, among other things, (i) reduced the period of the standstill provision from 18 months to three months, (ii) allowed Pebblebrook to publicly disclose its acquisition proposals and (iii) deleted the public disclosure prohibition.

              On April 10, 2018, at the direction of the transaction committee, representatives of our financial and legal advisors had a discussion with Pebblebrook's financial and legal advisors to discuss the draft mutual confidentiality agreement. During the discussion, as directed by the transaction committee, representatives of our financial and legal advisors reiterated our willingness to enter into a mutual confidentiality agreement and our desire to include Pebblebrook in the Company's sale process. At the direction of the transaction committee, representatives of our financial and legal advisors indicated that we were conducting a formal sale process in an attempt to maximize value for our shareholders and that other potentially interested parties would not participate in the sale process if Pebblebrook were invited to participate in the sale process without being restricted from making public acquisition proposals or public announcements about the process and its discussions with us. In these discussions our legal advisors informed Pebblebrook's financial and legal advisors that all of the other parties that had entered into confidentiality agreements with the Company had agreed to the public disclosure prohibition and the public acquisition proposal prohibition. Pebblebrook's financial and legal advisors did not agree to any specific terms during this discussion.

              On April 11, 2018, Goodwin sent to Pebblebrook's outside legal counsel a revised draft of the mutual confidentiality agreement. Our revised draft confidentiality agreement included (i) the standstill provision with a reduced period from 18 months to May 9, 2019, (ii) the public acquisition proposal prohibition and (iii) the public disclosure prohibition. This was our second attempt to enter into a confidentiality agreement with Pebblebrook in order to have Pebblebrook participate in the Company's sale process.

              On April 12, 2018, Pebblebrook inadvertently posted on its website an initial working draft of a document relating to Pebblebrook's first quarter 2018 financial and operating results, and later in the day publicly announced its revised first quarter 2018 financial outlook.

              On April 12, 2018, representatives of Goodwin and Pebblebrook's outside legal counsel had a discussion in which Pebblebrook's outside legal counsel indicated that Pebblebrook was not interested in entering into a mutual confidentiality agreement with us. Representatives of Goodwin reiterated that we wanted Pebblebrook to participate in the Company's sale process, and that we were willing to reduce the length of the time period applicable to (i) the standstill provision, (ii) the public acquisition proposal prohibition and (iii) the public disclosure prohibition. Representatives of Goodwin indicated that we were seeking to have these restrictions in place only for as long a period of time as was necessary for the Company to conduct its sale process. Pebblebrook's outside legal counsel indicated that Mr. Bortz wanted to have a discussion with Mr. Scott. Goodwin responded that it would inform our board of trustees of this request. This was our third attempt to enter into a confidentiality agreement with Pebblebrook in order to have Pebblebrook participate in the Company's sale process.

              From April 12 through May 5, 2018, at the direction of the transaction committee, representatives of our financial and legal advisors had a series of discussions with Pebblebrook's financial advisors in which the representatives of our financial and legal advisors reiterated our

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willingness to enter into a mutual confidentiality agreement and to reduce the period of time during which the restrictions contained in the confidentiality agreement applied for the minimum period of time necessary for the Company to conduct its sale process.

              Beginning on April 13, 2018, each of the bidders that had entered into a confidentiality agreement with the Company was provided access to an online data room containing nonpublic information regarding the Company and its properties, including the preliminary projections.

              At approximately 9:00 p.m. on April 13, 2018, Mr. Bortz, on behalf of Pebblebrook, sent a letter to our board of trustees (which we refer to as the April 13 letter, and the proposal set forth therein as the April 13 proposal). The April 13 letter stated that Pebblebrook remained committed to a merger of the two companies. The April 13 letter provided a revised proposal with respect to merger consideration. The April 13 proposal provided for a fixed exchange ratio of 0.8944 Pebblebrook common share for each Company common share. The 0.8944 exchange ratio provided in the April 13 proposal represented a 3.3% increase to the 0.8655 exchange ratio provided in Pebblebrook's March 6 proposal. According to the April 13 letter, the April 13 proposal resulted in an implied price of $31.75 per share for 100% of our outstanding common shares based on Pebblebrook's closing price of $35.50 on April 13, 2018. Unlike Pebblebrook's March 6 proposal, Pebblebrook's April 13 proposal did not state an implied price based on a volume weighted average price of Pebblebrook's common shares. The April 13 letter also stated that our shareholders would be provided with the option to elect to receive cash up to a maximum of 15% in aggregate merger consideration, subject to proration. The April 13 letter indicated that the proposal was not subject to a financing condition. The April 13 letter stated that, with our full cooperation, Pebblebrook believed that the companies could sign a definitive merger agreement within ten business days. The letter also included a summary of certain proposed key terms which included: an exclusivity period of ten business days; a 30-day go-shop period in which we could solicit alternative proposals; a break-up fee of 1.25% of equity value during the go-shop period and 3.25% of equity value after the go-shop period; Pebblebrook executives would manage the combined company; and a seven-member board of trustees (three independent trustees from each company and Mr. Bortz) would govern the combined company. In the letter, Pebblebrook requested a response from the Company by April 15, 2018. Mr. Barnello sent the April 13 letter to our board of trustees. On April 13, 2018, our common share closing price on the NYSE was $29.94.

              On April 14, 2018, following discussions with the transaction committee, Mr. Barnello contacted Mr. Bortz to schedule a time to have a discussion the next day regarding the following:

              Later on April 14, 2018, Goodwin sent to Pebblebrook's outside legal counsel a revised draft of the mutual confidentiality agreement as indicated by Mr. Barnello's earlier communication to Mr. Bortz. Our revised draft confidentiality agreement provided for, among other things, (i) the standstill provision with the three-month term proposed by Pebblebrook in its April 9 revised draft of the confidentiality agreement, (ii) the public acquisition proposal prohibition and (iii) the public

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disclosure prohibition. This was our fourth attempt to enter into a confidentiality agreement with Pebblebrook in order to have Pebblebrook participate in the Company's sale process.

              On April 15, 2018, Mr. Barnello called Mr. Bortz and indicated that our board of trustees had received Pebblebrook's April 13 proposal and was evaluating it. Mr. Barnello also indicated that we were willing to have a meeting as Pebblebrook requested and that we had proposed a revised mutual confidentiality agreement with the standstill provision for a reduced period of three months, consistent with Pebblebrook's original proposal, in order to facilitate Pebblebrook's participation in the Company's sale process. Mr. Barnello also offered to schedule a meeting among Mr. Bortz and certain members of our board of trustees, including Mr. Scott, on April 17, 2018, contingent on Pebblebrook not publicly disclosing its April 13 letter, and preferably after execution of a mutual confidentiality agreement. Mr. Bortz responded that Pebblebrook was not interested in entering into a mutual confidentiality agreement with the Company. Mr. Bortz also indicated that he could not attend a meeting on the date Mr. Barnello proposed and Mr. Bortz did not propose an alternative date. Mr. Bortz also indicated that it would not be appropriate for him to say whether or not Pebblebrook was going to publicly release its April 13 letter.

              Later on April 15, 2018, our board of trustees held a meeting to discuss, among other things, Pebblebrook's April 13 proposal and the strategic process. Members of our management and representatives of Citi, Goldman Sachs, Goodwin and DLA Piper were present. Mr. Barnello updated our board of trustees on his discussion with Mr. Bortz. Representatives of Citi and Goldman Sachs updated our board of trustees on their discussions with Pebblebrook's financial advisors. Representatives of Citi and Goldman Sachs also reviewed with our board of trustees certain financial aspects of Pebblebrook's April 13 proposal and certain financial aspects of Pebblebrook's March 6 proposal. Representatives of Citi and Goldman Sachs also updated our board of trustees on the initial stages of the strategic process completed to date, noting the parties that remained interested in engaging in discussions regarding a possible acquisition of the Company, their diligence efforts to date and expressed levels of interest. Our board of trustees discussed the possibility that Pebblebrook could publicly disclose its April 13 proposal and the impact that would have on the strategic process. Our board of trustees also discussed recent discussions and correspondence with certain Company shareholders.

              On April 16, 2018, prior to the opening of trading on the NYSE, Pebblebrook issued a press release disclosing its April 13 letter.

              Subsequently on April 16, 2018, we issued a press release confirming that our board of trustees was reviewing Pebblebrook's April 13 proposal.

              On April 17, 2018, Bloomberg published an article speculating as to a potential sale of the Company, with Blackstone listed as an interested suitor. After discussing the Bloomberg article with representatives of Citi, Goldman Sachs and Goodwin, Mr. Barnello contacted members of our board of trustees to update them on this development. Prior to the publication of this article, on April 16, 2018, our common share closing price on the NYSE was $30.71.

              Between April 18, 2018 and April 21, 2018, an initial bid instruction letter was distributed on behalf of the Company to each of the nine of the potential bidders that had entered into confidentiality agreements with the Company prior to April 21, 2018 (including Blackstone). The letter indicated a deadline for submitting preliminary non-binding indications of interest by May 4, 2018. Because Pebblebrook had not entered into a confidentiality agreement with the Company at that time, it did not receive an initial bid instruction letter.

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              On April 19, 2018, Mr. Bortz sent a letter to our board of trustees in which Pebblebrook proposed that we conduct a due diligence review of Pebblebrook to better understand Pebblebrook's business and evaluate Pebblebrook's April 13 proposal. Pebblebrook proposed that we enter into a unilateral confidentiality agreement obligating the Company to maintain the confidentiality and nonuse of Pebblebrook's nonpublic information, and enclosed a copy of a proposed confidentiality agreement. In the letter, Pebblebrook stated that it did not require that we provide it with any information under the proposed unilateral confidentiality agreement. Pebblebrook's proposed confidentiality agreement did not include (i) the standstill provision, (ii) the public acquisition proposal prohibition or (iii) the public disclosure prohibition.

              On April 20, 2018, Mr. Bortz, on behalf of Pebblebrook, sent a letter to our board of trustees (which we refer to as the April 20 letter, and the proposal set forth therein as the April 20 proposal). The April 20 letter stated that Pebblebrook was making a final offer to the Company. The April 20 proposal provided for a fixed exchange ratio of 0.9085 Pebblebrook common share for each Company common share. The 0.9085 exchange ratio provided in the April 20 proposal represented a 1.6% increase to the 0.8944 exchange ratio provided in Pebblebrook's April 13 proposal. According to the April 20 letter, the April 20 proposal resulted in an implied price of $32.49 per share for 100% of our outstanding common shares based on Pebblebrook's closing price of $35.76 on April 19, 2018. Unlike Pebblebrook's March 6 proposal, Pebblebrook's April 20 proposal did not state an implied price based on a volume weighted average price of Pebblebrook's common shares. The April 20 letter also stated that Company shareholders would be provided with the option to elect to receive cash up to a maximum of 20% in aggregate merger consideration, subject to proration. The April 20 letter indicated that the proposal was not subject to a financing condition. The letter stated that the other key terms proposed in Pebblebrook's April 13 letter remained unchanged and that Pebblebrook would send the Company a draft merger agreement shortly.

              On April 21, 2018, Mr. Bortz sent an email to Mr. Scott and indicated that he would be interested in discussing Pebblebrook's April 20 proposal with Mr. Scott. Consistent with our board of trustees' prior determination, Mr. Scott replied that all communications between the companies on this topic should be made through Mr. Barnello.

              On April 22, 2018, our board of trustees held a meeting to discuss, among other things, Pebblebrook's April 20 proposal and the strategic process. Members of our management and representatives of Citi, Goldman Sachs, Goodwin and DLA Piper were present. Representatives of Citi and Goldman Sachs reviewed with our board of trustees certain financial aspects of Pebblebrook's April 20 proposal and certain financial aspects of Pebblebrook's March 6 and April 13 proposals. Representatives of Citi and Goldman Sachs also updated our board of trustees on the strategic process completed to date, noting the parties that remained interested in engaging in discussions regarding a possible strategic transaction or acquisition transaction involving the Company, their diligence efforts to date and expressed levels of interest, and noting the parties that had declined interest. Our board of trustees discussed the possibility that Pebblebrook could publicly disclose its April 20 proposal and the impact that would have on the strategic process. Our board of trustees also considered Pebblebrook's April 19 letter requesting the Company to enter into an unilateral confidentiality agreement and determined that it would not be appropriate to engage in a unilateral diligence review of Pebblebrook at that time given that we were not conducting reverse due diligence on any other bidders during the initial stages of the sale process. Our board of trustees also discussed recent discussions and correspondence with certain Company shareholders.

              From April 23 through 27, 2018, seven of the potential bidders that had entered into confidentiality agreements with the Company (one strategic party and six financial sponsors) attended high-level management presentations conducted by members of our management (Blackstone attended

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a presentation on April 26, 2018) and attended by representatives of Citi and Goldman Sachs as requested by the Company. Following these management presentations, members of our management participated in follow-up due diligence sessions with each of these potential bidders and their respective advisors. Representatives of Citi and Goldman Sachs also attended these due diligence sessions as requested by the Company.

              On April 24, 2018, prior to the opening of trading on the NYSE, Pebblebrook issued a press release disclosing its April 20 letter.

              Subsequently on April 24, 2018, we issued a press release confirming that our board of trustees would carefully review Pebblebrook's April 20 letter.

              Later on April 24, 2018, Mr. Bortz, on behalf of Pebblebrook, sent a letter to our board of trustees enclosing a proposed draft merger agreement as referenced in Pebblebrook's April 20 letter and consistent with the terms of the April 20 proposal. The draft merger agreement also provided that Company shareholders would be provided with the option to elect to receive a cash amount per Company common share, up to a maximum of 20% of the aggregate number of Company common shares outstanding immediately prior to the closing, subject to proration.

              On April 27, 2018, Pebblebrook conducted its quarterly earnings call relating to its financial and operating results for the first quarter. During the call, Mr. Bortz reiterated Pebblebrook's interest in pursuing an acquisition of the Company.

              Also on April 27, 2018, representatives of Citi received an unsolicited inquiry from a potential strategic acquirer. After consulting with management and representatives of Goodwin, as directed by management, later that day, representatives of Citi provided the potential strategic acquirer with the same form of confidentiality agreement provided to other potential participants in the Company's sale process. Representatives of Goodwin negotiated the terms and conditions of this draft confidentiality agreement with representatives of the potential strategic acquirer until May 6, 2018, by which point we had received written non-binding preliminary indications of interest from the other participants in the Company's sale process, as described below. Despite repeated requests by representatives of Citi and Goodwin made at the direction of management to move quickly to finalize negotiation of the confidentiality agreement, the potential strategic acquirer was lagging behind other continuing participants in the Company's sale process as of such date, and therefore confidentiality agreement negotiations with the potential strategic acquirer were discontinued as of May 6, 2018.

              On May 1, 2018, further to our board of trustees' direction that Pebblebrook be invited to participate in the formal sale process of the Company and confidentiality agreement negotiations to that end, a representative of Goldman Sachs spoke with Mr. Bortz and indicated our continued interest in negotiating a mutual confidentiality agreement with Pebblebrook, and the willingness of representatives of Goldman Sachs to facilitate discussions to that end. That day, representatives of Goldman Sachs informed our management and the transaction committee regarding this discussion. After a series of discussions on this topic, Mr. Bortz indicated that, under certain terms, Pebblebrook may be interested in re-initiating discussions regarding a mutual confidentiality agreement. This was our fifth attempt to enter into a confidentiality agreement with Pebblebrook in order to have Pebblebrook participate in the Company's sale process.

              On May 2, 2018, Pebblebrook's outside legal counsel sent to Goodwin a revised draft of the mutual confidentiality agreement. In its revised draft confidentiality agreement, Pebblebrook included (i) the standstill provision, (ii) the public acquisition proposal prohibition and (iii) the public disclosure

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prohibition (each of which Pebblebrook proposed would expire 14 days after the execution of the confidentiality agreement).

              From May 2 through May 5, 2018, representatives of our financial and legal advisors, with input from, and at the direction of, the transaction committee and our management, and Pebblebrook's financial and legal advisors had various discussions regarding the length of the time that the prohibitions set forth in the mutual confidentiality agreement would apply. During these discussions, Pebblebrook's financial and legal advisors indicated that Pebblebrook would not enter into a confidentiality agreement which contained restrictions limiting its ability to act beyond June 4, 2018, which was the week of the Nareit® REITweek: 2018 Investor Conference in New York.

              On the morning of May 4, 2018, Goodwin sent to Pebblebrook's outside legal counsel a revised draft of the mutual confidentiality agreement which provided that the restrictions set forth therein would apply for 45 days. This was our sixth attempt to enter into a confidentiality agreement with Pebblebrook in order to have Pebblebrook participate in the Company's sale process.

              In connection with the May 4, 2018 deadline for submissions of indication of interest, of the nine potential bidders that received a bid process letter on behalf of the Company, three financial sponsors (which we refer to as Party A, Party B and Blackstone) submitted indications of interest to the Company, as described below. All other potential bidders that had entered into confidentiality agreements with the Company declined to submit an indication of interest.

              On May 4, 2018, we received written non-binding preliminary indications of interest from Party A and Blackstone. Party A proposed to acquire the Company in an all-cash transaction at a price of $30.00 per share, and stated that it was prepared to complete its confirmatory due diligence and concurrently negotiate a definitive merger agreement within 21 days, and that the transaction would not be subject to any financing contingency. Blackstone proposed to acquire the Company in an all-cash transaction at a price of $31.50 per share, which price was predicated on no additional dividends being paid to our common shareholders other than our next regularly scheduled dividend. Blackstone's proposal also stated that it was prepared to complete its confirmatory due diligence immediately and concurrently negotiate a definitive merger agreement within seven days, and noted that the transaction would be funded with Blackstone's $15.8 billion fully discretionary Blackstone Real Estate Partners VIII fund, and would not be subject to any financing contingency. Blackstone's proposal also provided that it would expire at the close of business on May 7, 2018. On the prior trading day, May 3, 2018, our common share closing price on the NYSE was $29.78.

              On May 5, 2018, Goodwin sent to Pebblebrook's outside legal counsel a revised draft of the mutual confidentiality agreement which agreed to Pebblebrook's request that the restrictions set forth therein would terminate on June 4, 2018. This was our seventh attempt to enter into a confidentiality agreement with Pebblebrook in order to have Pebblebrook participate in the Company's sale process.

              Later on May 5, 2018, Pebblebrook and the Company entered into a mutual confidentiality agreement. The executed confidentiality agreement included, among other things, (i) the standstill provision, (ii) the public acquisition proposal prohibition and (iii) the public disclosure prohibition (each of which expired on June 4, 2018). The confidentiality agreement also permitted Pebblebrook to make confidential proposals to the Company at any time and provided that the standstill provision would terminate prior to June 4, 2018 if there was a public announcement by the Company of its execution of a definitive agreement to effect a Company sale. Immediately following execution of the mutual confidentially agreement, Pebblebrook was provided access to an online data room containing nonpublic information regarding the Company and its properties (including the preliminary projections), which was the same information provided to the other participants in the Company's sale

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process upon entering into a confidentiality agreement, and we were provided access to an online data room containing nonpublic information regarding Pebblebrook and its properties.

              On May 7, 2018, we received a written non-binding preliminary indication of interest from Party B. Party B proposed to acquire the Company in an all-cash transaction at a price of $32.00 per share. Party B's proposal also stated that it was prepared to complete its confirmatory due diligence and concurrently negotiate a definitive merger agreement within 45 days, and noted that the transaction would not be subject to any financing contingency.

              On May 7, 2018, our board of trustees held a meeting to discuss, among other things, the proposals received from Party A, Party B and Blackstone and Pebblebrook's April 20 proposal. Members of our management and representatives of Citi, Goldman Sachs, Goodwin and DLA Piper were present. Representatives of Citi and Goldman Sachs reviewed the financial aspects of the proposals. Representatives of Goodwin reviewed with our board of trustees their fiduciary duties in the context of evaluating the preliminary indications of interest from Party A, Party B and Blackstone and Pebblebrook's April 20 proposal.

              Following this discussion, our board of trustees discussed how best to encourage the parties to improve their respective purchase prices and other terms. Because Party B's and Blackstone's proposals were within close range of each other, our board of trustees determined to advance both parties to the next phase of the strategic process, to provide each party with additional due diligence access and a draft merger agreement with respect to which the parties would be requested to provide comments and to encourage them to increase their respective purchase prices in view of the competitive nature of the process. Because Pebblebrook had entered into a confidentiality agreement with the Company, and on the basis of Pebblebrook's April 20 proposal, our board of trustees determined that Pebblebrook should also be included in the next phase of the strategic process, provided with the same due diligence access as the other bidders and a draft merger agreement with respect to which Pebblebrook would be requested to provide comments, and to encourage Pebblebrook to increase its proposed purchase price.

              Our board of trustees directed management, in consultation with representatives of Citi and Goldman Sachs, to structure the next phase of the process to target a potential conclusion on or about May 18, 2018, which our board of trustees concluded was a realistic deadline for the bidders to complete their due diligence and negotiate and execute a definitive agreement. Because Party A had submitted a proposal that was lower than the others, our board of trustees directed representatives of Citi and Goldman Sachs to inform Party A that it would not be moving forward at that time, unless Party A were to meaningfully increase its proposed price. Our board of trustees also discussed that to date none of the three financial sponsors had, and had not requested to have, discussions with our management regarding any roles, compensation, retention or investment arrangements in connection with a possible transaction.

              At the meeting, Mr. Barnello also provided an update on our financial results that it expected to report for the first quarter, which management expected to be above Wall Street research consensus estimates, and an update on our preliminary financial outlook for the remainder of 2018, which management expected to improve in comparison to our previous guidance.

              On May 8, 2018, bid process letters were sent to Party B, Blackstone and Pebblebrook which, at the direction of our board of trustees, set a second round bid deadline of May 16, 2018, and requested marked drafts of our proposed form of merger agreement by May 14, 2018.

              On May 8, 2018, Party B, Blackstone and Pebblebrook were provided with a draft merger agreement on behalf of the Company. The draft merger agreement provided to the two financial

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sponsors (Party B and Blackstone) contemplated, among other things, a customary all-cash merger, a Company termination fee equal to 2% of the equity value of the transaction if the merger agreement was terminated under certain circumstances and a reverse termination fee equal to 10% of the equity value of the transaction if the merger agreement was terminated under certain circumstances. Drafts of an equity commitment letter and limited guaranty were concurrently provided to the financial sponsors. The draft merger agreement provided to Pebblebrook contemplated, among other things, a customary business combination merger and a Company termination fee equal to 2% of the aggregate equity value of the Company if the merger agreement was terminated under certain circumstances. The merger agreement provided to Pebblebrook also provided that Company shareholders would be provided with the option to elect to receive a cash amount per Company common share equal to the exchange ratio multiplied by the five-day volume weighted average price of Pebblebrook's common shares ending on the trading day immediately before execution of a definitive merger agreement, up to a maximum of 20% of the aggregate number of Company common shares outstanding immediately prior to the closing, subject to proration.

              On May 8, 2018, at the direction of our board of trustees, representatives of Citi and Goldman Sachs contacted representatives of Party A and informed them that, because their indication of interest was below the level of the other bidders, we would not be proceeding with Party A at that time, unless Party A were to meaningfully improve its proposed price. There were no further discussions between Party A and the Company or its representatives.

              On May 10, 2018, Company announced its financial results for the first quarter. We reported first quarter results that meaningfully exceeded our expectations and raised our guidance for the remainder of 2018. On May 10, 2018, our common share closing price on the NYSE was $31.43.

              Also on May 10, 2018, our board of trustees held a meeting to discuss, among other things, management's standalone plan and the strategic process. Members of our management and representatives of Citi, Goldman Sachs, Goodwin and DLA Piper were present. Our board of trustees reviewed certain updated financial projections regarding the Company for the fiscal years ended December 31, 2018 through December 31, 2022, prepared by our management, which were with the same in all respects as the preliminary projections that our management had prepared and provided to our board of trustees on March 20, 2018, except that they incorporated our actual performance for the fiscal quarter ended March 31, 2018 and an updated forecast for the fiscal quarter ending June 30, 2018, and a corresponding roll forward for the fiscal years ending December 31, 2018 through December 31, 2022 (which updated projections are summarized below under the section entitled "—Certain Prospective Financial Information—Financial Projections" and which we refer to as the final projections). Our board of trustees discussed the risks, challenges, and strategic opportunities facing the Company in the context of the final projections. Following discussion and questions of management regarding various matters relating to the final projections, including the assumptions on which they were based, our board of trustees approved the final projections.

              At the meeting, representatives of Goodwin reviewed certain terms contained in the draft merger agreements presented to the bidders. In addition, our board of trustees discussed the updated customary written relationships disclosure letter provided by each of Citi and Goldman Sachs and distributed to our board of trustees before the meeting. In the case of Citi, the disclosure letter listed engagements for which Citi and its affiliates has recognized compensation for investment banking, commercial banking and other financial services provided to Party B (including its portfolio companies and its affiliated public vehicle), Blackstone Real Estate Advisors L.P. (including its portfolio companies and its affiliated public vehicle Blackstone Mortgage Trust, Inc.) and Pebblebrook since January 1, 2016. In the case of Goldman Sachs, the disclosure letter listed engagements for which Goldman Sachs has recognized compensation for financial advisory and underwriting services provided by its investment

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banking division to Party B (including its affiliates and portfolio companies), Blackstone (including its affiliates and portfolio companies) and Pebblebrook in the two years preceding the meeting. After discussion, including with Goodwin, our board of trustees again determined that those relationships would not interfere with Citi's or Goldman Sachs' ability to continue to provide financial advisory services to the Company. At the conclusion of the meeting, the independent board members participating in the meeting met in executive session with Goodwin and DLA Piper to further discuss the strategic process and negotiations with Party B, Blackstone and Pebblebrook.

              On May 11, 2018, members of our management and Pebblebrook management conducted in-person, reciprocal high-level management presentations with their respective financial advisors also present. Following these management presentations, members of Company and Pebblebrook management participated in follow-up due diligence sessions, which were attended by representatives of their respective financial and legal advisors.

              On May 12, 2018, we made available to Party B, Blackstone and Pebblebrook the final projections.

              On May 14, 2018, HG Vora filed an amendment to its Schedule 13D reporting beneficial ownership of 9.1% of our outstanding common shares. The amendment to HG Vora's Schedule 13D also disclosed a letter that it had sent to our board of trustees stating that it believed that a sale of the Company on the terms of Pebblebrook's April 20 proposal or better would be superior to any credible standalone plan.

              On May 14, 2018, Simpson Thacher & Bartlett LLP (which we refer to as Simpson Thacher), outside legal counsel to Blackstone, provided Blackstone's initial comments on the draft merger agreement, equity commitment letter and limited guarantee to Goodwin. In the drafts, among other things, Blackstone proposed a Company termination fee equal to 3.5% of the equity value of the transaction and replaced our right to specific performance with our right to receive a reverse termination fee equal to 7% of the equity value of the transaction as our sole and exclusive remedy if the merger agreement were terminated under certain circumstances.

              On May 14, 2018, Pebblebrook's outside legal counsel provided Pebblebrook's initial comments on the draft merger agreement to Goodwin.

              Also on May 14, 2018, our board of trustees met to discuss, among other things, the strategic process. Members of our management and representatives of Citi, Goldman Sachs, Goodwin and DLA Piper were present. Mr. Barnello updated our board of trustees on the status of the negotiations with Party B, Blackstone and Pebblebrook.

              On May 15, 2018, the transaction committee met to discuss, among other things, management's reverse due diligence review of Pebblebrook. Members of our management and representatives of Citi, Goldman Sachs, Goodwin and DLA Piper were present. Our management reviewed with the transaction committee management's reverse due diligence of Pebblebrook and our management, with the assistance of representatives of Citi and Goldman Sachs, reviewed the financial aspects of Pebblebrook's five-year forecasts previously provided by Pebblebrook.

              Also on May 15, 2018, Party B informed representatives of Citi and Goldman Sachs that Party B would need additional time beyond the May 16, 2018 deadline to submit a revised proposal and mark-up of the merger agreement. Our board of trustees was informed of Party B's expected delay in submitting its revised proposal.

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              From May 15 through May 20, 2018, representatives of Goodwin, with input from our management and with the benefit of the views of the trustees provided at our board of trustees and transaction committee meetings, and Simpson Thacher exchanged drafts and participated in discussions regarding the terms of the merger agreement and related agreements. The key issues negotiated with respect to the merger agreement and related agreements included, among other things: the representations and warranties to be made by the parties; the restrictions on the conduct of our business until completion of the transaction; the definition of material adverse effect; the conditions to completion of the mergers; our obligations to cooperate with Blackstone's debt financing efforts; our ability to participate in discussions or negotiations with third parties relating to unsolicited acquisition proposals; the right of our board of trustees to change its recommendation that shareholders approve the merger in response to a superior proposal or otherwise; our right to terminate the merger agreement to accept a superior proposal under certain conditions; the other termination provisions and the triggers of the termination fee payable by the Company; the provisions regarding the Company's equity awards, employee benefit plans, severance and other compensation matters; the remedies available to each party under the merger agreement, including the triggers of the reverse termination fee payable to the Company and the terms of the guaranty of certain payment obligations by the Sponsor; and the amounts of the Company termination fee and reverse termination fee.

              Also from May 15 through May 19, 2018, representatives of Goodwin, with input from our management and with the benefit of the views of the trustees provided at our board of trustees and transaction committee meetings, and Pebblebrook's outside legal counsel exchanged drafts and participated in discussions regarding the terms of the merger agreement and related agreements. The key issues negotiated with respect to the merger agreement and related agreements included, among other things: the representations and warranties to be made by the parties; the restrictions on the conduct of the parties' businesses until completion of the transaction; the definition of material adverse effect; the conditions to completion of the mergers; our obligations to cooperate with Pebblebrook's financing efforts; the parties' ability to participate in discussions or negotiations with third parties relating to unsolicited acquisition proposals; the right of the parties' boards to change their recommendation that shareholders approve the merger in response to a superior proposal or otherwise; the parties' right to terminate the merger agreement to accept a superior proposal under certain conditions; the other termination provisions and the triggers of the termination fees payable by the parties; the provisions regarding the Company's equity awards, employee benefit plans, severance and other compensation matters; the remedies available to each party under the merger agreement; and the amounts of the Company termination fee and Pebblebrook termination fee.

              On May 16, 2018, Pebblebrook presented a written confirmation of its proposal at the exchange ratio set forth in Pebblebrook's April 20 proposal (which we refer to as the May 16 proposal). If the implied price of Pebblebrook's May 16 proposal were to be calculated after the closing of trading on that day, it would have been $34.58 per Company common share, based on an exchange ratio of 0.9085 and Pebblebrook's closing price of $38.06 on May 16, 2018 and assuming an all-stock transaction. The 0.9085 exchange ratio was the same as that set forth in Pebblebrook's April 20 proposal and the May 16 proposal also included the same 20% cash election provision in included in the April 20 proposal. Pebblebrook provided a bank commitment letter with its May 16 proposal to fund any cash required by Pebblebrook to complete the proposed transaction.

              Also on May 16, 2018, Blackstone presented a revised written proposal to acquire the Company in an all-cash transaction at a price of $33.00 per share, which price was predicated on no additional dividends being paid to our common shareholders other than its next regularly scheduled dividend. Blackstone's proposal also provided that it would expire at 5:00 p.m. on May 20, 2018 if Blackstone and we had not entered into a definitive agreement prior to that time or if another bidder was granted exclusivity. On May 16, 2018, our common share closing price on the NYSE was $31.39.

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              Later on May 16, 2018, Goodwin provided a revised draft of the merger agreement to each of Simpson Thacher and Pebblebrook's outside legal counsel and instructed each of them that any further revisions should be presented by noon on May 18, 2018.

              In connection with the submission of their proposals, Party B, Blackstone and Pebblebrook were informed that our board of trustees would hold a meeting later in the week to consider their proposals with the goal of selecting a winning bidder, finalizing definitive documentation and publicly announcing a transaction prior the opening of trading on May 21, 2018.

              On May 17, 2018, Party B presented a written confirmation of its proposal at the same price of $32.00 per share as set forth in Party B's May 4 proposal. Party B's proposal also stated that it expected to be able to complete all confirmatory due diligence and concurrently negotiate a definitive merger agreement within 20 days, and noted that the transaction remained subject to final approval from Party B's investment committee. Party B also presented initial comments on the draft merger agreement with its May 17 proposal, and stated that additional comments would be provided if Party B were to continue in the strategic process. Party B did not provide comments on the drafts of the equity commitment letter or limited guarantee.

              On May 17, 2018, the transaction committee met to discuss, among other things, the strategic process. Other members of our board of trustees, members of our management and representatives of Citi, Goldman Sachs, Goodwin and DLA Piper were present. The transaction committee, with the assistance of management and in consultation with our board of trustees' financial and legal advisors, discussed the revised proposals received from Blackstone and Pebblebrook on May 16 and Party B on May 17. Representatives of Citi and Goldman Sachs also reviewed with the transaction committee certain financial aspects of the three revised proposals and preliminary financial analyses with respect to the Company. Representatives of Goodwin reviewed with our board of trustees key execution risks associated with each of the three proposals and the material open points on the latest drafts of the merger agreements received from each of the three parties.

              The transaction committee discussed the advantages and risks of a proposed transaction with Blackstone or Pebblebrook, including, among other things, whether the proposals represented an attractive valuation of the Company for shareholders when considered in light of our board of trustees' knowledge and understanding of the business, operations, management, financial condition and prospects of the Company, including the various challenges presented if our board of trustees were to reject both of the offers and the Company were to continue as a standalone company.

              Based on the transaction committee's discussion at this meeting and previous board and transaction committee meetings, the transaction committee concluded that both Blackstone's and Pebblebrook's revised proposals would, if consummated, provide greater certainty of value (and less risk) at that time to our shareholders relative to the potential trading price of our common shares over a longer period as a standalone company. The transaction committee determined to continue the discussion at our board meeting scheduled for the following day.

              On May 18, 2018, Simpson Thacher provided a revised draft of the merger agreement to Goodwin.

              On May 18, 2018, our board of trustees met to discuss, among other things, the strategic process. Members of our management and representatives of Citi, Goldman Sachs, Goodwin and DLA Piper were present. Our board of trustees, with the assistance of management and in consultation with our board of trustees' financial and legal advisors, discussed each of the revised proposals received from Blackstone and Pebblebrook on May 16 and Party B on May 17. Representatives of Citi and

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Goldman Sachs also reviewed with our board of trustees certain financial aspects of the three revised proposals and preliminary financial analyses with respect to the Company and Pebblebrook's May 16 proposal. Representatives of Goodwin reviewed with our board of trustees key execution risks associated with each of the three proposals and the material open points on the latest drafts of the merger agreements received from each of the three parties.

              Our board of trustees discussed the advantages and risks of a proposed transaction with Blackstone or Pebblebrook, including, among other things, whether the proposals represented an attractive valuation of the Company for shareholders when considered in light of our board of trustees' knowledge and understanding of the business, operations, management, financial condition and prospects of the Company, including the various challenges presented if our board of trustees were to reject both of the offers and we were to continue as a standalone company. Based on the discussion at this meeting and previous board and transactions committee meetings, our board of trustees concluded that both Blackstone's and Pebblebrook's revised proposals would, if consummated, provide greater certainty of value (and less risk) to our shareholders relative to the potential trading price of the Company shares over a longer period after accounting for the long-term risks to our business resulting from operational execution risk and evolving industry dynamics. Our board of trustees then discussed how best to further enhance shareholder value by encouraging each of Blackstone and Pebblebrook to increase their offer price and enter into definitive documentation for a transaction.

              Our board of trustees also discussed that, from a timing perspective, Party B was significantly behind Blackstone and Pebblebrook in its evaluation of the Company and would not be prepared to enter into a definitive agreement for at least 20 days. Additionally, our board of trustees noted that Party B had not improved its offer price in the second round of the strategic process and had reaffirmed a lower value than the revised proposal from Blackstone. Our board of trustees discussed the substantial extra time that would be required by Party B as compared to Blackstone and Pebblebrook and the risk that Blackstone would withdraw its all-cash proposal if we were to materially deviate from the proposed timing. Following these discussions, our board of trustees directed representatives of Citi and Goldman Sachs to contact Party B and indicate that our board of trustees would be pursuing a transaction with a different party unless Party B were to materially improve its proposed offer price and to expedite its timing to reach a definitive merger agreement.

              Our board of trustees also discussed, with the assistance of our management and in consultation with financial and legal advisors, the certainty of value in Blackstone's all-cash offer as opposed to the share consideration offered by Pebblebrook. Our board of trustees discussed concerns including, among others, that Pebblebrook's proposal used a fixed exchange ratio pursuant to which our shareholders would receive a specific fraction of a Pebblebrook common share for each of their common shares regardless of the value of Pebblebrook's common shares at the time of the closing of a transaction with Pebblebrook. Given that a transaction with Pebblebrook would take several months to close, our shareholders would have no certainty of the value of the consideration they would receive at the closing. In this regard, representatives of Citi and Goldman Sachs reviewed with our board of trustees that as of March 27, 2018, the last trading day prior to public announcement of Pebblebrook's unsolicited proposal, the 52-week intraday trading range of Pebblebrook's common shares was $27.57 to $39.74, and that as recently as March 23, 2018 the closing price of Pebblebrook's common shares was $32.73. Our board of trustees also discussed its concerns that Pebblebrook's common shares trade at a significantly higher EBITDA multiple as compared to other publicly-traded lodging REITs and that it is difficult to predict whether this would continue in the future. Our board of trustees also considered that Company shareholders would be provided with the option to elect to receive a cash amount per Company common share equal to the exchange ratio multiplied by the five-day volume weighted average price of Pebblebrook's common shares ending on the trading day immediately before execution of a definitive merger agreement (which was a price of $34.41 per Company common share based on a

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five-day volume weighted average price of Pebblebrook's common shares ending on May 16, 2018), up to a maximum of 20% of the aggregate number of Company common shares outstanding immediately prior to the closing, subject to proration. Given the certainty of Blackstone's all-cash proposal, our board of trustees determined that it would request that Pebblebrook revise its proposal to provide more protection to our shareholders in the event that Pebblebrook's share price declined between the signing and the closing of the transaction. Our board of trustees noted that this could be accomplished in various ways, including by increasing the cash component of its proposed merger consideration, or implementing a pricing collar or similar type of pricing protection mechanism with respect to the share consideration.

              During our board meeting, a representative of Goodwin received a call from a representative of Pebblebrook's financial advisor who requested an update on the status of the Company's sale process and our board of trustees' deliberations. The representative of Goodwin indicated that representatives of our financial advisors would contact Pebblebrook's financial advisors following the conclusion of our board meeting.

              Following these discussions, our board of trustees instructed representatives of Citi and Goldman Sachs to inform Pebblebrook's financial advisors that our board of trustees was seeking an increase in Pebblebrook's proposed exchange ratio and also requesting that Pebblebrook revise its proposal to provide more protection to our shareholders in the event that Pebblebrook's share price declined between the signing and the closing of the transaction, which could be accomplished in various ways including by increasing the cash component of its proposed merger consideration, offering a fixed value transaction or implementing a pricing collar with respect to the share consideration. Our board of trustees also instructed representatives of Citi and Goldman Sachs, following receipt of feedback from Pebblebrook, to request that Blackstone submit a best and final revised offer. Following the meeting, representatives of Citi and Goldman Sachs communicated these points to each of Blackstone's and Pebblebrook's financial advisors.

              The independent trustees then met in executive session and continued discussions. Representatives of Goodwin and DLA Piper were in attendance. The independent trustees discussed the merits of the different proposals and agreed to discuss them again after final proposals were in hand.

              On the afternoon of May 18, 2018, at the direction of our board of trustees, representatives of Citi and Goldman Sachs contacted Pebblebrook's financial advisors and informed them of the feedback from our board of trustees on Pebblebrook's proposal. In these discussions, as directed by our board of trustees, the representatives of Citi and Goldman Sachs indicated that our board of trustees was seeking an increase in the exchange ratio and more protection for our shareholders in the event that Pebblebrook's share price declined between the signing and the closing of the transaction. The representatives of Citi and Goldman Sachs indicated, as directed by our board of trustees, that our board of trustees was open to discussing various different ways to accomplish these objectives with Pebblebrook and its financial advisors, including by increasing the cash component of its proposed merger consideration or implementing a pricing collar or similar type of pricing protection mechanism with respect to the share consideration. In response, Pebblebrook's financial advisors provided no specific feedback to the requests presented by the representatives of Citi and Goldman Sachs. Pebblebrook's financial advisors concluded by stating that Pebblebrook was considering whether or not it wanted to continue participating in the Company's sale process.

              Later on the afternoon of May 18, 2018, representatives of Pebblebrook's financial advisors contacted representatives of Citi and Goldman Sachs and indicated that Pebblebrook would continue to participate in the Company's sale process, but that Pebblebrook was not willing to increase the

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exchange ratio or provide more protection for our shareholders in the event that Pebblebrook's share price declined between the signing and the closing of the transaction. Pebblebrook's financial advisors indicated that Pebblebrook stood by its most recent proposal and that Pebblebrook understood that we may have a proposal from another party which our board of trustees was considering.

              Throughout the remainder of the afternoon and evening of May 18, 2018, pursuant to the direction of our board of trustees, representatives of our financial and legal advisors participated in a series of discussions with Pebblebrook's financial advisors concerning Pebblebrook's need to increase its proposed exchange ratio and provide more protection to our shareholders in the event of a decline of Pebblebrook's share price in between signing and closing of the transaction. Our financial and legal advisors reiterated throughout these discussions that this protection could be provided in one of various ways, including by use of a pricing collar or similar type of pricing protection mechanism. In response, Pebblebrook's financial advisor stated that in order to make progress in the negotiations, the Company should delineate the specific deal terms that our board of trustees was requesting from Pebblebrook. Representatives of our financial advisors responded that they would discuss this request with the Company and revert back.

              On May 18, 2018, at the direction of our board of trustees, representatives of Citi and Goldman Sachs contacted representatives of Blackstone and indicated that our board of trustees had met that day and was continuing its review of Blackstone's latest proposal.

              On May 18, 2018, representatives of Citi and Goldman Sachs contacted Party B as directed by our board of trustees. Per our board of trustees' direction, representatives of Citi and Goldman Sachs indicated that Party B needed to materially improve its proposed offer price and to expedite its timing to reach a definitive merger agreement with the Company. Thereafter, there were no further discussions with Party B.

              Later on May 18, 2018, Pebblebrook's outside legal counsel provided a revised draft of the merger agreement to Goodwin, which reflected no progress on the open points in the merger agreement, as it was in substantially the same form as the revised draft of the merger agreement provided to Goodwin on May 14, 2018. On May 18, 2018, the closing price of Pebblebrook's common shares was $39.01.

              Later in the evening on May 18, 2018, representatives of Goodwin and representatives of Simpson Thacher had discussions regarding the merger agreement. During these discussions, representatives of Simpson Thacher indicated that Blackstone did not want to further discuss open points on the merger agreement until we had responded to Blackstone's May 16 proposal.

              Also, later on the evening on May 18, 2018, further to the direction of our board of trustees, representatives of Citi had a discussion with representatives of Pebblebrook's financial advisor and indicated that the next morning we would provide Pebblebrook, through representatives of our and their financial advisors, with specific guidance on what improvements Pebblebrook would need to make to its proposal in order to increase its chance of being successful.

              Early in the morning of May 19, 2018, our board of trustees met to discuss the strategic process. Members of our management and representatives of Citi, Goldman Sachs, Goodwin and DLA Piper were present. Representatives of Citi and Goldman Sachs updated our board of trustees as to the discussions they had with each of Blackstone's and Pebblebrook's financial advisors at the direction of our board of trustees. Representatives of Citi and Goldman Sachs reviewed with our board of trustees that, based on the previous day's closing prices, Pebblebrook's proposal had an implied value of $35.44 per share for 100% of our outstanding common shares. Representatives of Citi and Goldman Sachs

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also reviewed with our board of trustees that Pebblebrook had declined to increase the value of its proposal from what it offered in its April 20 proposal or provide our shareholders with any protection in the event of a decrease in Pebblebrook's share price between signing and closing of the transaction. Representatives of Citi and Goldman Sachs also reported that Pebblebrook's financial advisors had asked for specific guidance on valuation. Representatives of Citi and Goldman Sachs acknowledged that symmetrical collars were more common in these types of transactions than asymmetrical collars, and our board of trustees discussed being open to a symmetrical collar. Our board of trustees also discussed the risk that Blackstone would withdraw its all-cash proposal if we were to materially deviate from our proposed timing to announce a transaction prior to market opening on May 21, 2018.

              Following these discussions, our board of trustees instructed representatives of Citi and Goldman Sachs to inform Pebblebrook's financial advisors that by noon on May 19, 2018, Pebblebrook would need to improve its proposed exchange ratio from 0.9085 to 0.9250, provide for an asymmetrical collar with 10% downside protection for the Company and provide a revised draft of the merger agreement which was more responsive than the draft merger agreement provided by Pebblebrook's outside legal counsel to Goodwin on May 18, 2018. Our board of trustees indicated that if Pebblebrook agreed to these terms our board of trustees would seek to enter into definitive documentation for a transaction with Pebblebrook as soon as possible. Our board of trustees determined to meet again later in the day to further consider the status of the current proposals from Blackstone and Pebblebrook.

              At approximately 9:00 a.m. on May 19, 2018, as directed by our board of trustees, representatives of Citi and Goldman Sachs communicated the feedback from our board of trustees to Pebblebrook's financial advisors on the following business terms:

              In these discussions, as directed by our board of trustees, representatives of Citi and Goldman Sachs acknowledged that symmetrical collars were more common in these types of transactions than asymmetrical collars and suggested that our board of trustees could be open to a symmetrical collar. Representatives of Citi and Goldman Sachs concluded by emphasizing, as directed by our board of trustees, that our board of trustees was focused on the risk to our shareholders of a decline in the Pebblebrook share price between signing and closing of the transaction and that our board of trustees would be open to considering any other potential mechanisms which Pebblebrook could suggest to ameliorate these concerns.

              Also in these discussions, as directed by our board of trustees, representatives of Citi and Goldman Sachs indicated to Pebblebrook's financial advisors that the Company would need definitive responses from Pebblebrook on our request to increase the exchange ratio, to provide protection against a decline in Pebblebrook's common share price between signing and closing, and a revised draft of the merger agreement by noon on May 19, 2018. As directed by our board of trustees, representatives of Citi and Goldman Sachs also indicated that in the meantime the Company would not have discussions with any other parties regarding a transaction. As directed by our board of trustees, representatives of Citi and Goldman Sachs further indicated that if Pebblebrook would agree with the above terms, we would seek to execute a definitive merger agreement with Pebblebrook as soon as possible. Alternatively, representatives of Citi and Goldman Sachs indicated, as directed by our board

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of trustees, that if Pebblebrook did not agree to these terms our board of trustees was likely to move forward with a proposal from another party.

              Shortly before noon on May 19, 2018, Pebblebrook's financial advisors verbally provided representatives of Citi and Goldman Sachs with a revised proposal consisting of the following terms (which we refer to as the May 19 proposal) and indicated to the representatives of Citi and Goldman Sachs that this was Pebblebrook's best and final offer:

              Shortly thereafter, on May 19, 2018, at the direction of our board of trustees, representatives of Goodwin had a call with representatives of Pebblebrook's outside legal counsel to discuss the open issues in the merger agreement.

              In the afternoon of May 19, 2018, our board of trustees met to discuss the status of the negotiations with Blackstone and Pebblebrook. Members of our management and representatives of Citi, Goldman Sachs, Goodwin and DLA Piper were present. Representatives of Citi and Goldman Sachs reviewed the financial aspects of the latest proposal from Pebblebrook and the latest discussions with Pebblebrook's financial advisors. Representatives of Goodwin updated our board of trustees on the status of the merger agreement negotiation with Pebblebrook. Our board of trustees discussed that while Pebblebrook had improved the exchange ratio, it again refused to include a collar or any other mechanism to protect the value of the transaction for our shareholders. Our board of trustees determined that because Pebblebrook had not met our board of trustees' request for a collar (whether symmetrical or asymmetrical) or any other protection from a decrease in Pebblebrook's share price between the signing and closing of the transaction, the best pathway to maximize value for Company's shareholders was to expeditiously seek an improved offer price from Blackstone, in light of the expiration of Blackstone's offer at 5:00 p.m. on May 20, 2018. Our board of trustees considered, among other things, the certainty of value in Blackstone's all-cash offer as opposed to the share consideration offered by Pebblebrook, and Blackstone's proven ability to complete large acquisition transactions on the agreed terms. Following these discussions, our board of trustees instructed representatives of Citi and Goldman Sachs to request that Blackstone increase its purchase price to $34.25 per share. Following the meeting, representatives of Citi and Goldman Sachs communicated this information to Blackstone. Our board of trustees determined to meet again later in the day to further consider the status of the current proposals from Blackstone and Pebblebrook.

              Later on May 19, 2018, at the direction of our board of trustees, representatives of Citi and Goldman Sachs had discussions with a representative of Blackstone in which they asked Blackstone to increase its price to $34.25 per share.

              In a subsequent discussion also on May 19, 2018, the Blackstone representative indicated that Blackstone would not be able to pay $34.25 per share, but that it would increase its price to $33.50 per share, assuming no additional dividends were paid to our common shareholders other than our regular dividend for the quarter ending June 30, 2018 and that the Company termination fee would equal $112 million (representing approximately 3.0% of our equity value and 2.3% of our enterprise value,

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based on the merger consideration) and the reverse termination fee payable to the Company would equal $336 million (representing approximately 9.0% of our equity value and 6.9% of our enterprise value, based on the merger consideration). During that discussion, the Blackstone representative stated that Blackstone was not willing to increase its offer beyond $33.50 per share and that the Company should not contact Blackstone again other than to accept its revised offer of $33.50 per share.

              Later in the afternoon on May 19, 2018, our board of trustees met to discuss the status of the negotiations with Blackstone and Pebblebrook. Members of our management and representatives of Citi, Goldman Sachs, Goodwin and DLA Piper were present. Representatives of Citi and Goldman Sachs provided our board of trustees with an update regarding the discussions with Blackstone and Pebblebrook since the last board meeting, including that Blackstone had offered $33.50 per share, plus the regular dividend for the quarter ending June 30, 2018, as its best and final offer, and that Pebblebrook was not willing to improve its offer presented earlier that day. Although the exchange ratio last proposed by Pebblebrook resulted in an implied price of $35.89 per share for 100% of our outstanding common shares based on Pebblebrook's closing price of $39.01 on May 18, 2018, representatives of Citi and Goldman Sachs reviewed with our board of trustees that based on 30-, 60-and 90-day volume weighted average share prices, the implied consideration of Pebblebrook's last proposal was less than $33.50 per Company common share. Representatives of Goodwin then summarized the material terms of the merger agreement and ancillary documentation that had been negotiated with Blackstone, including that the Company termination fee would equal $112 million (which our board of trustees viewed as reasonable and not likely to preclude any other party from making a competing acquisition proposal) and that the reverse termination fee payable to the Company would equal $336 million. Our board of trustees again considered, among other things, the certainty of value in Blackstone's all-cash offer as opposed to the share consideration offered by Pebblebrook and Blackstone's proven ability to complete large acquisition transactions on the agreed terms.

              Our board of trustees further discussed the advantages and risks of the proposed transaction with Blackstone that are described below in greater detail under the section entitled "—Reasons for the Mergers." Our board of trustees believed that Blackstone would not improve upon its latest offer and that asking for additional improvement on this offer would put at risk the ongoing negotiations with Blackstone to finalize the terms of the merger agreement. In light of these discussions, our board of trustees concluded that Blackstone's improved and final offer would, if consummated, provide greater certainty of value (and less risk) to our shareholders relative to the potential trading price of our common shares over a longer period as a standalone company after accounting for the long-term risks to our business resulting from operational execution risk and evolving industry dynamics. Our board of trustees also considered that Blackstone could withdraw from the process if our board of trustees did not accept its proposal by the stated deadline of entering into a definitive merger agreement by 5:00 p.m. May 20, 2018. After considering our strategic alternatives to a potential transaction with Blackstone and our ability to continue as a standalone company, our board of trustees instructed Goodwin to work with Simpson Thacher to finalize the merger agreement and related documents. The independent trustees then met in executive session and continued discussions. Representatives of Goodwin and DLA Piper were in attendance.

              Subsequently on May 19, 2018, as directed by our board of trustees, representatives of Citi and Goldman Sachs informed a representative of Blackstone that our board of trustees was willing to move forward with negotiating and finalizing a definitive merger agreement concerning Blackstone's offer of $33.50 per share. The representatives of Blackstone indicated that it expected the Company to work with Blackstone to finalize and execute a definitive merger agreement by 5:00 p.m. on May 20, 2018.

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              Subsequently on May 19, 2018, Goodwin and Simpson Thacher had a call to resolve open issues on the merger agreement. Thereafter, Goodwin and Simpson Thacher exchanged revised drafts of the merger agreement and related documents.

              In the morning of May 20, 2018, our board of trustees met to receive an update on the status of the discussions with Blackstone. Members of our management and representatives of Citi, Goldman Sachs, Goodwin and DLA Piper were present. Representatives of Citi, Goldman Sachs and Goodwin provided an update on the discussions with Blackstone since the last board meeting, including that negotiations between the Company and Blackstone were substantially complete. Following discussion, our board of trustees instructed our management and our board of trustees' advisors to work with Blackstone and its advisors to finalize the merger agreement and related documents. Our board of trustees determined to meet again later in the day to further consider the final terms of the proposed transaction with Blackstone.

              In the afternoon of May 20, 2018, our board of trustees held a meeting to discuss the final terms of the proposed transaction with Blackstone. Members of our management and representatives of Citi, Goldman Sachs, Goodwin and DLA Piper were present. Representatives of Citi, Goldman Sachs and Goodwin updated our board of trustees on the discussions with Blackstone since the last board meeting. Representatives of Goodwin provided an overview of the negotiation process to date with Blackstone's representatives, indicating that negotiations with Blackstone were complete, as well as a presentation regarding the terms of the merger agreement and related documents. Representatives of Goodwin also reviewed with our board of trustees their fiduciary duties in connection with a potential sale of the Company. Our board of trustees discussed that to date Blackstone had not had, and had not requested to have, discussions with our management regarding their future roles, compensation, retention or investment arrangements in connection with the proposed transaction.

              Also at this meeting, representatives of Citi and Goldman Sachs reviewed the financial analyses supporting their proposed opinions. After discussion among our board of trustees and its financial advisors, representatives of each of Citi and Goldman Sachs each delivered an oral opinion, subsequently confirmed by the delivery of a written opinion from each financial advisor, both dated May 20, 2018, to our board of trustees to the effect that, as of such date and based upon and subject to the assumptions made, procedures followed, factors considered and limitations and qualifications on the review undertaken described in each financial advisor's written opinion, the $33.50 in cash per outstanding common share to be paid to the holders (other than Parent and its affiliates) of our outstanding common shares pursuant to the merger agreement was fair from a financial point of view to such holders.

              After the discussion, and taking into account the opinions delivered by Citi and Goldman Sachs, and other factors described below in greater detail under the section entitled "—Reasons for the Mergers," including our board of trustees' belief that the merger is more favorable to our shareholders than other strategic transactions available to the Company, including remaining as an independent public company, our board of trustees unanimously adopted resolutions which, among other things, approved the merger agreement, the merger and the other transactions contemplated by the merger agreement and recommended that our shareholders approve the merger and the other transactions contemplated by the merger agreement.

              Later on May 20, 2018, the Company and Blackstone executed the merger agreement and all signatories to the equity commitment letter and limited guarantee executed such agreements.

              On the morning of May 21, 2018, prior to the opening of trading on the NYSE, the Company and Blackstone issued a joint press release announcing the execution of the merger agreement.

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              On the morning of June 11, 2018, prior to the opening of trading on the NYSE, Mr. Bortz, on behalf of Pebblebrook, sent a letter to our board of trustees (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 0.9200 Pebblebrook common shares for each Company common share (the same exchange ratio as set forth in Pebblebrook's verbal proposal on May 19, 2018). As in Pebblebrook's April 20 proposal and May 19 proposal, the June 11 letter stated that our shareholders would be provided with the option to elect cash up to a maximum of 20% of the aggregate number of Company common shares outstanding immediately prior to the closing, subject to proration. As in Pebblebrook's May 19 proposal, the per share cash amount was based on the exchange ratio multiplied by the five-day volume weighted average price of Pebblebrook's common shares as of the end of the last trading day before the proposal was made. Thus, the June 11 letter indicated that the per share cash amount for the June 11 proposal was $37.80 per share, based on the exchange ratio multiplied by the five-day volume weighted average price of Pebblebrook's common shares ending on June 8, 2018, as opposed to the per share cash amount for the May 19 proposal of $35.05 per share, based on the exchange ratio multiplied by the five-day volume weighted average price of Pebblebrook's common shares ending on May 18, 2018. 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; 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 Blackstone merger agreement adapted to reflect the terms of the June 11 proposal and that Pebblebrook would send us a draft merger agreement under separate cover. Pebblebrook's outside legal counsel subsequently sent the draft merger agreement to Goodwin.

              On the morning of June 11, 2018, prior to the opening of trading on the NYSE, Pebblebrook issued a press release disclosing its June 11 letter and Pebblebrook also publicly disclosed a related investor presentation.

              On the morning of June 11, 2018, prior to the opening of trading on the NYSE, we issued a press release confirming receipt of Pebblebrook's June 11 proposal and indicating that our board of trustees would carefully review Pebblebrook's June 11 proposal in accordance with the provisions of the Blackstone merger agreement.

              Later on June 11, 2018, the transaction committee met to discuss, among other things, Pebblebrook's June 11 proposal. Members of our management and representatives of Citi, Goldman Sachs, Goodwin and DLA Piper were present. Representatives of Citi and Goldman Sachs reviewed with the transaction committee certain preliminary financial analyses with respect to the June 11 proposal. Representatives of Goodwin provided an overview of their fiduciary duties under applicable law and the application of those principles to Pebblebrook's June 11 proposal. Representatives of Goodwin also reviewed the Company's obligations under the Blackstone merger agreement related to the June 11 proposal. Thereafter, the information discussed at this meeting was provided to the other members of our board of trustees and Mr. Barnello regularly briefed and consulted with other members of our board of trustees regarding the June 11 proposal.

              On June 12, 2018, HG Vora filed an amendment to its Schedule 13D reporting beneficial ownership of 9.1% of the Company's outstanding common shares. The amendment to HG Vora's Schedule 13D also disclosed a letter that it had sent to our board of trustees stating that it believed that Pebblebrook's June 11 proposal constituted a superior proposal under the Blackstone merger agreement.

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              On June 14, 2018, our board of trustees met to discuss Pebblebrook's June 11 proposal. Members of our management and representatives of Goodwin and DLA Piper were present. Our board of trustees, with the assistance of management and in consultation with representatives of Goodwin, discussed Pebblebrook's June 11 proposal. Representatives of Goodwin reviewed with our board of trustees that in connection with Pebblebrook's June 11 proposal, and in accordance with the Blackstone merger agreement, our board of trustees was permitted to determine whether or not in comparison to the Blackstone merger, Pebblebrook's June 11 proposal constituted a superior proposal (as defined under the Blackstone merger agreement, which we refer to as a superior proposal) or could reasonably be expected to lead to a superior proposal (as more fully described below in the sections entitled "The Merger Agreement—Restriction on Solicitation of Acquisition Proposals"). Representatives of Goodwin also provided our board of trustees with an overview of their fiduciary duties under applicable law and the application of those principles to Pebblebrook's June 11 proposal.

              Our board of trustees discussed the terms of Pebblebrook's June 11 proposal including: that the price per share for the cash election shares had been increased from $35.05 in the May 19 proposal to $37.80 in the June 11 proposal; that Pebblebrook would have to pay the cash termination fee of $112 million to Blackstone if we were to terminate the Blackstone merger agreement to execute a merger agreement with Pebblebrook (Pebblebrook's draft merger agreement did not contemplate Pebblebrook paying such termination fee); that Pebblebrook had not improved the exchange ratio from its last proposal on May 19, 2018; that the June 11 proposal continued to have a fixed exchange ratio pursuant to which our shareholders would receive a specific fraction of a Pebblebrook common share for each of our common shares regardless of the value of Pebblebrook's common shares at the time of the closing of a transaction with Pebblebrook, and given that a transaction with Pebblebrook would be expected to take several months to close, our shareholders would have no certainty of the value of the consideration they would receive at the closing of the transaction; and that despite multiple requests from our board of trustees and our financial advisors between May 18 and 19, 2018, the June 11 proposal did not contain a pricing collar or similar type of pricing protection mechanism with respect to the share consideration. Our board of trustees again considered, among other things, the certainty of value in Blackstone's all-cash offer as opposed to the share consideration offered by Pebblebrook, and Blackstone's proven ability to complete large acquisition transactions on the agreed terms. Following these discussions, our board of trustees determined to meet again to further consider Pebblebrook's June 11 proposal.

              On June 17, 2018, our board of trustees held another meeting to further discuss Pebblebrook's June 11 proposal. Members of our management and representatives of Citi, Goldman Sachs, Goodwin and DLA Piper were present. Representatives of Goodwin reviewed with our board of trustees that, in connection with the June 11 proposal and in accordance with the Blackstone merger agreement, our board of trustees was permitted to determine in good faith, after consultation with its outside legal counsel and financial advisors, whether or not in comparison to the Blackstone merger, Pebblebrook's June 11 proposal constituted a superior proposal or could reasonably be expected to lead to a superior proposal. Representatives of Goodwin also reviewed with our board of trustees their fiduciary duties under applicable law and the application of those principles to an evaluation of Pebblebrook's June 11 proposal. Also at this meeting, representatives of Citi and Goldman Sachs reviewed certain financial aspects of Pebblebrook's June 11 proposal, including the implied value of the consideration set forth in Pebblebrook's June 11 proposal since the announcement of the Blackstone merger agreement and a comparison of Blackstone price of $33.50 per share and Pebblebrook's June 11 proposal.

              Our board of trustees discussed that, among other things, the key terms included in Pebblebrook's June 11 proposal were substantially similar to the prior proposal submitted by Pebblebrook on May 19, 2018, which our board of trustees previously evaluated alongside the Blackstone proposal submitted on the same date. Our board of trustees also discussed that, as in

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Pebblebrook's May 19 proposal, the June 11 proposal included the same 80% stock consideration and provided that our shareholders would be provided with the option to elect cash up to a maximum of 20% of the aggregate number of Company common shares outstanding immediately prior to the closing, subject to proration; however, unlike the May 19 proposal, under the June 11 proposal the shareholders of the combined company resulting from the combination of the Company and Pebblebrook would bear the expense of the $112 million termination fee that would be payable to Blackstone under the Blackstone merger agreement. Our board of trustees also discussed that Pebblebrook's June 11 proposal continued to fail to address the significant price risks and uncertainties for our shareholders that our board of trustees had previously communicated to Pebblebrook, and that in previous discussions, Pebblebrook refused to agree to any possible terms that would protect our shareholders against downside risks in the event of a decline in Pebblebrook's share price between the signing and closing of a transaction with Pebblebrook. Our board of trustees also discussed that the Blackstone merger agreement represents immediate and certain cash value, is in the best interest of our shareholders and is expected to close as early as August 2018, and Blackstone's proven ability to complete large acquisition transactions on the agreed terms. Based on the discussions at this meeting and prior board meetings, our board of trustees unanimously determined in good faith, after consultation with its outside legal counsel and financial advisors, that in comparison to the Blackstone mergers, Pebblebrook's June 11 proposal did not constitute a superior proposal and could not reasonably be expected to lead to a superior proposal.

              On the morning of June 18, 2018, prior to the opening of trading on the NYSE, the Company issued a press release disclosing that our board of trustees had determined that Pebblebrook's June 11 proposal did not constitute a superior proposal and could not reasonably be expected to lead to a superior proposal. The press release further disclosed that our board of trustees had reaffirmed its recommendation in support of the Blackstone merger agreement.

              Also on the morning of June 18, 2018, prior to the opening of trading on the NYSE, the Company filed this preliminary proxy statement with the SEC.

Reasons for the Mergers

              In reaching its unanimous decision to approve the merger agreement, the merger and the other transactions contemplated by the merger agreement and to recommend that our shareholders approve the merger and the other transactions contemplated by the merger agreement, our board of trustees consulted with our management team, as well as its financial and legal advisors, and considered a number of factors, including the following material factors which our board of trustees viewed as supporting its decisions:

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              Our board of trustees also considered the following potentially negative factors in its consideration of the merger, the merger agreement and the other transactions contemplated by the merger agreement:

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              The foregoing discussion of the factors considered by our board of trustees is not intended to be exhaustive, but rather includes the material factors considered by our board of trustees. In reaching its unanimous decision to approve the merger agreement, the merger and the other transactions contemplated by the merger agreement, our board of trustees did not quantify or assign any relative weights to, and did not make specific assessments of, the factors considered, and individual trustees may have given different weights to different factors. Our board of trustees did not reach any specific conclusion with respect to any of the factors or reasons considered.

              The above factors are not presented in any order of priority. The explanation of the factors and reasoning set forth above contains forward-looking statements and should be read in conjunction with the section of this proxy statement entitled "Cautionary Statement Regarding Forward-Looking Statements."

Recommendation of Our Board of Trustees

              Our board of trustees has unanimously:

Certain Prospective Financial Information—Financial Projections

              We do not, as a matter of course, make public projections as to future performance or earnings beyond the current fiscal year and generally do not make public projections for extended periods due to, among other things, the inherent difficulty of predicting financial performance for future periods and the likelihood that the underlying assumptions and estimates may not be realized. However, in connection with our evaluation of potential strategic alternatives and specifically the mergers, our management prepared two sets of long-term financial projections for fiscal years ending December 31, 2018 through December 31, 2022, one of which we refer to as the final projections and one of which we refer to as the preliminary projections, and which we refer to collectively as the financial projections.

              Following the end of the fiscal quarter ended March 31, 2018 and based on our review of our results for such period, our management updated the preliminary projections in early May 2018 to further refine certain of the assumptions and estimates included therein to better reflect the information available to our management at the time of such update. The final projections replaced the preliminary projections and are the same in all respects as the preliminary projections except that they incorporated actual performance for the fiscal quarter ended March 31, 2018 and an updated forecast for the fiscal quarter ending June 30, 2018, and a corresponding roll forward for the fiscal years ending December 31, 2018 through December 31, 2022.

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Final Projections

              The final projections were provided to, and approved by, our board of trustees at its meeting held on May 10, 2018. The final projections were also provided to Citi and Goldman Sachs, and our management directed Citi and Goldman Sachs to use and rely upon the final projections in connection with their respective financial analyses and opinions to our board of trustees as described above in the section entitled "—Opinions of Our Financial Advisors." Consequently, neither Citi nor Goldman Sachs relied upon the preliminary projections in connection with their respective financial analyses and opinions to our board of trustees as described above under the section entitled "—Opinions of Our Financial Advisors." On May 12, 2018, we made available to Blackstone the final projections. The table below presents selected elements of the final projections.

Final Projections(1)(2)

GRAPHIC

(1)
Dollar amounts in millions, except room revenue per available room, which we refer to as RevPAR, which is in dollars.
(2)
The projected financial data provided in this table has not been updated following May 10, 2018 to reflect our current views of our future financial performance, and should not be treated as guidance with respect to projected results for the fiscal year ending December 31, 2018 or any other period.
(3)
RevPAR represents hotel room revenue, which is the portion of hotel operating revenues attributable to rooms, divided by the total number of available room nights in our portfolio during the respective period.
(4)
Earnings before interest, taxes, depreciation and amortization, which we refer to as EBITDA, represents net income or loss (computed in accordance with generally accepted accounting principles, which we refer to as GAAP), excluding interest expense, income tax, depreciation and amortization. Hotel EBITDA represents total hotel revenue minus total hotel expenses.
(5)
Adjusted EBITDA represents EBITDA adjusted for certain additional items, including impairment losses (to the extent included in EBITDA), loss from extinguishment of debt, acquisition transaction costs, costs associated with management transitions or the departure of executive officers, costs associated with the recognition of issuance costs related to the redemption of preferred shares, non-cash ground rent and certain other items.
(6)
Unlevered Free Cash Flow represents Adjusted EBITDA less capital expenditures and income tax expense, plus income tax benefit.

Preliminary Projections

              Prior to the preparation of the final projections, in March 2018, our management prepared the preliminary projections, a preliminary set of long-term financial projections for fiscal years ending December 31, 2018 through December 31, 2022 that we provided to, and which were approved by, our board of trustees at its meeting held on March 20, 2018 in connection with its evaluation of a potential strategic transaction. The preliminary projections were provided to Citi and Goldman Sachs to permit them to conduct preliminary financial analyses of us. On April 13, 2018, we made available to

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Blackstone the financial information contained in the preliminary projections. The table below presents selected elements of the preliminary projections.

Preliminary Projections(1)(2)

GRAPHIC

(1)
Dollar amounts in millions, except RevPAR, which is in dollars.
(2)
The projected financial data provided in this table has not been updated following March 20, 2018 to reflect our current views of our future financial performance, and should not be treated as guidance with respect to projected results for the fiscal year ending December 31, 2018 or any other period. Since the date the preliminary projections were prepared, we have made publicly available our actual results of operations for the quarter ended March 31, 2018. You should review our Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 to obtain this information. See the section entitled "Where You Can Find More Information."
(3)
RevPAR represents hotel room revenue, which is the portion of hotel operating revenues attributable to rooms, divided by the total number of available room nights in our portfolio during the respective period.
(4)
EBITDA represents net income or loss (computed in accordance with GAAP), excluding interest expense, income tax, depreciation and amortization. Hotel EBITDA represents total hotel revenue minus total hotel expenses.
(5)
Adjusted EBITDA represents EBITDA adjusted for certain additional items, including impairment losses (to the extent included in EBITDA), loss from extinguishment of debt, acquisition transaction costs, costs associated with management transitions or the departure of executive officers, costs associated with the recognition of issuance costs related to the redemption of preferred shares, non-cash ground rent and certain other items.
(6)
Unlevered Free Cash Flow represents Adjusted EBITDA less capital expenditures and income tax expense, plus income tax benefit.

Important Information About the Financial Projections

              The financial projections are included solely to give our shareholders access to certain long-term financial projections that were made available to our board of trustees and Citi and Goldman Sachs (and which were made available to Blackstone), and are not included in this proxy statement to influence any of our common shareholders to vote to approve the merger and the other transactions contemplated by the merger agreement or for any other purpose. The financial projections were not prepared with a view toward public disclosure and, accordingly, do not necessarily comply with published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information or GAAP. The financial projections were prepared solely for our internal use and for Citi and Goldman Sachs and are subjective in many respects. Our independent registered public accounting firm has not compiled, examined, audited, or performed any procedures with respect to the financial projections, and has not expressed any opinion or any other form of assurance regarding this information or its achievability. The inclusion of the financial projections in this proxy statement does not constitute an admission or representation by us that the information is material.

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              Certain of the above financial projections above were not prepared in accordance with GAAP, including Hotel EBITDA, Adjusted EBITDA and Unlevered Free Cash Flow. We use these non-GAAP financial measures in analyzing our financial results and believe that they enhance investors' understanding of our financial performance and the comparability of our results to prior periods, as well as against the performance of other REITs. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. The Company's calculation of non-GAAP financial measures may differ from others in the industry and Hotel EBITDA, Adjusted EBITDA and Unlevered Free Cash Flow are not necessarily comparable with similar titles used by other companies. The non-GAAP financial measures used in the final projections were relied upon by Citi and Goldman Sachs, as directed by our management, for purposes of their respective opinions to our board of trustees as described above in the section entitled "—Opinions of Our Financial Advisors" and by our board of trustees in connection with its consideration of the mergers. Financial measures provided to a financial advisor are excluded from the definition of non-GAAP financial measures and therefore, are not subject to SEC rules regarding disclosures of non-GAAP financial measures, which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure. Reconciliations of non-GAAP financial measures were not relied upon by Citi or Goldman Sachs for purposes of their respective opinions to our board of trustees as described above in the section entitled "—Opinions of Our Financial Advisors" or by our board of trustees in connection with its consideration of the mergers. Accordingly, we have not provided a reconciliation of the financial measures included in the financial projections above.

              In the view of our management, the financial projections were prepared on a reasonable basis reflecting management's best available estimates and judgments regarding our future financial performance at the time they were prepared.

              The financial projections, while presented with numerical specificity, were based on numerous variables, estimates and assumptions that necessarily involve judgments with respect to, among other things, future economic, competitive, regulatory and financial market conditions, all of which are difficult or impossible to predict and many of which are beyond our control. The financial projections were developed under the assumption of continued standalone operation, do not take into account any circumstances, transactions or events occurring after the date on which the financial projections were prepared and do not give effect to any changes or expenses as a result of the mergers or any effects of the mergers. Further, the financial projections do not take into account the effect of any failure of the mergers to be consummated and should not be viewed as accurate or continuing in that context. The financial projections also reflect assumptions as to certain business decisions that are subject to change. Given that the financial projections cover multiple years, by their nature, they become subject to greater uncertainty with each successive year. Important factors that may affect actual results and the achievability of the financial projections include, but are not limited to, local market conditions, general economic conditions and disruptions in the financial, debt, capital, credit or securities markets, developing industry dynamics, competition, our ability to obtain financing, construction, development and redevelopment costs, changes in business strategy and those risks and uncertainties described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 and our Current Reports on Form 8-K. For additional information on factors that may cause our future financial results to materially vary from the projected results summarized above, see the section entitled "Cautionary Statement Regarding Forward-Looking Statements."

              The financial projections also reflect assumptions that are subject to change and are susceptible to multiple interpretations and periodic revisions based on actual results, revised prospects for our business, changes in general business or economic conditions, certain accounting assumptions, timing of

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business investments, changes in actual or projected cash flows, competitive pressures and changes in tax or other laws or regulations or any other transaction or event that has occurred or that may occur and that was not anticipated when the financial projections were prepared. In addition, the financial projections may be affected by our ability to achieve strategic goals, objectives and targets over the applicable period. Accordingly, actual results will differ, and may differ materially, from those contained in the financial projections. The financial projections should be evaluated, if at all, in conjunction with the historical financial statements and other information contained in our public filings with the SEC. There can be no assurance that the financial results in the financial projections will be realized, or that future actual financial results will not materially vary from those estimated in the financial projections.

              The inclusion of selected elements of the financial projections and accompanying narrative in the tables above should not be regarded as an indication that we, Blackstone, our or its affiliates and/or any of our or their respective officers, trustees, advisors or other representatives consider the financial projections to be necessarily predictive of actual future events, and this information should not be relied upon as such. None of us, Blackstone, our or its affiliates nor any of our or their respective officers, trustees, advisors or other representatives gives any of our shareholders or any other person any assurance that actual results will not differ materially from the financial projections, and we, Blackstone, our or its affiliates and/or our or their respective officers, trustees, advisors or other representatives undertake no obligation to update or otherwise revise or reconcile the financial projections to reflect circumstances existing after the dates on which the financial projections were prepared or to reflect the occurrence of future events, even in the event that any or all of the assumptions and estimates underlying the financial projections are shown to be in error. Some or all of the assumptions that have been made in connection with the preparation of the financial projections may have changed since the date the financial projections were prepared. None of us, Blackstone and/or our or its respective affiliates intend to make publicly available any update or other revision to or reconciliation of the financial projections. These considerations should be taken into account in reviewing the financial projections, which were prepared as of an earlier date. None of us, our affiliates and/or our or their respective officers, trustees, advisors or other representatives has made or makes any representation to any of our shareholders regarding our ultimate performance compared to the information contained in the financial projections or that the financial projections will be achieved.

              In light of the foregoing factors and the uncertainties inherent in the financial projections, our shareholders are cautioned not to place undue, if any, reliance on the financial projections.

Opinions of Our Financial Advisors

Opinion of Citi

              On May 20, 2018, Citi delivered to our board of trustees an oral opinion, subsequently confirmed by the delivery of a written opinion dated May 20, 2018, to the effect that, as of such date and based on and subject to the assumptions made, procedures followed, matters considered and limitations and qualifications set forth in the written opinion, the $33.50 in cash per outstanding common share to be paid to the holders (other than Parent and its affiliates) of our outstanding common shares pursuant to the merger agreement was fair from a financial point of view to such holders.

              The full text of Citi's written opinion, dated May 20, 2018, which sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken by Citi in rendering its opinion, is attached to this proxy statement as Exhibit B and is incorporated into this proxy statement by reference in its entirety. The summary of Citi's opinion set forth below is qualified in its entirety by reference to the full text of the

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opinion. We urge you to read the opinion carefully and in its entirety. Citi's opinion, the issuance of which was authorized by Citi's fairness opinion committee, was provided for the information of our board of trustees (in its capacity as such) in its evaluation of the proposed mergers and was limited to the fairness, from a financial point of view, as of the date of the opinion, of the $33.50 in cash per outstanding common share to be paid to the holders (other than Parent and its affiliates) of our outstanding common shares pursuant to the merger agreement. Citi's opinion does not address any other aspects or implications of the transactions contemplated by the merger agreement and does not constitute a recommendation to any shareholder as to how such shareholder should vote or act on any matters relating to the proposed mergers. Citi's opinion does not address our underlying business decision to effect the mergers, the relative merits of the mergers as compared to any alternative business strategies that might exist for us or the effect of any other transaction in which we might engage. The following is a summary of Citi's opinion.

              In arriving at its opinion, Citi, among other things:

              In rendering its opinion, Citi assumed and relied, without independent verification, upon the accuracy and completeness of all financial and other information and data publicly available or provided to or otherwise reviewed by or discussed with Citi and upon the assurances of our management that they were not aware of any relevant information that was omitted or that remained undisclosed to Citi. With respect to the final projections provided to or otherwise reviewed by or discussed with Citi, Citi was advised by our management that the final projections were reasonably prepared on bases reflecting the best currently available estimates and judgments of our management as to our future financial performance. Citi also relied, at our direction, upon the assessments of our management as to the potential impact on us of certain market trends and other developments in and prospects for, and governmental or other regulatory matters relating to or affecting, the lodging real estate market and related credit and financial markets and potential future acquisitions and dispositions

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(including, in each case, the timing and amount thereof) of lodging properties contemplated to be undertaken by us. Citi assumed, with our consent, that there would be no developments with respect to any such matters that would have an adverse effect on us or the mergers or that otherwise would be meaningful in any respect to Citi's analyses or opinion. In connection with Citi's engagement and at our direction, Citi was requested to approach, and Citi held discussions with, third parties to solicit indications of interest in the possible acquisition of us.

              Citi also assumed, with our consent, that the mergers would be consummated in accordance with their terms, without waiver, modification or amendment of any material term, condition or agreement and that, in the course of obtaining the necessary regulatory or third-party approvals, consents and releases for the mergers, no delay, limitation, restriction or condition would be imposed that would have an adverse effect on us or the mergers. Citi did not make and it was not provided with an independent evaluation or appraisal of our assets or liabilities (contingent or otherwise) and Citi did not make any physical inspection of our properties or assets. Citi was advised by us and assumed, with our consent, that we have operated in conformity with the requirements for qualification as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 1998 and that the mergers would not adversely affect such status or our operations. Citi's opinion did not address our underlying business decision to effect the mergers, the relative merits of the mergers as compared to any alternative business strategies that might exist for us or the effect of any other transaction in which we might engage. Citi also expressed no view as to, and Citi's opinion did not address, the fairness (financial or otherwise) of the amount or nature or any other aspect of any compensation to any officers, trustees or employees of any parties to the mergers, or any class of such persons, relative to the per share merger consideration or otherwise. Citi's opinion was necessarily based upon information available to it, and financial, stock market and other conditions and circumstances existing, as of the date of its written opinion.

              For a summary of the material financial analyses presented by Citi to our board of trustees in connection with the delivery of Citi's opinion, see the section entitled "—Summary of Material Financial Analyses" beginning on page 78.

              Pursuant to an engagement letter between us and Citi, we have agreed to pay Citi an aggregate fee of approximately $20 million, $3 million of which became payable at or prior to the announcement of the mergers (including $1.5 million of which that became payable upon Citi's delivery of the opinion described in this section) and the remainder of which is contingent upon the closing of the mergers. Subject to certain limitations, we also have agreed to reimburse Citi, subject to certain conditions, for reasonable expenses incurred by Citi in performing its services, and to indemnify Citi and related persons against certain liabilities arising out of its engagement.

              Citi and its affiliates in the past have provided, and currently provide, services to us unrelated to the mergers, for which services Citi and such affiliates have received and expect to receive compensation, including, without limitation, between January 1, 2016 and May 20, 2018, having acted or acting as (i) senior co-manager for our preferred equity offering in 2016, (ii) administrative agent, joint lead arranger and joint bookrunner for a term loan in 2017, (iii) administrative agent, joint lead arranger and joint bookrunner for a revolving credit facility and term loan in 2017, and (iv) administrative agent, joint lead arranger and joint bookrunner for the Westin Copley Place mortgage loan in 2018. Citi has also provided services to us with respect to securitization lending, our common share buyback program and, in 2016, Citi provided derivative-related services to us. For the foregoing services, Citi and its affiliates received aggregate fees between January 1, 2016 and May 20, 2018 of approximately $6 million. Citi and its affiliates in the past have also provided, and currently provide, services to Blackstone Real Estate Advisors L.P. and its portfolio companies and its affiliated public vehicle Blackstone Mortgage Trust, Inc. unrelated to the mergers, for which services Citi and its

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affiliates have received and expect to receive compensation, including, without limitation, between January 1, 2016 and May 20, 2018, (i) financial advisory services related to the acquisition of BioMed Realty Trust, Inc. in January 2016, the acquisition of International Market Centers, Inc. in September 2017, the disposal of Logicor Europe in December 2017, the pending acquisition of Gramercy Property Trust, and the then-pending acquisition of Pure Industrial Real Estate Trust which closed on May 24, 2018, (ii) margin loans on shares of Hilton Worldwide Holdings Inc., Brixmor Property Group Inc., and Hudson Pacific Properties, Inc. in January 2016, advisory services for an Extended Stay America, Inc. follow-on equity offering in February 2016, block trade execution for Brixmor Property Group Inc. in June 2016, block trade execution for Extended Stay America, Inc. in December 2016, March 2017 and May 2017, a margin loan on Hudson Pacific Properties, Inc. shares in April 2017, acting as joint bookrunner for a Blackstone Mortgage Trust, Inc. convertible senior note offering in May 2017, margin loans on shares of Invitation Homes Inc. and Hilton Worldwide Holdings Inc. in September 2017, block trade execution for Blackstone Mortgage Trust, Inc. in November 2017, acting as joint bookrunner for Blackstone Mortgage Trust, Inc.'s convertible senior notes offering in March 2018 and margin loans on shares of Hilton Worldwide Holdings Inc. and Invitations Homes Inc. in April 2018, (iii) acting as sole underwriter of secured financing for the Greensborough Plaza shopping center in Melbourne, Australia for Blackstone Real Estate Australia in 2016, joint bookrunner for ESH Hospitality, Inc.'s senior notes offering in March 2016, joint bookrunner for Brixmor Property Group Inc.'s senior notes offering in June 2016, joint lead arranger for Extended Stay America, Inc.'s revolving credit facility and term loan in August 2016, co-manager for Hilton Worldwide Holdings Inc.'s high yield bond offering in November 2016, joint lead arranger for Extended Stay America, Inc.'s term loan repricing in March 2017, joint bookrunner for Brixmor Property Group Inc.'s senior notes offering in March 2017, co-lead manager and joint bookrunner for Blackstone Mortgage Trust, Inc.'s collateralized loan obligation in December 2017 and co-manager for Hilton Worldwide Holdings Inc.'s high yield bond offering in April 2018, (iv) committed financing in connection with the then-pending acquisition of Pure Industrial Real Estate Trust which closed on May 24, 2018, a senior secured guidance facility of Blackstone REIT, a revolving credit facility of Hilton Worldwide Holdings Inc. and a revolving credit facility of La Quinta Holdings Inc. and (v) securitization and commercial mortgage-backed securities services for which services Citi and its affiliates received aggregate fees between January 1, 2016 and May 20, 2018 of approximately $55 million.

              In the ordinary course of Citi's business, Citi and its affiliates may actively trade or hold our securities for its own account or for the account of its customers and, accordingly, may at any time hold a long or short position in such securities. In addition, Citi and its affiliates (including Citigroup Inc. and its affiliates) may maintain relationships with us, Parent and our and its respective affiliates.

              Our board of trustees selected Citi to act as one of its financial advisors in connection with the mergers to assist and advise our board of trustees because of Citi's qualifications, experience and reputation, long-standing relationship with us (serving as an underwriter in our equity offerings and as a lender under our credit facility and term loans) and substantial knowledge of the lodging REIT industry.

Opinion of Goldman Sachs

              At a meeting of our board of trustees held on May 20, 2018, Goldman Sachs delivered to our board of trustees its opinion, subsequently confirmed in writing, to the effect that, as of such date and based upon and subject to the factors and assumptions set forth therein, the $33.50 in cash per outstanding common share to be paid to the holders (other than Parent and its affiliates) of our outstanding common shares pursuant to the merger agreement was fair from a financial point of view to such holders.

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              The full text of the written opinion of Goldman Sachs, dated May 20, 2018, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Exhibit C and is incorporated into this proxy statement by reference in its entirety. Goldman Sachs provided advisory services and its opinion for the information and assistance of our board of trustees in connection with its consideration of the transactions contemplated by the merger agreement. The Goldman Sachs opinion is not a recommendation as to how any holder of our common shares should vote with respect to the mergers or any other matter.

              In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things:

              Goldman Sachs also held discussions with members of our senior management regarding their assessment of our past and current business operations, financial condition and future prospects; reviewed the reported price and trading activity for our common shares; compared certain financial and stock market information for us with similar information for certain other companies the securities of which are publicly traded; reviewed the financial terms of certain recent business combinations in the U.S. REIT industry; and performed such other studies and analyses, and considered such other factors, as it deemed appropriate.

              For purposes of rendering its opinion, Goldman Sachs, with our consent, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by, it, without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs assumed with our consent that the final projections were reasonably prepared on a basis reflecting the best currently available estimates and judgments of our management. Goldman Sachs did not make an independent evaluation or appraisal of assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) or any of our subsidiaries and it was not furnished with any such evaluation or appraisal. Goldman Sachs assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the transactions contemplated by the merger agreement would be obtained without any adverse effect on the expected benefits of the transactions contemplated by the merger agreement in any way meaningful to its analysis. Goldman Sachs also assumed that the transactions contemplated by the merger agreement would be consummated on the terms set forth in the merger agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to its analysis.

              Goldman Sachs' opinion does not address our underlying business decision to engage in the transactions contemplated by the merger agreement, or the relative merits of the transactions

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contemplated by the merger agreement as compared to any strategic alternatives that may be available to us, including a proposal for a transaction provided by a third party that may have resulted in greater value than the $33.50 in cash per common share to be paid to the holders (other than Parent and its affiliates) of common shares pursuant to the merger agreement, which proposal we advised Goldman Sachs we have determined not to pursue; nor does it address any legal, regulatory, tax or accounting matters. Goldman Sachs' opinion addresses only the fairness from a financial point of view to the holders (other than Parent and its affiliates) of our outstanding common shares, as of the date of the opinion, of the $33.50 in cash per outstanding common share to be paid to such holders pursuant to the merger agreement. Goldman Sachs' opinion does not express any view on, and does not address, any other term or aspect of the merger agreement or the transactions contemplated by the merger agreement or any term or aspect of any other agreement or instrument contemplated by the merger agreement or entered into or amended in connection with the transactions contemplated by the merger agreement, including the merger of Merger OP with and into the Operating Partnership, the fairness of the transactions contemplated by the merger agreement to, or any consideration received in connection therewith by, the holders of any other class of securities of ours, including our 6.375% Series I Cumulative Redeemable Preferred Shares of Beneficial Interest, par value $0.01 per share, and our 6.3% Series J Cumulative Redeemable Preferred Shares of Beneficial Interest, par value $0.01 per share, any class of securities of the Operating Partnership, or any other person, creditors, or other constituencies of us or the Operating Partnership; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of our officers, trustees or employees, or class of such persons in connection with the transactions contemplated by the merger agreement, whether relative to the $33.50 in cash per outstanding common share to be paid to the holders (other than Parent and its affiliates) of our outstanding common shares pursuant to the merger agreement or otherwise. In addition, Goldman Sachs does not express any opinion as to the impact of the transactions contemplated by the merger agreement on the solvency or viability of us or Parent or the ability of us or Parent to pay our or their respective obligations when they come due. Goldman Sachs' opinion was necessarily based on economic, monetary, market and other conditions, as in effect on, and the information made available to it as of, the date of the opinion and Goldman Sachs assumed no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of its opinion. Goldman Sachs' opinion was approved by a fairness committee of Goldman Sachs.

              Goldman Sachs and its affiliates are engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment management and other financial and non-financial activities and services for various persons and entities. Goldman Sachs and its affiliates and employees, and funds or other entities they manage or in which they invest or have other economic interests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of us, Parent, any of our or their respective affiliates and third parties, including Blackstone and any of its affiliates and portfolio companies or any currency or commodity that may be involved in the transactions contemplated by the merger agreement for the accounts of Goldman Sachs and its affiliates and employees and their customers. Goldman Sachs acted as our financial advisor in connection with, and participated in certain of the negotiations leading to, the transactions contemplated by the merger agreement. During the two year period ended May 20, 2018, other than acting as our financial advisor in connection with the transactions contemplated by the merger agreement, the Investment Banking Division of Goldman Sachs has not been engaged by us or our affiliates to provide financial advisory and/or underwriting services for which Goldman Sachs has recognized compensation. Goldman Sachs has provided certain financial advisory and/or underwriting services to Parent and/or its affiliates, including Blackstone and its affiliates and portfolio companies, from time to time for which the Investment Banking Division of Goldman Sachs has received, and may receive, compensation, including having acted as joint bookrunner with respect to the offering of

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5.000% Senior Secured Notes due 2027 by Cheniere Energy Partners LP Holdings, LLC ($1,500,000,000 aggregate principal amount), a portfolio company of Blackstone, in September 2016; as joint lead arranger with respect to a bank loan ($1,500,000,000 aggregate principal amount) for Blackstone in December 2016; as financial advisor to Fisterra Energy, an affiliate of Blackstone, in connection with the sale of Ventika wind farm in December 2016; as joint lead arranger with respect to a bank loan (aggregate principal amount $2,270,000,000) for Michaels Stores, Inc., a portfolio company of Blackstone, in March 2017; as joint lead agent with respect to a bank loan (aggregate principal amount $2,425,000,000) for Avaya Inc., a portfolio company of Blackstone, in December 2017; and as joint bookrunner with respect to the offering of 5.125% Senior Notes due 2026 by Hilton Worldwide Inc. (aggregate principal amount $1,500,000,000), a portfolio company of Blackstone, in April 2018. During the two year period ended May 20, 2018, Goldman Sachs has recognized compensation for financial advisory and/or underwriting services provided by its Investment Banking Division to Blackstone and/or to its affiliates and portfolio companies (which may include companies that are not controlled by Blackstone) of approximately $275 million.

              Goldman Sachs may also in the future provide financial advisory and/or underwriting services to us, Parent, and our and their respective affiliates, including Blackstone and any of its affiliates and portfolio companies, for which the Investment Banking Division of Goldman Sachs may receive compensation. Affiliates of Goldman Sachs also may have co-invested with Blackstone and its affiliates from time to time and may have invested in limited partnership units of affiliates of Blackstone from time to time and may do so in the future.

              Our board of trustees selected Goldman Sachs to act as one of its financial advisors in connection with the mergers to assist and advise our board of trustees because of Goldman Sachs' qualifications, experience and reputation, its knowledge of and involvement in recent transactions in the REIT industry and its experience with shareholder activism and acquisition transactions generally. Pursuant to an engagement letter between us and Goldman Sachs, we have agreed to pay Goldman Sachs an aggregate fee of approximately $20 million, $1.5 million of which became payable at or prior to the announcement of the mergers and the remainder of which is contingent upon the closing of the mergers. Subject to certain limitations, we also have agreed to reimburse Goldman Sachs, subject to certain conditions, for reasonable expenses incurred by Goldman Sachs in performing its services, and to indemnify Goldman Sachs and related persons against certain liabilities arising out of its engagement.

Summary of Material Financial Analyses

              The following is a summary of the material financial analyses delivered by Citi and Goldman Sachs to our board of trustees in connection with rendering their respective opinions described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Citi and Goldman Sachs, nor does the order of analyses described represent relative importance or weight given to those analyses by Citi and Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of the financial analyses of Citi and Goldman Sachs. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before May 18, 2018, and is not necessarily indicative of current market conditions.

              The preparation of financial opinions is a complex process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, financial opinions are not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the

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summary set forth below, without considering the analyses as a whole, could create an incomplete view of the processes underlying each financial opinion. In arriving at their respective fairness determinations, Citi and Goldman Sachs each considered the results of all of their analyses and did not attribute any particular weight to any factor or analysis considered by them. Rather, each of Citi and Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the following analyses as a comparison is directly comparable to us or the mergers.

              The financial advisors prepared these analyses for purposes of providing their respective opinions to our board of trustees as to the fairness, from a financial point of view, to the holders (other than Parent and its affiliates) of our outstanding common shares, as of the date of the opinions, of the $33.50 in cash per share to be paid to such holders pursuant to the merger agreement. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of us, Citi, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecast.

              The merger consideration was determined through arm's-length negotiations between us and Parent, rather than by Citi and Goldman Sachs, and was approved by our board of trustees. Citi and Goldman Sachs provided advice to us during these negotiations. Citi and Goldman Sachs did not, however, recommend any specific amount of consideration to us or our board of trustees or that any specific amount of consideration constituted the only appropriate consideration for the mergers.

              As described above, the respective opinions of Citi and Goldman Sachs to our board of trustees was one of many factors taken into consideration by our board of trustees in making its determination to approve the merger agreement. The following summary does not purport to be a complete description of the analyses performed by Citi and Goldman Sachs in connection with their respective opinions and is qualified in its entirety by reference to their respective written opinions attached as Exhibit B for Citi and Exhibit C for Goldman Sachs.

Illustrative Discounted Cash Flow Analysis

              Citi and Goldman Sachs performed separate discounted cash flow analyses of us.

Citi

              Using discount rates ranging from 8.1% to 9.1%, reflecting estimates of our weighted average cost of capital, Citi discounted to present value as of March 31, 2018 (i) estimates of our unlevered free cash flow for the period from April 1, 2018 to December 31, 2022, as reflected in the final projections and (ii) a range of illustrative terminal values for the Company, which were calculated by applying terminal forward multiples ranging from 12.4x to 14.4x, to a terminal year estimate of our adjusted EBITDA, as reflected in the final projections. As directed by our management, Citi derived the estimate of our unlevered free cash flow for the period from April 1, 2018 through December 31, 2018 by subtracting our actual unlevered free cash flow for the period from January 1, 2018 through March 31, 2018, as provided by our management, from the estimate of our unlevered free cash flow for the fiscal year ended December 31, 2018 reflected in the final projections. Citi derived such discount rates from a weighted average cost of capital calculation for the Company, which Citi performed utilizing the Capital Asset Pricing Model with inputs that Citi determined were relevant based on publicly available data and Citi's professional judgment. The range of multiples was derived by Citi

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utilizing its professional judgment and experience, primarily taking into account our 2018 EBITDA trading multiple during the period prior to the public announcement of an unsolicited proposal from a third party to acquire the Company and also taking into account current EBITDA trading multiples of companies comparable to us (see also our discussion under the section entitled "—Comparable Companies Analysis" below). Citi derived ranges of illustrative enterprise values for the Company by adding the ranges of present values it derived above. Citi then subtracted from the range of illustrative enterprise values it derived for the Company net debt, preferred equity and noncontrolling interests (other than common units in the Operating Partnership not held by the Company) as of March 31, 2018, in each case, as provided by our management, to derive a range of illustrative equity values for the Company. Citi then divided the range of illustrative equity values it derived by the fully-diluted number of outstanding Company common shares, as provided by our management, which fully-diluted number included common units in the Operating Partnership not held by the Company, to derive a range of illustrative present values per Company common share of $28.50 to $35.19.

Goldman Sachs

              Using discount rates ranging from 7.5% to 8.5%, reflecting estimates of our weighted average cost of capital, Goldman Sachs discounted to present value as of March 31, 2018 (i) estimates of our unlevered free cash flow for the period from April 1, 2018 to December 31, 2022, as reflected in the final projections and (ii) a range of illustrative terminal values for the Company, which were calculated by applying perpetuity growth rates ranging from 1.5% to 2.5%, to a terminal year estimate of our unlevered free cash flow, as reflected in the final projections (which analysis implied terminal year enterprise value / adjusted EBITDA multiples ranging from 11.3x to 15.8x). As directed by our management, Goldman Sachs derived the estimate of our unlevered free cash flow for the period from April 1, 2018 through December 31, 2018 by subtracting our actual unlevered free cash flow for the period from January 1, 2018 through March 31, 2018, as provided by our management, from the estimate of our unlevered free cash flow for the fiscal year ended December 31, 2018 reflected in the final projections. Goldman Sachs derived such discount rates by application of the Capital Asset Pricing Model, which requires certain company-specific inputs, including the company's target capital structure weightings, the cost of long-term debt, after-tax yield on permanent excess cash, if any, future applicable marginal cash tax rate and a beta for the company, as well as certain financial metrics for the U.S. financial markets generally. The range of perpetuity growth rates was estimated by Goldman Sachs utilizing its professional judgment and experience, taking into account the final projections and market expectations regarding long-term real growth of gross domestic product and inflation. Goldman Sachs derived ranges of illustrative enterprise values for the Company by adding the ranges of present values it derived above. Goldman Sachs then subtracted from the range of illustrative enterprise values it derived for the Company net debt, preferred equity and noncontrolling interests (other than common units in the Operating Partnership not held by the Company) as of March 31, 2018, in each case, as provided by our management, to derive a range of illustrative equity values for the Company. Goldman Sachs then divided the range of illustrative equity values it derived by the fully-diluted number of outstanding Company common shares, as provided by our management, which fully-diluted number included common units in the Operating Partnership not held by the Company, to derive a range of illustrative present values per Company common share of $26.33 to $39.65.

Comparable Companies Analysis

Citi

              Citi performed a comparable companies analysis, which is an analysis designed to estimate an implied value of a company through an analysis of the public valuation and trading multiples of similar publicly-traded companies. Citi reviewed financial and stock information of the Company and the selected publicly-traded companies described below, which we refer to as the selected companies, which

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include full-service lodging REITs. No publicly-traded company is identical to us, but the companies listed were selected because, among other reasons, they possessed certain financial, operational or business characteristics that, in Citi's view, were sufficiently comparable to those of the Company or otherwise relevant for purposes of comparison.

              Citi reviewed, among other information, enterprise values of the selected companies, calculated as equity values (based on closing stock prices of the selected companies on May 18, 2018) plus net debt and any preferred equity and non-controlling interest, as a multiple of estimated EBITDA for calendar year 2018. The observed multiples of enterprise value to estimated 2018 EBITDA for the selected companies ranged from 12.7x to 14.7x (with a median of 13.0x), with such multiple for each of the selected companies being set forth in the table below.

Selected Company 

  Enterprise Value / 2018E EBITDA Multiple 

Chesapeake Lodging Trust

  14.7x

DiamondRock Hospitality Company

  12.8x

Host Hotels & Resorts, Inc.

  13.1x

Park Hotels & Resorts Inc.

  12.7x

Sunstone Hotel Investors, Inc.

  14.0x

Xenia Hotels & Resorts, Inc.

  13.0x

              Citi then applied this multiple range to our estimated 2018 adjusted EBITDA, as reflected in the final projections, to calculate an implied enterprise value reference range for the Company. Citi then subtracted from the range of implied enterprise values it derived for the Company net debt, preferred equity and noncontrolling interests (other than common units in the Operating Partnership not held by the Company) as of March 31, 2018, in each case, as provided by our management, to derive a range of implied equity values for the Company. Citi then divided the range of implied equity values it derived by the fully-diluted number of outstanding Company common shares, as provided by our management, which fully-diluted number included common units in the Operating Partnership not held by the Company. Financial data of the selected companies was based on publicly available research analysts' estimates, public filings and other information. Financial data of the Company were based on the final projections and our public filings. From this analysis, Citi derived an implied per Company common share equity value reference range of $24.74 to $30.06.

Illustrative Present Value of Future Share Price Analysis

Goldman Sachs

              Goldman Sachs performed an illustrative analysis of the implied present value of an illustrative future value per Company common share, which is designed to provide an indication of the present value of a theoretical future value of a company's equity as a function of such company's financial multiples. Using the final projections, Goldman Sachs derived a range of illustrative future values per Company common share as of December 31 for each of the fiscal years 2018 to 2021, by: (i) applying a range of illustrative one-year forward enterprise value / adjusted EBITDA multiples of 12.0x to 14.0x, which illustrative multiple estimates were derived by Goldman Sachs utilizing its professional judgment and experience, taking into account the historical average enterprise value / adjusted EBITDA multiples for the Company during the five-year period ended March 27, 2018, the last trading day prior to the public announcement of an unsolicited proposal from a third party to acquire the Company, to estimates of our one-year forward adjusted EBITDA as of the end of that fiscal year, as reflected in the final projections, to derive a range of implied enterprise values for the Company as of December 31 of each year; (ii) subtracting from the range of implied enterprise values as of December 31 of each year estimated year-end net debt, preferred equity and noncontrolling interests

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(other than common units in the Operating Partnership not held by the Company), as provided by our management, to yield a range of implied equity values for the Company as of December 31 of each fiscal year; and (iii) dividing the range of implied equity values by the estimated fully-diluted number of Company common shares outstanding as of December 31 of each fiscal year, as provided by our management, which fully-diluted number included common units in the Operating Partnership not held by us. Using an illustrative discount rate of 10.5%, reflecting an estimate of our cost of equity derived by application of the Capital Asset Pricing Model, which requires certain company-specific inputs, including a beta for the company, as well as certain financial metrics for the U.S. financial markets generally, Goldman Sachs discounted to present value as of March 31, 2018 both the range of illustrative values it derived above and estimated accrued future dividends as of December 31 of each of the fiscal years 2018 to 2021 (excluding declared dividends as of March 31, 2018), as provided by our management, to yield illustrative present values per Company common share ranging from $24.16 to $32.94.

Premia Analysis

Goldman Sachs

              Goldman Sachs reviewed and analyzed, using publicly available information, the acquisition premia for all-cash and majority-cash mixed consideration acquisition transactions announced during the time period from January 1, 2013 through May 18, 2018 involving a public company in the REIT industry as the target where the disclosed enterprise values for such transaction were greater than $1.0 billion. The following table lists the acquisition transactions:

Announcement Date   Acquiror   Target / Seller
May 2018   Blackstone   Gramercy Property Trust
March 2018   Brookfield Property Partners L.P.   GGP Inc.
July 2017   APG Asset Management N.V. / Greystar Real Estate Partners / GIC Pte Ltd. / Ivanhoe Cambridge   Monogram Residential Trust, Inc.
June 2017   Canada Pension Plan Investment Board   Parkway, Inc.
June 2017   Government Properties Income Trust   First Potomac Realty Trust
February 2017   Tricon Capital Group Inc.   Silver Bay Realty Trust Corp.
January 2017   Starwood Capital   Milestone Apartments Real Estate Investment Trust
January 2016   Brookfield Asset Management Inc.   Rouse Properties, Inc.
December 2015   DRA Advisors LLC   Inland Real Estate Corporation
October 2015   Harrison Street Real Estate Capital   Campus Crest Communities, Inc.
October 2015   Blackstone   BioMed Realty Trust, Inc.
September 2015   Blackstone   Strategic Hotels & Resorts, Inc.
June 2015   Lone Star Investment Advisors   Home Properties, Inc.
May 2015   Brookfield Asset Management Inc.   Associated Estates Realty Corporation
April 2015   Blackstone   Excel Trust
September 2014   Washington Prime Group Inc.   Glimcher Realty Trust
August 2014   Health Care REIT, Inc.   HealthLease Properties Real Estate Investment Trust
May 2013   American Realty Capital Properties, Inc.   CapLease, Inc.
April 2013   Brookfield Office Properties Inc.   MPG Office Trust, Inc.

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              For the entire period, using publicly available information, Goldman Sachs calculated the low, median, mean and high premia of the price paid in these transactions relative to the target's last undisturbed closing stock price prior to announcement of the transaction. This analysis indicated a low premium of 5.1%, a median premium of 17.4%, a mean premium of 18.0% and high premium of 35.3%. Using this analysis, Goldman Sachs applied a reference range of illustrative premiums of 5.1% to 35.3% to the undisturbed closing price per Company common share of $24.84 as of March 27, 2018, the last trading day prior to the public announcement of an unsolicited proposal from a third party to acquire the Company, and calculated a range of implied equity values per Company common share of $26.11 to $33.60.

Selected Transactions Analysis

              Citi and Goldman Sachs performed a selected transactions analysis, which is an analysis designed to estimate an implied illustrative value of a company through an analysis of the multiples paid in acquisitions of similar companies and businesses. Citi and Goldman Sachs reviewed certain publicly available information for selected transactions in the lodging REIT industry announced between 2006 and 2018, which we refer to collectively as the selected transactions.

              Although none of the target companies in the selected transactions are directly comparable to us and none of the selected transactions are directly comparable to the transactions contemplated by the merger agreement, the selected transactions were chosen because they involved lodging REITs with financial, operational or business characteristics that, in Citi's and Goldman Sachs' view, based on their respective professional judgment and experience, made them sufficiently comparable to us and/or the transactions contemplated by the merger agreement or otherwise relevant for purposes of analysis. For each of the selected transactions, Citi and Goldman Sachs reviewed the total enterprise value, which we refer to as TEV, of the selected transaction as a multiple of the relevant target company's trailing 12 months (which we refer to as TTM) EBITDA as of the time of the most recently completed quarter prior to the close of the transaction. The observed TEV / TTM EBITDA multiples for the selected transactions are set forth in the table below and ranged from 10.4x to 18.6x.

Announcement Date
  Target Name   Acquiror   TEV /
TTM EBITDA
April 24, 2017   FelCor Lodging Trust Incorporated   RLJ Lodging Trust   12.9x
April 14, 2016   Apple REIT Ten, Inc.   Apple Hospitality REIT, Inc.   13.5x
September 8, 2015   Strategic Hotels & Resorts, Inc.   Blackstone   18.6x
November 29, 2012   Apple REIT Six Inc.   Blackstone   13.4x
July 25, 2007   Apple Hospitality Five, Inc.   Inland American Real Estate Trust, Inc.   14.9x
June 21, 2007   Equity Inns, Inc.   Whitehall Street Global Real Estate   15.0x
April 30, 2007   Eagle Hospitality Properties Trust, Inc.   Apollo Real Estate Consortium   12.1x
April 24, 2007   Highland Hospitality Corporation   JER Partners   16.2x
April 16, 2007   Innkeepers USA Trust   Apollo Investment Corporation   14.8x
April 3, 2007   Winston Hotels, Inc.   Inland American Real Estate Trust, Inc.   13.0x
February 15, 2007   Apple Hospitality Two, Inc.   ING Clarion Partners, LLC   10.4x
February 21, 2006   MeriStar Hospitality Corporation   Blackstone   13.4x

              Based on their respective professional judgment and experience, and taking into consideration the observed multiples for the selected transactions, Citi and Goldman Sachs then applied a reference range of multiples of 13.0x to 14.9x (reflecting the 25th and 75th percentiles of TEV/TTM EBITDA multiples for the selected transactions) to derive an implied equity value per share for the Company. Financial data of the selected transactions were based on public filings and other information. Financial data of the Company were based on financial information provided by, and used by Citi and Goldman Sachs at the direction of, our management. Citi and Goldman Sachs applied the 13.0x to 14.9x range of TEV / TTM EBITDA multiples to our TTM EBITDA for the 12-month period ended March 31, 2018

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to derive a range of implied enterprise values for the Company. Citi and Goldman Sachs then subtracted from the range of implied enterprise values they derived for the Company net debt, preferred equity and noncontrolling interests (other than common units in the Operating Partnership not held by the Company) as of March 31, 2018, in each case, as provided by our management, to derive a range of implied equity values for the Company. Citi and Goldman Sachs then divided the range of implied equity values they derived by the fully-diluted number of outstanding Company common shares, as provided by our management, which fully-diluted number included common units in the Operating Partnership not held by the Company, resulting in an implied equity value per Company common share of $28.43 to $34.10.

Financing

              In connection with the closing of the mergers, Parent will cause an aggregate of approximately $3.7 billion to be paid to the holders of our common shares, including holders of our restricted share awards, performance shares and deferred shares, and the limited partners (other than the Company) of the Partnership. In connection with our redemption of the preferred shares as described under "The Merger Agreement—Common Shares, Restricted Share Awards, Performance Shares, Deferred Shares and Preferred Shares," Parent will cause us to deliver notices of redemption to the holders of our preferred shares and we will pay approximately $260 million (plus accrued and unpaid dividends to, but not including, the redemption date) to the holders of our preferred shares immediately prior to the mergers. In addition, Parent has informed us that in connection with the closing of the mergers, Parent expects to cause all of our outstanding term loans and all of the outstanding indebtedness under our senior unsecured credit facility and unsecured revolving credit facility to be prepaid in full at the closing. Parent has informed us that it expects our mortgage loans to be repaid or remain outstanding. As of May 31, 2018, we had approximately $855 million in aggregate principal amount of consolidated indebtedness under our term loans and senior unsecured credit facility and $225 million in aggregate principal amount of consolidated indebtedness under our mortgage loans.

              Parent has informed us that it is currently in the process of obtaining debt financing to be provided in connection with the mergers. In addition, it is expected that the Sponsor and its affiliates will contribute equity to Parent for the purpose of funding the acquisition costs (including the merger consideration) that are not covered by such debt financing.

              Parent has informed us that in addition to the payment of the merger consideration, the funds to be obtained from the debt and equity financing may be used for purposes such as reserves, the refinancing of certain of our existing debt, and for other costs and expenses related to the financing and the mergers. Parent has informed us that it currently believes that the funds to be borrowed under the debt financing would be secured by, among other things, a first priority mortgage lien on certain properties which are wholly owned by us, escrows, reserves, a cash management account, or a first priority pledge of and security interest in the direct or indirect ownership interests in the owners of the properties, in each case, together with such other pledges and security required by the lender to secure and perfect their interest in the applicable collateral and that such debt financing would be conditioned on the mergers being completed and other customary conditions for similar financings.

              The merger agreement does not contain a financing condition or a "market MAC" condition to the closing of the mergers. We have agreed to use commercially reasonable efforts to provide, and to cause our subsidiaries to use their commercially reasonable efforts to provide, all cooperation reasonably necessary and customary in connection with the arrangement of debt financing with respect to us or our subsidiaries, or our or our subsidiaries' real property. For more information, see "The Merger Agreement—Financing Cooperation" and "The Merger Agreement—Conditions to the Mergers."

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Interests of Our Trustees, Executive Officers and Employees in the Mergers

              In considering the recommendation of the board to approve the merger and the merger agreement and the other proposals described above, our shareholders should be aware that our trustees, executive officers and employees have certain interests in the mergers that are different from, or in addition to, the interests of our shareholders generally. These interests may create potential conflicts of interest. The board was aware of these interests and considered them, among other matters, in reaching its decision to approve the merger and the merger agreement. These interests are discussed below.

Deferred Shares

              In accordance with the terms of the trustee fee deferral program, the merger agreement provides that each award of deferred shares outstanding immediately prior to the merger effective time will automatically be cancelled in exchange for the right to receive the merger consideration, without interest and less any required tax withholdings. Deferred shares issued under the trustee fee deferral program represent amounts previously earned and voluntarily deferred by our non-management trustees.

              The following table sets forth the number of deferred shares held by our non-management trustees as of May 17, 2018, as well as the value of those shares based on the merger consideration of $33.50 per share. As noted above, the amounts in the table below reflect compensation previously earned and voluntarily deferred by the applicable trustee and are therefore not uniform.

Trustee   Number of
Deferred Shares
(#)(1)
  Value of Deferred
Shares
($)
 

Denise M. Coll

         

Jeffrey T. Foland

     

Darryl Hartley-Leonard

    16,675     558,613  

Jeffrey L. Martin

  1,384   46,364  

Stuart L. Scott

    85,876     2,876,846  

Donald A. Washburn

     

(1)
Holders of deferred shares will receive additional deferred shares in an amount equal to the amount of the dividend paid on our common shares for the quarter ending June 30, 2018, divided by the average closing price of our common shares on the NYSE during the 10 trading days preceding the first day on which our common shares begin trading without entitlement to such dividend.

              For more information regarding the beneficial ownership of our securities by our trustees and executive officers, see "Security Ownership of Certain Beneficial Owners and Management."

Restricted Share Awards

              In accordance with our 2014 Equity Incentive Plan, as amended, and the terms of the restricted share agreements, the merger agreement provides that, effective immediately prior to the merger effective time, each restricted share award that is outstanding immediately prior to the merger effective time, including those held by our executive officers, will automatically become fully vested, and non-forfeitable, and all restrictions and repurchase rights will lapse, and our common shares represented thereby will be considered outstanding for all purposes under the merger agreement and subject to the right to receive the merger consideration, less any required tax withholdings.

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              As of May 17, 2018, our senior officers collectively owned 189,870 unvested restricted share awards, including 107,635 unvested restricted share awards granted to our senior officers in January 2018. The following table sets forth the number of unvested restricted share awards held by our current senior officers as of May 17, 2018, as well as the value of those shares based on the merger consideration of $33.50 per share.

Officer   Unvested
Restricted Share
Awards
(#)
  Value of Unvested
Restricted Share
Awards
($)
 

Michael D. Barnello

    93,820     3,142,970  

Kenneth G. Fuller

  28,860   966,810  

Alfred L. Young, Jr.

    44,499     1,490,717  

Ian Gaum

  22,691   760,149  

Performance Shares

              The performance-based share award agreements provide that the number of common shares subject to each award that would become vested upon a change in control is based on the measurement of certain performance criteria as of the closing date of the change in control. Accordingly, the number of earned performance shares under each such performance award could range between zero to 200% of the target number of common shares subject to such performance award. Based on the $33.50 per share merger consideration, the Company calculated at the time the merger agreement was executed that Messrs. Barnello and Young would have received 180% of their target number of common shares and Mr. Fuller would have received 175% of his target number of common shares. In connection with entering into the merger agreement, the Company and Parent evaluated the number of common shares that could be earned and vested upon the closing of the mergers and, in order to avoid uncertainty, the Company and Parent agreed, and the merger agreement provides, that, immediately prior to the merger effective time, each outstanding performance award, including those held by our executive officers, will automatically become earned and vested with respect to 150% of the target number of common shares subject to such performance award. Such provision does not apply to an aggregate of 24,613 unearned and unvested performance awards (assuming "target" performance) held by Messrs. Barnello and Young that are expected to vest pursuant to the terms of the applicable award agreements in July 2018. Immediately prior to the merger effective time, each earned performance share will be cancelled in exchange for the merger consideration, without interest and less required tax withholdings. Additionally, in accordance with the terms of the performance-based share award agreements, in connection with the mergers, each holder of a performance award will receive a cash amount equal to all accrued and unpaid cash dividends that would have been paid on the earned performance shares as if the earned performance shares had been issued and outstanding from the grant date through the merger effective time, without interest and less any required tax withholdings.

              As of May 17, 2018, our senior officers collectively owned 391,359 unearned and unvested performance awards (assuming "target" performance), including 152,024 performance awards (assuming "target" performance) granted to our senior officers in January 2018. The following table sets forth the number of performance awards held by our senior officers as of May 17, 2018 (excluding performance awards held by Messrs. Barnello and Young that are expected to vest in accordance with the terms of the applicable award agreements in July 2018), as well as the value of those awards with a performance

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level of 150% of "target," as agreed upon in the merger agreement. The dollar amounts set forth below are based on the merger consideration of $33.50 per share.

Officer   Number of Unvested
Performance
Awards at 150% of
"Target" Performance
(#)
  Value of Unvested
Performance
Awards at 150% of
"Target" Performance
($)
 

Michael D. Barnello

    297,616     9,970,136  

Kenneth G. Fuller

  83,739   2,805,257  

Alfred L. Young, Jr.

    141,114     4,727,319  

Ian Gaum

  27,649   926,241  

Change in Control Severance Agreements

              As previously disclosed, we entered into an amended and restated change in control severance agreement with Mr. Barnello, effective October 19, 2009, and change in control severance agreements with Mr. Fuller, effective April 25, 2016, Mr. Young, effective November 3, 2009, and Mr. Gaum, effective December 17, 2013.

              Each severance agreement provides for certain severance payments and benefits, as described more fully below, upon termination by the Company without "cause" (as defined in the applicable severance agreement) or by the officer for "good reason" (as defined in the applicable severance agreement) in connection with or within one year following a change in control. The merger agreement provides that the occurrence of the merger effective time will be deemed to constitute a change in control under each severance agreement. Immediately after the merger effective time, the employment of each of Messrs. Barnello, Fuller, Young and Gaum will be deemed to have been terminated by the Company without "cause" as of the closing date and each officer will be entitled to the following severance payments and benefits provided under the terms of the applicable severance agreements, subject to the applicable individual's execution and non-revocation of a general release of claims:

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              The severance agreements with Messrs. Barnello and Young provide for tax gross-up payments to the executive if any amounts paid or payable to the executive would be subject to the excise tax imposed on certain so-called "excess parachute payments" under Section 4999 of the Code.

              As a condition to receiving accelerated vesting under the existing terms of our performance shares, each of Messrs. Barnello, Fuller, Young and Gaum agreed to a 12-month limited non-compete with the Company that restricts such officer from participating in any business operation primarily engaged in owning (as compared to, for example, franchising or managing) luxury or upscale hotels in urban, resort or convention markets in the United States. The severance agreements also contain non-solicitation provisions which apply during the term of the officer's employment and the 12-month period following employment termination.

              The table below under "—Quantification of Payments and Benefits" reflects the amount of severance payments and benefits that our executive officers would be entitled to receive under the applicable executive officer's severance agreement upon termination of such executive officer's employment by us without "cause" or by the executive officer for "good reason" following the mergers.

Payment of Employee Bonuses

              In order to reduce uncertainty in connection with the proposed mergers, the merger agreement provides that Parent will cause the Surviving Entity to pay pro-rated annual bonuses for the 2018 performance year for certain of our employees (other than our senior officers) no later than January 15, 2019 at 125% of the applicable employee's target bonus amount. The amount due to any employee who is terminated by Parent or the Surviving Entity without "cause" prior to January 15, 2019 will be pro-rated through the termination date and paid upon expiration of the seven-day revocation period following the execution and delivery by the applicable employee of a release agreement.

              Following the Company's receipt of an unsolicited proposal for the acquisition of the Company, the board adopted an employee retention bonus plan to assure that the Company will retain and have the continued dedication of employees during a period of uncertainty at the Company. The aggregate value of the awards payable to certain of our employees (other than our senior officers) under the employee retention bonus plan is approximately $7,500,000. Parent will cause the Surviving Entity to pay, following the closing date, the amounts and benefits due to certain employees (other than our senior officers) under the Company's employee retention bonus plan upon expiration of the seven-day revocation period following the execution and delivery by the applicable participant of a release agreement.

Payment of Trustee Compensation

              In exchange for their services to the Company in connection with the mergers, each member of the transaction committee of the board is entitled to receive compensation of $20,000 per month, subject to an overall limit of $100,000 per member. The members of the transaction committee of the board are Messrs. Foland, Hartley-Leonard and Scott.

              On the closing date, our non-management trustees will be paid by the Company in cash in respect of their earned and unpaid 2018 board compensation.

Indemnification of Our Trustees and Executive Officers

              The merger agreement provides that from and after the merger effective time, each of Parent and the Surviving Entity will indemnify and hold harmless each individual who at the merger effective

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time is, or at any time prior to the merger effective time was, our or our subsidiaries' trustee, director or officer , which persons we refer to as the indemnified persons, for any and all costs and expenses (including reasonable fees and expenses of legal counsel), judgments, fines, penalties or liabilities (including amounts paid in settlement or compromise) imposed upon or reasonably incurred by such indemnified party in connection with or arising out of any action, suit, arbitration or other proceedings (whether civil or criminal) in which such indemnified party may be involved or with which he or she may be threatened (regardless of whether as a named party or as a participant other than as a named party, including as a witness) (we refer to the foregoing as an indemnified party proceeding) (1) by reason of such indemnified party's being or having been such trustee, director or officer or an employee or agent of us or any of our subsidiaries or otherwise in connection with any action taken or not taken at the request of us or any of our subsidiaries at, or at any time prior to, the merger effective time or (2) arising out of such indemnified party's service in connection with any other corporation or organization for which he or she serves or has served as a trustee, director, officer, employee, agent, trustee or fiduciary at our request (including in any capacity with respect to any employee benefit plan) at, or at any time prior to, the merger effective time, in each of (1) or (2), whether or not the indemnified party continues in such position at the time such indemnified party proceeding is brought or threatened, to the fullest extent permitted under applicable law, subject to certain limitations set forth in the merger agreement.

              The parties have agreed not to terminate or modify the obligations described above regarding indemnification of indemnified persons in such a manner as to adversely affect such indemnified persons, and such obligations must be assumed by any successor entity to the Surviving Entity as a result of any consolidation or merger or transfer or conveyance of all or substantially all of its properties and assets.

              The merger agreement also provides that for a period of six years from and after the merger effective time, Parent will, or will cause the Surviving Entity to, maintain officers' and directors' liability insurance in respect of acts or omissions occurring prior to the merger effective time covering each such person currently covered by our officers' and directors' liability insurance policy on terms with respect to coverage and amount no less favorable than those of such policy in effect on the date of the merger agreement. This requirement is subject to a maximum cost of 300% of our annual premium paid for such insurance in the fiscal year ended December 31, 2017, which we refer to as the maximum cost. If the cost to maintain or procure such insurance coverage would exceed the maximum cost, the Surviving Entity must cause to be maintained policies of insurance that, in the Surviving Entity's good faith judgment, provide the maximum coverage available at an aggregate amount for such insurance policy equal to the maximum cost. Additionally, Parent and the Surviving Entity are required to fulfill and honor in all respects our obligations pursuant to specified agreements in effect as of the date of the merger agreement between us and any indemnified party; and any indemnification provision (including advancement of expenses) and any exculpation provision set forth in our or our subsidiaries' organizational documents as in effect on the date of the merger agreement.

Quantification of Payments and Benefits

              The following table sets forth the information required by Item 402(t) of Regulation S-K promulgated by the SEC regarding certain compensation which each of our "named executive officers" may receive that is based on or that otherwise relates to the mergers. This compensation is referred to as "golden parachute" compensation in Item 402(t) of Regulation S-K. This compensation payable to our named executive officers is subject to a non-binding advisory vote of our common shareholders as described above under the section entitled "Proposal 2: Proposal to Approve the Merger-Related Compensation." For additional details regarding the terms of the payments quantified below, see the section entitled "—Interests of Our Trustees, Executive Officers and Employees in the Mergers" above.

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              The amounts indicated below are estimates based on multiple assumptions that may or may not actually occur or be accurate on the relevant date, including the assumptions described below. The actual value to be received by our named executive officers may be greater or less than the amounts presented below. For purposes of calculating such amounts, we have assumed, among other things:


"Golden Parachute" Compensation

Name   Cash
($)(1)
  Equity
($)(2)
  Perquisites/
Benefits
($)(3)
  Tax
Reimbursement
($)(4)
  Total
($)
 

Michael D. Barnello

  8,869,976   13,781,268   150,000   8,695,088   31,496,332  

Kenneth G. Fuller

    2,114,916     3,930,125     50,000         6,095,041  

Alfred L. Young, Jr.

  2,730,938   6,536,000   80,000   3,446,792   12,793,730  

(1)
This figure represents the sum of (a) the cash severance payment, and (b) an amount equal to the applicable executive's average bonus over the prior three years (as adjusted for such lesser number of years that the executive has been employed by us) that is pro-rated for the portion of the year elapsed.

The cash severance payment, as further described above under "—Interests of Our Trustees, Executive Officers and Employees in the Mergers—Change in Control Severance Agreements," is an amount equal to the sum of the executive's then-current annual base salary plus average bonus over the prior three years (as adjusted for such lesser number of years that the executive has been employed by us), multiplied by (a) three, for Mr. Barnello, or (b) two, for Messrs. Fuller and Young. The calculations in the table are based on each executive's 2018 annual base salary ($850,000 for Mr. Barnello, $450,000 for Mr. Fuller and $530,000 for Mr. Young) and each executive's average bonus for the three-year period (as adjusted for such lesser period that the executive has been employed by us) ended December 31, 2017 ($1,625,646 for Mr. Barnello, $403,410 for Mr. Fuller and $578,645 for Mr. Young). The cash severance payment will be paid in a lump sum upon expiration of the seven-day revocation period following the executive's execution and non-revocation of a general release of claims.

(2)
Represents the value of the accelerated vesting of restricted share awards and performance awards (assuming 150% of "target" performance of the performance awards and including the value of all accrued and unpaid cash dividends that would have been paid with respect to the earned performance shares), as applicable, for each named executive officer. See "—Interests of Our Trustees, Executive Officers and Employees in the Mergers—Restricted Share Awards" and "—Interests of Our Trustees, Executive Officers and Employees in the Mergers—Performance Shares" above for more information. Estimated amounts included in this column with respect to restricted share awards and performance awards are "single trigger" benefits that will be paid in cash within five business days after the merger effective time, or at such later time as necessary to avoid a violation or adverse tax consequences under Section 409A of the Code to our named executive officers.

(3)
With respect to Messrs. Barnello, Fuller and Young, this figure represents the sum of the amount needed to pay for then-current health, dental, disability and life insurance benefits for

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    (a) 36 months for Mr. Barnello, (b) 18 months for Mr. Fuller, and (c) 24 months for Mr. Young, with such amounts payable following the executive's termination of employment at the same level as in effect immediately preceding his termination of employment. The health insurance benefits amounts were determined using the estimated premiums currently in effect. Estimated amounts included in this column will be paid in a lump sum upon expiration of the seven-day revocation period following the executive's execution and non-revocation of a general release of claims.

(4)
The severance agreements with Messrs. Barnello and Young provide for tax gross-up payments to the executive if any amounts paid or payable to the executive would be subject to the excise tax imposed on certain so-called "excess parachute payments" under Section 4999 of the Code. This figure represents the estimated potential cost of such tax gross-up.

Regulatory Matters

              We are unaware of any material federal, state or foreign regulatory requirements or approvals that are required for the execution of the merger agreement or the completion of either the merger or the partnership merger, other than the acceptance for record of the articles of merger with respect to the merger by the State Department of Assessments and Taxation of the State of Maryland, and the filing of the certificate of merger with respect to each of the merger and the partnership merger with the Secretary of State of the State of Delaware.

Material U.S. Federal Income Tax Consequences

              The following is a summary of the material U.S. federal income tax consequences of the merger to common shareholders whose shares are surrendered in the merger in exchange for the right to receive the merger consideration as described herein. This summary is based on current law, is for general information only and is not tax advice. This summary is based on the Code, applicable Treasury Regulations, and administrative and judicial interpretations thereof, each as in effect as of the date hereof, all of which are subject to change or to different interpretations, possibly with retroactive effect. We have not requested, and do not plan to request, any rulings from the Internal Revenue Service, which we refer to as the IRS, concerning our tax treatment or the tax treatment of the merger, and the statements in this proxy statement are not binding on the IRS or any court. We can provide no assurance that the tax consequences contained in this discussion will not be challenged by the IRS, or if challenged, will be sustained by a court.

              This summary does not address (1) U.S. federal taxes other than income taxes, (2) state, local or non-U.S. taxes, (3) tax reporting requirements or (4) withholding taxes under Sections 1471 through 1474 of the Code (such Sections commonly referred to as FATCA). This summary assumes that our common shares are held as capital assets within the meaning of Section 1221 of the Code and does not address all aspects of taxation that may be relevant to particular holders in light of their personal investment or tax circumstances or to persons that are subject to special tax rules and does not address the tax consequences of the merger to holders of our restricted share awards, our preferred shares, equity received as compensation, or common units of the Operating Partnership. In addition, this summary does not address the tax treatment of special classes of common shareholders, including, for example:

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              If any entity that is treated as a partnership for U.S. federal income tax purposes holds our common shares, the tax treatment of its partners or members generally will depend upon the status of the partner or member and the activities of the entity. If you are a partner of a partnership or a member of a limited liability company or other entity classified as a partnership for U.S. federal income tax purposes and that entity is holding our common shares, you should consult your tax advisors. Moreover, each holder should consult its tax advisors regarding the U.S. federal income tax consequences to it of the merger in light of its own particular situation, as well as any consequences of the merger to such holder arising under the laws of any other taxing jurisdiction.

              For purposes of this section, a "U.S. holder" means a beneficial owner of our common shares that is, for U.S. federal income tax purposes:

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              As used in this section, a "non-U.S. holder" means a beneficial owner of our common shares that is not a U.S. holder or an entity treated as a partnership for U.S. federal income tax purposes.

Consequences of the Merger to U.S. Common Shareholders

              General.    The receipt of cash by U.S. holders in exchange for their shares pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes (and also may be a taxable transaction under applicable state, local and foreign income and other tax laws). In general, a U.S. holder of our common shares will recognize gain or loss for U.S. federal income tax purposes equal to the difference between:

              Gain or loss will be calculated separately for each block of shares, with a block consisting of shares acquired at the same cost in a single transaction. This gain or loss will generally be capital gain or loss and will be long-term capital gain or loss if at the time of the merger the shares have been held for more than one year. An individual U.S. holder will be subject to tax on net capital gain at a maximum U.S. federal income tax rate of 20%. Additionally, a 3.8% Medicare unearned contribution tax will apply to any gain recognized by individuals, trusts and estates whose income exceeds certain threshold levels. Capital gains of corporate U.S. holders generally are taxable at the regular tax rate applicable to corporations. The deductibility of a capital loss recognized in the exchange is subject to limitations under the Code. In addition, the IRS has the authority to prescribe, but has not yet prescribed, regulations that would apply a tax rate of 25% to a portion of capital gain realized by a non-corporate shareholder on the sale of REIT shares that would correspond to the REIT's "unrecaptured section 1250 gain."

              Special Rule for U.S. Holders Who Have Held our Common Shares for Less than Six Months.    A U.S. holder who has held our common shares for less than six months at the time of the merger, taking into account the holding period rules of Section 246(c)(3) and (4) of the Code, and who recognizes a loss on the exchange of our common shares in the merger, will be treated as recognizing a long-term capital loss to the extent of any capital gain dividends received from us, or such holder's share of any designated retained capital gains, with respect to such shares.

Consequences of the Merger to Non-U.S. Common Shareholders

              General.    The U.S. federal income tax consequences of the merger to a non-U.S. holder will depend on various factors, including whether the receipt of the merger consideration is treated as a distribution from us to our shareholders that is attributable to gain from the sale of "United States real property interests." The consequences also may vary depending on whether the non-U.S. holder has held not more than 10% of our common shares during specified periods. The IRS announced in Notice 2007-55 that it intends to (1) take the position that under current law a non-U.S. holder's receipt of a liquidating distribution from a REIT (including the receipt of cash in exchange for Company shares in the merger, which will be treated as a deemed liquidation for U.S. federal income tax purposes) is generally subject to tax under FIRPTA as a distribution to the extent attributable to gain from the sale of United States real property interests, and (2) issue regulations that will be effective for transactions occurring on or after June 13, 2007, clarifying this treatment. Although legislation effectively overriding Notice 2007-55 has previously been proposed, it is not possible to say if or when any such legislation will be enacted. As a result, the following paragraphs provide alternative

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discussions of the tax consequences that would arise to the extent the tax treatment set forth in Notice 2007-55 does or does not apply. Notwithstanding the discussion in the following paragraphs, we intend to take the position that the cash received in exchange for our common shares will be subject to tax in accordance with Notice 2007-55 as described in more detail below. In general, the provisions governing the taxation of distributions by REITs can be less favorable to non-U.S. holders than the taxation of sales or exchanges of REIT shares by non-U.S. holders, and non-U.S. holders should consult their tax advisors regarding the application of these provisions.

              Distribution of Gain from the Disposition of U.S. Real Property Interests.    Subject to the discussion below regarding non-U.S. holders who have not owned more than 10% of our common shares during the one year period ending on the date of the merger, to the extent the tax treatment set forth in Notice 2007-55 applies, and to the extent cash received by non-U.S. holders in the merger is attributable to gain from the deemed sale of our United States real property interests (which we expect to be a substantial portion of such cash), then such amount will be treated as income effectively connected with the conduct of a U.S. trade or business of the non-U.S. holder and generally will be subject to U.S. federal income tax on a net basis. A corporate non-U.S. holder will also be subject to the 30% branch profits tax (or such lower rate as may be specified by an applicable income tax treaty). In addition, 21% (or 20% to the extent provided in Treasury Regulations) of any such amounts paid to a non-U.S. holder will be withheld and remitted to the IRS. Notwithstanding the foregoing, to the extent the tax treatment set forth in Notice 2007-55 does not apply, or if a non-U.S. holder has not owned more than 10% of our common shares at any time during the one-year period ending on the date of the merger and our common shares are "regularly traded," as defined by applicable Treasury Regulations, on an established securities market located in the United States, the 21% withholding tax described above would not apply, and such non-U.S. holder would instead be subject to the rules described below in the section entitled "—Taxable Sale of our Common Shares." We believe that our common shares are regularly traded on an established securities market in the United States as of the date of this proxy statement.

              Taxable Sale of our Common Shares.    Subject to the discussion of backup withholding below and to the discussion of distribution of gain from the disposition of United States real property interests above, if the merger is treated as a taxable sale of our common shares, a non-U.S. holder should not be subject to U.S. federal income taxation on any gain or loss from the merger unless: (1) the gain is effectively connected with the non-U.S. holder's conduct of a trade or business in the United States, or, if an applicable income tax treaty applies, the gain is attributable to a permanent establishment maintained by the non-U.S. holder in the United States; (2) the non-U.S. holder is an individual present in the United States for 183 days or more in the taxable year of the merger and certain other requirements are met; or (3) such shares constitute a "United States real property interest" under FIRPTA.

              A non-U.S. holder whose gain is effectively connected with the conduct of a trade or business in the United States will generally be subject to U.S. federal income tax on such gain on a net basis in the same manner as a U.S. holder. In addition, a non-U.S. holder that is a corporation may be subject to the 30% branch profits tax (or such lower rate as may be specified by an applicable income tax treaty) on such effectively connected gain described in clause (1) of the previous paragraph.

              A non-U.S. holder who is an individual present in the United States for 183 days or more in the taxable year of the merger and who meets certain other requirements will be subject to a flat 30% tax on the gain derived from the merger, which may be offset by U.S. source capital losses. In addition, the non-U.S. holder may be subject to applicable alternative minimum taxes.

              If a non-U.S. holder's share constitutes a United States real property interest under FIRPTA, any gain recognized by such holder in the merger will be treated as income effectively connected with

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the conduct of a U.S. trade or business of the non-U.S. holder and generally will be subject to U.S. federal income tax on a net basis in the same manner as a U.S. holder. A non-U.S. holder's common shares generally will not constitute a U.S. real property interest if either (1) we are a "domestically controlled qualified investment entity" at the merger effective time, or (2) both (a) that class of our shares is regularly traded on an established securities market at the date of the merger and (b) the non-U.S. holder holds 10% or less of the total fair market value of that class of shares at all times during the shorter of (x) the five-year period ending with the effective date of the merger and (y) the non-U.S. holder's holding period for the shares. As discussed above, we believe that our common shares are regularly traded on an established securities market as of the date of this proxy statement. A "qualified investment entity" includes a REIT. Assuming we qualify as a REIT, we will be a "domestically controlled qualified investment entity" at the merger effective time if non-U.S. holders held directly or indirectly less than 50% in value of our common shares at all times during the five-year period ending with the merger effective time. No assurances can be given that the actual ownership of our shares has been or will be sufficient for us to qualify as a "domestically controlled qualified investment entity" at the merger effective time.

              U.S. Withholding Tax.    As described above, it is unclear whether the receipt of the merger consideration by a non-U.S. holder will be treated as a sale or exchange of our common shares or as a distribution from us that is attributable to gain from the deemed sale of our United States real property interests in the mergers. Accordingly, we intend to withhold U.S. federal income tax at a rate of 21% (or 20% to the extent provided in applicable Treasury Regulations) from the portion of the merger consideration that is, or is treated as, attributable to gain from the sale of United States real property interests and paid to a non-U.S. holder unless such holder qualifies for the 10% exception described above. If a non-U.S. holder holds its shares through a nominee, that nominee may take a contrary position and conclude that withholding applies to the merger consideration payable to such non-U.S. holder.

              A non-U.S. holder may be entitled to a refund or credit against the holder's U.S. federal income tax liability, if any, with respect to any amount withheld pursuant to FIRPTA, provided that the required information is furnished to the IRS on a timely basis. Non-U.S. holders should consult their tax advisors regarding withholding tax considerations.

Information Reporting and Backup Withholding

              Backup withholding, currently at a rate of 24%, and information reporting may apply to the cash received pursuant to the exchange of our common shares in the merger. Backup withholding will not apply, however, to a holder who:

              Backup withholding is not an additional tax and any amount withheld under these rules may be credited against the holder's U.S. federal income tax liability and may entitle the holder to a refund if required information is timely furnished to the IRS.

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              THE FOREGOING DOES NOT PURPORT TO BE A COMPLETE ANALYSIS OF THE POTENTIAL TAX CONSIDERATIONS RELATING TO THE MERGERS AND IS NOT TAX ADVICE. THEREFORE, COMMON SHAREHOLDERS ARE STRONGLY URGED TO CONSULT THEIR TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE MERGERS, INCLUDING THE APPLICABILITY AND EFFECT OF U.S. FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX LAWS IN THEIR PARTICULAR CIRCUMSTANCES.

Delisting and Deregistration of Our Common Shares and Preferred Shares

              If the mergers are completed, our common shares and preferred shares will no longer be traded on the NYSE and will be deregistered under the Exchange Act.

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THE MERGER AGREEMENT

              The following summarizes the material provisions of the merger agreement. This summary does not purport to be complete and may not contain all of the information about the merger agreement that is important to you. The summary of the material terms of the merger agreement below and elsewhere in this proxy statement is qualified in its entirety by reference to the merger agreement, a copy of which is attached to this proxy statement as Exhibit A and which we incorporate by reference into this proxy statement. We recommend that you read the merger agreement attached to this proxy statement as Exhibit A carefully and in its entirety, as the rights and obligations of the parties are governed by the express terms of the merger agreement and not by this summary or any other information contained in this proxy statement.

              The merger agreement contains representations and warranties made by, and to, us, the Operating Partnership, Parent, Merger Sub and Merger OP. These representations and warranties, which are set forth in the copy of the merger agreement attached to this proxy statement as Exhibit A, were made for the purposes of negotiating and entering into the merger agreement between the parties, or may have been used for the purpose of allocating risk between the parties instead of establishing such matters as facts. In addition, these representations and warranties may be subject to important qualifications and limitations agreed by the parties in connection with negotiating the terms of the merger agreement, were made as of specified dates, and may be subject to standards of materiality different from what may be viewed as material to our shareholders. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this proxy statement, may have changed since the date of the merger agreement and subsequent developments or new information qualifying a representation or warranty may have been included in this proxy statement. You should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or conditions of us or our affiliates.

              As used in the summary of the material terms of the merger agreement below and elsewhere in this proxy statement, unless the context requires otherwise, references to our "subsidiaries" do not include certain joint venture entities in which we, directly or indirectly through our subsidiaries, own interests.

Structure

The Partnership Merger

              At the partnership merger effective time, Merger OP will be merged with and into the Operating Partnership and the separate existence of Merger OP will cease. The Operating Partnership will continue as the Surviving Partnership in the partnership merger. At the partnership merger effective time, all of the properties, rights, privileges, powers and franchises of the Operating Partnership and Merger OP will vest in the Surviving Partnership, and all debts, liabilities, duties and obligations of the Operating Partnership and Merger OP will become the debts, liabilities, duties and obligations of the Surviving Partnership.

The Merger

              At the merger effective time, the Company will be merged with and into Merger Sub and the separate existence of the Company will cease. Merger Sub will continue as the surviving entity in the merger. At the merger effective time, all of the properties, rights, privileges, powers and franchises of the Company and Merger Sub will vest in the Surviving Entity, and all debts, liabilities, duties and obligations of the Company and Merger Sub will become the debts, liabilities, duties and obligations of the Surviving Entity. Following the completion of the merger, our common shares will no longer be traded on the NYSE and will be deregistered under the Exchange Act.

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Effective Times; Closing Date

              On the closing date, Merger OP and the Operating Partnership will cause a certificate of merger to be executed, acknowledged and filed with the Secretary of State of the State of Delaware. The partnership merger will become effective on the date and time at which such certificate of merger has been duly filed with the Secretary of State of the State of Delaware, or at such other date and time agreed between the parties to the merger agreement and specified in such certificate of merger.

              Immediately following the partnership merger effective time, we and Merger Sub will execute articles of merger and cause them to be accepted for record by the State Department of Assessments and Taxation of the State of Maryland, and cause a certificate of merger to be executed, acknowledged, and filed with the Secretary of State of the State of Delaware. The merger will become effective after the partnership merger effective time on the date and time at which the articles of merger have been filed with, and accepted for record by, the State Department of Assessments and Taxation of the State of Maryland or at such other date and time as is agreed between the parties to the merger agreement and specified in the articles of merger. The parties to the merger agreement will cause the merger effective time to occur immediately after the partnership merger effective time.

              Unless otherwise agreed, the parties to the merger agreement will cause the partnership merger effective time and the merger effective time to occur on the closing date.

              The closing of the mergers will take place as soon as practicable (and, in any event, within three business days) following the satisfaction or, to the extent permitted by applicable law, waiver of the conditions to the mergers described in the section entitled "—Conditions to the Mergers" (other than those conditions that by their terms are to be satisfied at the closing of the mergers, but subject to the satisfaction or, to the extent permitted by applicable law, waiver of those conditions) unless another date, time or place is agreed to in writing by us and Parent.

Organizational Documents

              At the partnership merger effective time, unless otherwise jointly determined by us and Parent prior to the partnership merger effective time, the certificate of limited partnership of Merger OP, as in effect immediately prior to the partnership merger effective time, will be the certificate of limited partnership of the Surviving Partnership, amended in accordance with applicable law. At the partnership merger effective time, unless otherwise jointly determined by us and Parent prior to the partnership merger effective time, the limited partnership agreement of Merger OP, as in effect immediately prior to the partnership merger effective time, will be the limited partnership agreement of the Surviving Partnership, until thereafter amended in accordance with the provisions thereof and applicable law.

              At the merger effective time, unless otherwise jointly determined by us and Parent prior to the merger effective time, the certificate of limited partnership of Merger Sub, as in effect immediately prior to the merger effective time, will be the certificate of limited partnership of the Surviving Entity, until amended in accordance with applicable law. At the merger effective time, unless otherwise jointly determined by us and Parent prior to the merger effective time, the limited partnership agreement of Merger Sub, as in effect immediately prior to the merger effective time, will be the limited partnership agreement of the Surviving Entity, until thereafter amended in accordance with the provisions thereof and applicable law.

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Trustees and Officers; General Partner and Limited Partners

              Following the partnership merger effective time, Merger OP GP will be the sole general partner of the Surviving Partnership. From and after the partnership merger effective time, the officers of Merger OP immediately prior to the partnership merger effective time will be the officers of the Surviving Partnership.

              Following the merger effective time, Merger Sub GP will be the sole general partner of the Surviving Entity. From and after the merger effective time, the officers of Merger Sub immediately prior to the merger effective time will be the officers of the Surviving Entity.

              Following the merger effective time, the Surviving Entity will be the limited partner of the Surviving Partnership.

Treatment of Common Shares, Restricted Share Awards, Performance Shares, Deferred Shares and Preferred Shares

Common Shares

              At the merger effective time, each common share issued and outstanding immediately prior to the merger effective time (other than (1) common shares held by us in our treasury or owned by Parent, Merger Sub, Merger OP or any of their respective subsidiaries, which will be cancelled and retired and will cease to exist, and no consideration will be delivered in exchange therefor, and (2) any of our outstanding restricted share awards, which will receive the treatment described in the section entitled "—Treatment of Common Shares, Restricted Share Awards, Performance Shares, Deferred Shares and Preferred Shares—Restricted Share Awards") will be automatically cancelled and converted into the right to receive the merger consideration, without interest. If we declare a distribution to our shareholders that we determine in good faith to be required to be distributed to qualify as a REIT under the Code or to avoid the incurrence of income or excise tax as permitted under the merger agreement, the merger consideration will be decreased by an amount equal to such distribution.

Restricted Share Awards

              The merger agreement provides that, immediately prior to the merger effective time, each outstanding restricted share award will automatically become fully vested and all restrictions and repurchase rights will lapse, and all of our common shares represented thereby will be considered outstanding for all purposes of the merger agreement and subject to the right to receive the merger consideration, less any required tax withholdings.

Performance Shares

              The merger agreement provides that, immediately prior to the merger effective time, each outstanding performance award will automatically become earned and vested with respect to 150% of the target number of our common shares subject to such performance award. Immediately prior to the merger effective time, each earned performance share will be cancelled and, in exchange therefor, the Company will pay each former holder of any such cancelled earned performance share an amount equal to the merger consideration, without interest and less any required tax withholdings. In addition, on the closing date, the Company will pay each holder of a performance award an amount equal to all accrued and unpaid cash dividends that would have been paid on such earned performance shares as if such earned performance shares had been issued and outstanding from the grant date up to, and including, the merger effective time, less any required tax withholdings.

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Deferred Shares

              The merger agreement provides that, immediately prior to the merger effective time, each outstanding deferred share award will automatically be cancelled and, in exchange therefor, the Company will pay each former holder of any such cancelled deferred common share, including any of our common shares attributable to dividend equivalent rights accrued with respect thereto, an amount equal to the merger consideration, without interest and less any required tax withholdings.

Preferred Shares

              The merger agreement provides that, at Parent's request, we will deliver notices of redemption to the holders of record of our preferred shares, in accordance with the articles supplementary related to such preferred shares. The redemption notices will be prepared by Parent, in form and substance reasonably approved by the Company, and will state that each preferred share held by such holder immediately prior to the merger effective time will be redeemed in the merger on the closing date through the payment of an amount, without interest and less any applicable withholding taxes, equal to $25.00 plus accrued and unpaid dividends. The redemption notices will include the other information required by the articles supplementary. If Parent has not requested us to provide the redemption notices prior to the 32nd day before the scheduled closing date and if we have asked Parent to make such request or requests prior to such day, we may provide the redemption notices as described above.

Treatment of Interests in the Operating Partnership

Limited Partner Interests

              At the partnership merger effective time, each common unit of the Operating Partnership issued and outstanding immediately prior to the partnership merger effective time (other than common units of the Operating Partnership held by us or our subsidiaries immediately prior to the partnership merger effective time) will be converted into, and will be cancelled in exchange for, the right to receive an amount in cash equal to the merger consideration, without interest. Each common unit of the Operating Partnership held by us immediately prior to the partnership merger effective time will be unaffected by the partnership merger and will remain outstanding as common units of the Surviving Partnership held by the Surviving Entity. At the partnership merger effective time, each preferred unit of the Operating Partnership issued and outstanding immediately prior to the partnership merger effective time will be cancelled and will no longer be outstanding. This proxy statement does not constitute any solicitation of consents in respect of the partnership merger.

              As described above, if we declare a distribution to our shareholders that we determine in good faith to be required to be distributed to qualify as a REIT under the Code or to avoid the incurrence of income or excise tax as permitted under the merger agreement, the merger consideration will be decreased by an amount equal to such distribution.

General Partnership Interests

              At the partnership merger effective time, the general partner interests of Merger OP outstanding immediately prior to the partnership merger effective time and owned by Merger OP GP will be converted into general partner interests of the Surviving Partnership. Immediately following the partnership merger effective time, by virtue of the merger, Merger OP GP will be the general partner of the Surviving Partnership and will have such rights, duties and obligations as are more fully set forth in the limited partnership agreement of the Surviving Partnership.

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No Further Ownership Rights

              The merger consideration paid upon surrender of any certificates (or automatically in the case of book-entry common units of the Operating Partnership) will be deemed to have been paid in full satisfaction of all rights pertaining to such certificates. From and after the partnership merger effective time, the holders of common units of the Operating Partnership outstanding immediately prior to the partnership merger effective time will cease to have any rights with respect to such units of the Operating Partnership except as otherwise provided for in the merger agreement or by applicable law.

              The merger consideration paid upon surrender of any certificates (or automatically in the case of book-entry common shares) will be deemed to have been paid in full satisfaction of all rights pertaining to such certificates. From and after the merger effective time, holders of common shares outstanding immediately prior to the merger effective time will cease to have any rights with respect to such shares except as otherwise provided for in the merger agreement or by applicable law.

Exchange and Payment Procedures

              Prior to the partnership merger effective time, Parent will deposit, or cause to be deposited, with an exchange agent reasonably acceptable to us, cash amounts sufficient to enable the exchange agent to make payments to common shareholders and holders of common units of the Operating Partnership, as applicable, outstanding immediately prior to the partnership merger effective time. At the merger effective time, Parent will deposit with the Surviving Entity cash in the amount necessary, together with the other funds of the Surviving Entity, to make the payments to the holders of our restricted share awards, performance shares, deferred shares and preferred shares, other than payments in respect of accrued and unpaid cash dividends to the holders of performance shares, and Parent will cause the Surviving Entity to make such payments through the Surviving Entity's payroll within five business days after the merger effective time, or at such later time as necessary to avoid certain adverse tax consequences.

              Within five business days after the partnership merger effective time, the exchange agent will mail to each holder of record of a certificate or certificates that, immediately prior to the merger effective time, represented outstanding common shares or that, immediately prior to the partnership merger effective time, represented common units of the Operating Partnership, whose shares or units, as applicable, were converted into the right to receive or be exchanged for the merger consideration, a letter of transmittal and instructions for use in effecting the surrender of certificates previously representing such common shares or common units of the Operating Partnership in exchange for payment therefor. The letter of transmittal and instructions will tell you how to surrender your certificates representing our common shares and any common units of the Operating Partnership, as applicable, in exchange for the merger consideration. Upon surrender to the exchange agent of each such certificates (or affidavits of loss in lieu of a certificate as described below), together with a properly executed letter of transmittal, the holder of such certificates (or the transferee of our common shares or units of the Operating Partnership previously represented by such certificates as described below) will promptly receive in exchange therefor the amount of cash to which such holder (or transferee) is entitled. Exchange of book-entry shares or book-entry units representing common shares or common units of the Operating Partnership will be effected in accordance with the exchange agent's customary procedures with respect to securities represented by book entry.

              If any certificate has been lost, stolen or destroyed, then, upon the making of an affidavit of that fact by the person claiming such certificate to be lost, stolen or destroyed, to the reasonable satisfaction of Parent and the exchange agent and the taking of such other actions as may be reasonably requested by the exchange agent, the exchange agent will pay in exchange for such lost,

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stolen or destroyed certificate the cash amount payable in respect thereof pursuant to the merger agreement.

              Parent, the Surviving Entity, any affiliate thereof or the exchange agent will be entitled to deduct and withhold from any amounts otherwise payable pursuant to the merger agreement to any person such amount as it is required to deduct and withhold with respect to the making of such payment under the Code, and the rules and regulations promulgated thereunder, or any provision of state, local or foreign tax law, and such amounts so deducted and withheld will be treated as having been paid to the person in respect of which such deduction and withholding was made.

              As of the partnership merger effective time, the unit transfer books of the Operating Partnership will be closed and thereafter there will be no further registration of transfers of any units of the Operating Partnership outstanding immediately prior to the partnership merger effective time on the records of the Operating Partnership. If, after the partnership merger effective time, certificates representing such units of the Operating Partnership are presented to the Surviving Partnership for transfer, they will be cancelled and exchanged as provided in the merger agreement. As of the merger effective time, our share transfer books will be closed and thereafter there will be no further registration of transfers of any of our common shares outstanding immediately prior to the merger effective time on our records. If, after the merger effective time, certificates representing such common shares are presented to the Surviving Entity for transfer, they will be cancelled and exchanged as provided in the merger agreement.

              On or after the first anniversary of the partnership merger effective time, the Surviving Entity will be entitled to cause the exchange agent to deliver to the Surviving Entity any funds made available by Parent to the exchange agent which have not been disbursed to holders of certificates, and thereafter such holders will be entitled to look to Parent and the Surviving Entity with respect to the cash amounts payable upon surrender of their certificates. Neither the exchange agent nor the Surviving Entity will be liable to any holder of a certificate for any amount properly paid to a public official pursuant to any applicable abandoned property or escheat law. Any amounts remaining unclaimed by holders of the certificates, book-entry shares or book-entry units immediately prior to the time at which such amounts would otherwise escheat to, or become the property of, any governmental entity will, to the extent permitted by applicable law, become the property of the Surviving Entity, free and clear of any claims or interest of any such holders or their successors, assigns or personal representatives previously entitled thereto.

Representations and Warranties

              We and the Operating Partnership, jointly and severally, have made customary representations and warranties in the merger agreement that are subject, in some cases, to specified exceptions and qualifications contained in the merger agreement or in the disclosure schedules delivered in connection therewith. These representations and warranties relate to, among other things:

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              Many of our representations and warranties are qualified by the concept of a "material adverse effect." Under the merger agreement, a "material adverse effect" means, with respect to us and our subsidiaries, any effect, change, event, occurrence, circumstance or development that has had or would reasonably be expected to have a material adverse effect on (1) the business, financial condition, assets or results of operations of us and our subsidiaries, taken as a whole or (2) the ability of us and the Operating Partnership to timely consummate the mergers prior to November 20, 2018; provided that, for purposes of clause (1), in no event will any of the following, alone or in combination, or any effect, change, event, occurrence, circumstance or development to the extent any of the foregoing results from any of the following, be taken into account in determining whether there will have occurred a material adverse effect:

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provided that, in each of the exceptions set forth in the third, fourth, fifth, sixth, seventh, eighth, eleventh and twelfth bullets above, such effects referred to therein may be taken into account to the extent that we are disproportionally affected relative to other companies in the United States in the industry in which we and our subsidiaries operate, in which case only the incremental disproportionate impact or impacts may be taken into account in determining whether or not there has been a material adverse effect; provided, further, that the ninth bullet above will not apply to the use of material adverse effect in certain representations and warranties.

              The merger agreement also contains customary representations and warranties made, jointly and severally, by Parent, Merger Sub and Merger OP that are subject, in some cases, to specified exceptions and qualifications contained in the merger agreement. These representations and warranties relate to, among other things:

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              The representations and warranties of each of the parties to the merger agreement will expire upon the closing of the mergers.

Conduct of Our Business Pending the Mergers

              Under the merger agreement, we and the Operating Partnership have each agreed that, subject to certain exceptions in the merger agreement and the disclosure schedules delivered in connection therewith, between the date of the merger agreement and the merger effective time or the partnership merger effective time, as applicable, we and the Operating Partnership will, and will cause our and its subsidiaries to:

              We and the Operating Partnership have also each agreed that, subject to certain exceptions in the merger agreement and the disclosure schedules delivered in connection therewith, between the date of the merger agreement and the merger effective time or the partnership merger effective time, as applicable, without the prior written consent of Parent (which consent may not be unreasonably withheld, conditioned or delayed), we and the Operating Partnership will not, and will cause our and its subsidiaries not to, do any of the following, among other things:

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              Notwithstanding the foregoing, we and our subsidiaries will not be restricted from, or require the consent of Parent prior to, engaging in any transaction or entering into any agreement exclusively among us and our subsidiaries.

Shareholders' Meeting

              Under the merger agreement, we are required, as promptly as reasonably practicable following the date that this proxy statement is cleared by the SEC, in accordance with applicable law and our declaration of trust, to duly call, give notice of, convene and hold a special meeting of our shareholders, which we refer to as the special meeting, for the purpose of obtaining shareholder approval. We may postpone or adjourn the special meeting after consultation with Parent:

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provided that, in the case of the second and fourth bullets above, the special meeting may not, without the written consent of Parent, be held on a date that is more than 30 days after the date on which the special meeting was originally scheduled.

              Unless our board of trustees or any committee thereof has withdrawn its recommendation to shareholders to approve the merger and the other transactions contemplated by the merger agreement, we, through our board of trustees, will recommend to our common shareholders that they vote in favor of the merger and the other transactions contemplated by the merger agreement, so that we may obtain shareholder approval. We will use commercially reasonable efforts to solicit shareholder approval (including by soliciting proxies from our shareholders) and take all other action necessary or advisable to secure shareholder approval.

              We will keep Parent reasonably informed with respect to proxy solicitation results as reasonably requested by Parent. Unless the merger agreement is terminated:

              For purposes of the merger agreement, "acquisition proposal" means any proposal or offer from any third party relating to, in a single transaction or series of related transactions:

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Agreement to Take Certain Actions

              Each party to the merger agreement has agreed:

              Without the prior written consent of Parent, neither we nor the Operating Partnership take any action referenced in the bullet immediately above relating to the divestiture, holding separate or other disposition of any asset or business of the Parent, Merger Sub, Merger OP or us or our subsidiaries, or pay any fee, penalty or other consideration, make any commitment or incur any liability to any person for any consent or approval in connection with the transactions contemplated by the merger agreement. None of Parent, Merger Sub or Merger OP or any of their affiliates will be required to pay any fee, penalty or other consideration, make any commitment or incur any liability to any person for any consent or approval in connection with the transactions contemplated by the merger agreement.

              Notwithstanding anything to the contrary in the merger agreement, Parent, Merger Sub and Merger OP are not required to take or agree to take any action with respect to any of their affiliates, including selling, divesting, conveying, holding separate, or otherwise limiting its freedom of action with respect to any assets, rights, products, licenses, businesses, operations, or interest therein, of any such affiliates or any direct or indirect portfolio companies (as such term is understood in the private equity industry) of investment funds advised or managed by one or more of their affiliates. In the event that any party fails to obtain any such consent or approval, the parties to the merger agreement will use commercially reasonable efforts to minimize any adverse effect upon us and Parent and our respective affiliates and business resulting, or which would reasonably be expected to result, after the partnership merger effective time, from the failure to obtain such consent.

              Each party to the merger agreement will:

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              Each party to the merger agreement has the right to review in advance, and each party will consult and cooperate with the other parties and will consider in good faith the views of the other parties in connection with any filing, analysis, appearance, presentation, memorandum, brief, argument, opinion or proposal made or submitted to any governmental entity in connection with the transactions contemplated by the merger agreement. In addition, except as may be prohibited by any governmental entity or by any law, in connection with any such request, inquiry, investigation, action, lawsuit, court action, arbitration or other proceeding, each party to the merger agreement will permit authorized representatives of the other parties to be present at each meeting or conference relating to such request, inquiry, investigation, action, lawsuit, court action, arbitration or other proceeding and to have access to and be consulted in connection with any document, opinion or proposal made or submitted in writing to any governmental entity in connection with such request, inquiry, investigation, action, lawsuit, court action, arbitration or other proceeding.

              In the event that any lawsuit, court action, arbitration or other proceeding is commenced challenging the mergers or any of the other transactions contemplated by the merger agreement and such lawsuit, court action, arbitration or other proceeding seeks, or would reasonably be expected to seek, to prevent the consummation of the mergers or the other transactions contemplated by the merger agreement, the parties to the merger agreement will use reasonable best efforts to resolve any such lawsuit, court action, arbitration or other proceeding and each of the parties to the merger agreement will cooperate with each other and use their respective reasonable best efforts to contest any such lawsuit, court action, arbitration or other proceeding and to have vacated, lifted, reversed or overturned any decree, judgment, injunction, or other writ, consent, order, stipulation, award or executive order of or by any governmental entity, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or restricts consummation of the mergers or the other transactions contemplated by the merger agreement.

Restriction on Solicitation of Acquisition Proposals

              We have agreed that, from and after the date of the merger agreement, we will, and will cause each of our subsidiaries and our and our subsidiaries' officers, trustees and directors to, and will direct our and our subsidiaries' other representatives to, immediately cease any solicitations, discussions, negotiations or communications with any person that may be ongoing with respect to any acquisition proposal (as described below) and will turn off any data rooms maintained by us.

              We have further agreed that, except as permitted by certain exceptions described below, we will not, and will cause each of our subsidiaries and our and our subsidiaries' officers, trustees and directors not to, and will not authorize and will use commercially reasonable efforts to cause our and our subsidiaries' other representatives not to:

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              Prior to obtaining shareholder approval, in response to an unsolicited bona fide written acquisition proposal made after the date of the merger agreement that did not result from a breach of our obligations described under this section "—Restriction on Solicitation of Acquisition Proposals" and in the section entitled "—Obligation of the Board of Trustees with Respect to Its Recommendation," we and our representatives may engage in any such discussions or negotiations and provide any such information if:

              Promptly (and, in any event, within 24 hours) with providing any non-public information to such third party, we will make such non-public information available to Parent (to the extent such non-public information has not been previously made available to Parent).

              If we receive an acquisition proposal or acquisition inquiry, we must:

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              For purposes of the merger agreement, "acquisition inquiry" means any inquiry, indication of interest or request for information or discussions from a third party that constitutes, or could reasonably be expected to lead to, an acquisition proposal. For purposes of the merger agreement, "superior proposal" means any bona fide written acquisition proposal (with all of the references to 20% included in the definition of acquisition proposal increased to 50%) that: (1) includes a proposed alternative acquisition agreement with respect thereto or confirms in writing that any purchase agreement in connection therewith will be on substantially the same terms as the merger agreement, and is not withdrawn; (2) is made by a third party that did not result from a breach of our obligations described under this section "—Restriction on Solicitation of Acquisition Proposals" and in the section entitled "—Obligation of the Board of Trustees with Respect to Its Recommendation;" (3) is on terms that our board of trustees (or a committee thereof) determines in good faith, after consultation with our financial advisor and outside legal counsel, would result, if consummated, in a transaction that is more favorable to our common shareholders (solely in their capacity as such) from a financial point of view than the mergers, taking into consideration, among other things, all of the terms and conditions of such acquisition proposal and the merger agreement (including any revisions to the terms of the merger agreement proposed by Parent in writing prior to the time of such determination); and (4) is reasonably likely to be completed in accordance with its terms, in each case taking into account all legal, financial, financing, regulatory approvals, conditionality, identity of the third party making the acquisition proposal, certainty and likelihood of closing, breakup fee provisions and other aspects of such acquisition proposal and the merger agreement that our board of trustees (or a committee thereof) deems relevant (including any revisions to the terms of the merger agreement proposed by Parent in writing prior to the time of such determination).

              Under this section "—Restriction on Solicitation of Acquisition Proposals" and in the section entitled "—Obligation of the Board of Trustees with Respect to Its Recommendation," references to us include our board of trustees, and references to us or our board of trustees include our representatives. Any breach of the obligations described under this section "—Restriction on Solicitation of Acquisition Proposals" and in the section entitled "—Obligation of the Board of Trustees with Respect to Its Recommendation" by our board of trustees or any of our or our board of trustees' representatives constitute a breach of the merger agreement by us.

Obligation of the Board of Trustees with Respect to Its Recommendation

              Except in the circumstances and pursuant to the procedures described below, neither our board of trustees nor any committee thereof will:

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We refer to any action in the first six bullets above as a "change in recommendation."

              Prior to obtaining shareholder approval, our board of trustees is permitted to make a change in recommendation in response to an unsolicited written bona fide acquisition proposal or terminate the merger agreement as described in the second bullet of the section entitled "—Termination of the Merger Agreement—Termination by the Company," or both, if and only if:

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              Prior to obtaining shareholder approval, our board of trustees is permitted to make a change in recommendation not related to an acquisition proposal if:

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              For purposes of the merger agreement, "change in circumstances" means any material change in circumstances with respect to us and our subsidiaries, taken as a whole that, in each case, occurred or arose after the date of the merger agreement, which (x) was not known by, nor reasonably foreseeable to, our board of trustees as of, or prior to, the date of the merger agreement and (y) becomes known to our board of trustees prior to obtaining shareholder approval, provided that none of the following will constitute, or be considered in determining whether there has been, a change in circumstances:

              Nothing contained in the merger agreement prohibits us, our board of trustees or our representatives from:

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Employee Benefits

              From and after the merger effective time, for a period ending on the first anniversary of the closing date (or, if shorter, during any applicable period of employment), Parent will provide, or cause the Surviving Entity to provide, to each of our and our subsidiaries' employees who is employed immediately prior to the merger effective time and who continues employment with Parent or with the Surviving Entity following the merger effective time, each of which we refer to as a company employee, a base salary at a rate that is no less favorable than the rate of base salary provided to such employee immediately prior to the merger effective time and an annual cash bonus opportunity that is no less favorable than the annual cash bonus opportunity provided to such employee immediately prior to the merger effective time, and Parent will provide, or cause the Surviving Entity to provide, to each company employee other compensation and benefits (including severance benefits, paid time off and health insurance but excluding equity-based compensation and long-term incentive compensation) that are substantially comparable, in the aggregate, to the other compensation and benefits provided to each such employee immediately prior to the merger effective time.

              With respect to each benefit plan, program, policy or arrangement maintained by Parent or the Surviving Entity in which any of the company employees participate, and except to the extent necessary to avoid duplication of benefits, service with us or any of our subsidiaries and any predecessor of us or any of our subsidiaries will be treated as service with Parent or the Surviving Entity (for all purposes, including eligibility to participate, vesting (if applicable), benefit accrual, and entitlement to benefits including vacation and severance) (but not for accrual of or entitlement to defined benefit pension benefits which may be in effect from time to time), to the extent such service was recognized by us as of the date of the merger agreement. Parent will, or will cause the Surviving Entity to, credit unused vacation time credited to company employees through the merger effective time under our and our subsidiaries' vacation time policies.

              All limitations as to preexisting conditions, waiting periods or any other restriction that would prevent immediate or full participation of company employees under Parent's or the Surviving Entity's health and welfare plans will be waived by Parent and the Surviving Entity, other than limitations, exclusions, waiting periods or other restrictions that are already in effect with respect to such employees and that have not been satisfied as of the closing date under any of our employee benefit plans. Additionally, each company employee and his or her dependents will be provided with full credit for any co-payments, out-of-pocket maximums, and deductibles satisfied prior to the closing date for the plan year within which the merger effective time occurs in order to satisfy any applicable deductible or out-of-pocket requirements.

              At and after the closing date, Parent will, and will cause the Surviving Entity and their respective subsidiaries to, honor in accordance with their terms certain agreements, including each

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specified employment, change in control, retention, severance, and termination protection plan, policy or agreement of or between us and our subsidiaries and any of our current or former officers, trustees, directors or employees existing as of immediately prior to the merger effective time, all obligations in effect as of the merger effective time under equity-based, bonus or compensation deferral plans, programs or agreements of us, our subsidiaries or our respective affiliates, and all vested and accrued benefits under our benefit plans. Parent agrees that the transactions contemplated by the merger agreement will constitute a "change in control" for purposes of each our benefit plans that uses such term or a similar term, including certain specified change in control severance agreements and rendition agreements.

              The merger agreement provides that Parent will cause the Surviving Entity to pay pro-rated annual bonuses for the 2018 performance year for certain of our employees (other than our senior officers) no later than January 15, 2019 at 125% of the applicable employee's target bonus amount. The amount due to any employee who is terminated by Parent or the Surviving Entity without "cause" prior to January 15, 2019 will be pro-rated through the termination date and paid upon expiration of the seven-day revocation period following the execution and delivery by the applicable employee of a release agreement.

              Immediately after the merger effective time, each of our senior officers will be deemed to have been terminated without "cause" as of the closing date and each officer will be entitled to certain severance payments and benefits as provided under the terms of the applicable severance agreements. See the section entitled "The Mergers—Interests of Our Trustees, Executive Officers and Employees in the Mergers."

Financing Cooperation

              Prior to the closing date, we will use our commercially reasonable efforts to provide, and will cause each of our subsidiaries to use its commercially reasonable efforts to provide, to Parent and Merger Sub, in each case at Parent's sole expense, all cooperation reasonably necessary and customary in connection with the arrangement of debt financing with respect to us, our subsidiaries or our or our subsidiaries' real property, which we refer to as the debt financing, reasonably requested in writing by Parent, including using commercially reasonable efforts to:

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              Notwithstanding the foregoing, we will not be required to provide, or cause our subsidiaries to provide, cooperation to the extent that it:

              In no event will we or our subsidiaries be required to pay any commitment or other fee or give an indemnity or incur any liability (including due to any act or omission by us, our subsidiaries or any of our or our subsidiaries' respective affiliates or representatives) or expense (including legal and accounting expenses) in connection with assisting Parent and Merger Sub in arranging the debt financing or as a result of any information provided by us, our subsidiaries or any of our or their respective affiliates or representatives in connection with the debt financing (except those fees and expenses reimbursed promptly by Parent).

Pre-Closing Transactions

              In addition, the merger agreement requires that we use commercially reasonable efforts to provide such cooperation and assistance as Parent may reasonably request to (1) convert any of our wholly owned subsidiaries organized as a corporation or a limited partnership into a limited liability

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company on the basis of organizational documents as reasonably requested by Parent, (2) sell or cause to be sold shares, partnership interests or limited liability interests owned, directly or indirectly, by us in any wholly owned subsidiary on terms designated by Parent, (3) exercise any of our or our subsidiaries' rights to terminate or cause to be terminated any contract to which we or one of our wholly-owned subsidiaries is a party and (4) sell or cause to be sold any of our or our wholly owned subsidiaries' assets on terms designated by Parent.

              These rights of Parent are limited, however, in that (1) Parent may not require us or any of our subsidiaries to take any action that contravenes any of our or any of our subsidiaries' organizational documents, material contracts or applicable law, (2) any such conversions, exercises of any rights of termination or other terminations, sales or transactions must be contingent upon all conditions to the mergers under the merger agreement having been satisfied or waived and our receipt of a written notice from Parent to such effect and that Parent, Merger Sub and Merger OP are prepared to proceed immediately with the closing of the mergers and any other evidence reasonably requested by us that the closing of the mergers will occur, (3) these actions (or the inability to complete them) will not affect or modify the obligations of Parent, Merger Sub and Merger OP under the merger agreement, including the amount of or timing of the payment of the merger consideration, (4) we and our subsidiaries will not be required to take any action that could adversely affect our classification, or the classification of any of our subsidiaries that is classified as a REIT, as a REIT within the meaning of the Code or that could subject us or any such subsidiary to any "prohibited transactions" taxes or certain other material taxes under the Code (or other material entry-level taxes), and (5) we and our subsidiaries will not be required to take any such action that could result in any U.S. federal, state or local income tax being imposed on any holder of units of the Operating Partnership other than us or any of our subsidiaries. Parent will, promptly upon our request, reimburse us for all reasonable out-of-pocket costs incurred by us or our subsidiaries in connection with our or our subsidiaries' performance of these obligations.

Certain Other Covenants

              The merger agreement contains certain other covenants of the parties to the merger agreement relating to, among other things:

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Conditions to the Mergers

              The obligation of the parties to the merger agreement to consummate the mergers is subject to the satisfaction or waiver of the following mutual conditions:

              The obligation of Parent, Merger Sub and Merger OP to consummate the mergers is subject to the satisfaction or waiver of the following conditions:

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              Our and the Operating Partnership's obligation to consummate the mergers is subject to the satisfaction or waiver of the following conditions:

Termination of the Merger Agreement

              We and Parent may mutually agree to terminate the merger agreement and abandon the mergers at any time prior to the closing of the mergers, even after we have obtained shareholder approval.

Termination by Either the Company or Parent

              In addition, we, on the one hand, or Parent, on the other hand, may terminate the merger agreement upon written notice to the other at any time prior to the closing of the mergers, even after we have obtained shareholder approval, if:

Termination by the Company

              We may also terminate the merger agreement by written notice to Parent at any time prior to the closing of the mergers, even after we have obtained shareholder approval, if:

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Termination by Parent

              Parent may also terminate the merger agreement by written notice to us at any time prior to the closing of the mergers, even after we have obtained shareholder approval, if:

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Termination Fees

Termination Fee Payable by the Company

              We have agreed to pay the company termination fee as directed by Parent of $112 million, if:

Termination Fee Payable by Parent

              Parent has agreed to pay to us the parent termination fee of $336 million, if we terminate the merger agreement pursuant to the provisions described in the first bullet or third bullet in the section entitled "—Termination of the Merger Agreement—Termination by the Company."

Limited Guarantee and Remedies

              In connection with the merger agreement, the Sponsor entered into a limited guarantee in our favor to guarantee Parent's payment obligations with respect to the parent termination fee and certain expense reimbursement and indemnification obligations of Parent under the merger agreement, subject to the terms and limitations set forth in the limited guarantee.

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              The maximum aggregate liability of the Sponsor under the limited guarantee will not exceed $336 million, plus all reasonable and documented third-party costs and out-of-pocket expenses (including reasonable fees of counsel) actually incurred by us relating to any litigation or other proceeding brought by us to enforce our rights under the limited guarantee, if we prevail in such litigation or proceeding.

              We and the Operating Partnership cannot seek specific performance to require Parent, Merger Sub or Merger OP to consummate the mergers and, except with respect to enforcing confidentiality provisions, our sole and exclusive remedy against Parent, Merger Sub or Merger OP relating to any breach of the merger agreement or otherwise will be the right to receive the parent termination fee under the conditions described in the section entitled "—Termination Fees—Termination Fee Payable by Parent." Parent, Merger Sub and Merger OP may, however, seek specific performance to require us and the Operating Partnership to consummate the mergers.

Amendment and Waiver

              The merger agreement may be amended with the mutual agreement of the parties thereto at any time, whether before or after we have obtained shareholder approval, provided that after such approval has been obtained, no amendment or waiver may be made that pursuant to applicable law requires further approval or adoption by our shareholders without such further approval or adoption being obtained.

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MARKET PRICE OF OUR COMMON SHARES

              Our common shares have been listed on the NYSE under the symbol "LHO" since April 24, 1998. On [    ·    ], 2018, there were approximately [    ·    ] holders of record. Certain common shares are held in "street" name and accordingly, the number of beneficial owners of such shares is not known or included in the foregoing number.

              The following table sets forth, for the periods indicated, the high and low prices for our common shares on the NYSE and the dividends we declared per common share.

 
  Range    
 
 
  Cash Dividend
per
Share
 
Year   High   Low  

Fiscal Year Ended December 31, 2015

             

First Quarter

  $ 43.56   $ 36.54   $ 0.375  

Second Quarter

  $ 39.70   $ 34.87   $ 0.450  

Third Quarter

  $ 38.46   $ 27.70   $ 0.450  

Fourth Quarter

  $ 32.10   $ 24.91   $ 0.450  

Fiscal Year Ended December 31, 2016

                   

First Quarter

  $ 26.85   $ 19.01   $ 0.450  

Second Quarter

  $ 25.31   $ 21.56   $ 0.450  

Third Quarter

  $ 29.10   $ 23.02   $ 0.450  

Fourth Quarter

  $ 31.15   $ 23.05   $ 0.450  

Fiscal Year Ended December 31, 2017

             

First Quarter

  $ 31.87   $ 27.80   $ 0.450  

Second Quarter

  $ 31.75   $ 27.67   $ 0.450  

Third Quarter

  $ 31.39   $ 27.48   $ 0.450  

Fourth Quarter

  $ 30.87   $ 27.44   $ 0.450  

Fiscal Year Ending December 31, 2018

                   

First Quarter

  $ 30.99   $ 24.10   $ 0.450  

Second Quarter (through [·], 2018)

  $ [·]   $ [·]     N/A  

              On May 18, 2018, the last trading day prior to the date of the public announcement of the merger agreement, the closing price for our common shares reported on the NYSE was $31.90. On [    ·    ], 2018, the last trading day before the date of this proxy statement, the closing price for our common shares reported on the NYSE was $[    ·    ]. You are encouraged to obtain current market quotations for our common shares.

              On March 15, 2018, our board of trustees declared a regular quarterly dividend of $0.45 per common share for the quarter ended March 31, 2018, which was paid on April 16, 2018 to shareholders of record at the close of business on March 29, 2018. Under the terms of the merger agreement, we may not declare, set aside or pay any dividends on, or make any other distributions in respect of, or enter into any agreement with respect to the voting of, any capital shares of us or our subsidiaries, other than (1) the payment of dividends or distributions declared prior to the date of the merger agreement, (2) the declaration and payment by us and the Operating Partnership of our regular quarterly dividend per common share or common unit of the Operating Partnership for the fiscal quarter ending June 30, 2018 with an anticipated declaration date on or about June 15, 2018, in accordance with past practice and in an amount not to exceed $0.225 per common share or common unit of the Operating Partnership, (3) dividends on our preferred shares in accordance with their respective terms as set forth in the declaration of trust, (4) for distributions on the preferred units of the Operating Partnership in accordance with their respective terms, (5) dividends or distributions, declared, set aside or paid by any of us or our subsidiaries to any other subsidiary that is, directly or

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indirectly, wholly owned by us, (6) distributions required for us or any of our subsidiaries that is a REIT to maintain its status as a REIT under the Code or avoid the incurrence of any income or excise taxes which will result in a reduction of the merger consideration as described in the section entitled "The Merger Agreement—Treatment of Common Shares, Restricted Share Awards, Performance Shares, Deferred Shares and Preferred Shares—Common Shares," and (7) distributions resulting from the vesting or settlement of certain of our compensatory awards.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

              The following table sets forth as of June 4, 2018, except as otherwise set forth in the footnotes to the table, the beneficial ownership of our common shares, for (1) each person who is a beneficial owner of 5% or more of our outstanding common shares, (2) each of our named executive officers, (3) each trustee and (4) 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. We are not aware of any arrangements, including any pledge of our common shares, that could result in a change in control of the Company.

 
  Common Shares
Beneficially Owned(1)
Name of Beneficial Owner   Number   Percent of Total
BlackRock, Inc.(2)   15,126,088   13.40
HG Vora Capital Management, LLC(3)     10,000,000   9.10
Long Pond Capital, LP/Long Pond Capital GP, LLC/John Khoury(4)   5,780,546   5.10
State Street Corporation(5)     5,904,588   5.22
The Vanguard Group—23-1945930(6)   18,257,393   16.12
Vanguard Specialized Funds—Vanguard REIT Index Fund—23-2834924(7)     7,623,462   6.73
Wellington Management Group LLP/Wellington Group Holdings LLP/Wellington Investment Advisors Holdings LLP/Wellington Management Company LLP(8)   6,421,305   5.67
Michael D. Barnello     240,751   *
Denise M. Coll   23,651   *
Jeffrey T. Foland     15,636   *
Darryl Hartley-Leonard(9)   9,697   *
Jeffrey L. Martin(9)     5,317   *
Stuart L. Scott(9)   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 common shares held by each person, any 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)
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 common shares and is deemed to have the sole power to dispose or to direct the disposition with respect to 15,126,088 common shares. BlackRock Fund Advisors, a subsidiary of BlackRock, beneficially owns 5% or more of the common shares outstanding. BlackRock has its principal business office at 55 East 52nd Street, New York, New York 10055.

(3)
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

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    respect to 10,000,000 common shares and is deemed to have the sole power to dispose or to direct the disposition with respect to 10,000,000 common shares. HG Vora has its principal business office at 330 Madison Avenue, 20th Floor, New York, NY 10017.

(4)
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 common shares and the shared power to dispose or direct the disposition with respect to 5,780,546 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 10022.

(5)
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 common shares and the shared power to dispose or direct the disposition with respect to 5,904,558 common shares. State Street has its principal business office at State Street Financial Center, One Lincoln Street, Boston, Massachusetts 02111.

(6)
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 common shares, the shared power to vote or direct the vote with respect to 151,106 common shares, the sole power to dispose or to direct the disposition with respect to 17,990,785 common shares and the shared power to dispose or direct the disposition with respect to 266,608 common shares. Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 115,502 common shares or less than 1% of the 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 common shares or less than 1% of the 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.

(7)
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 common shares. Vanguard Funds has its principal business office at 100 Vanguard Blvd., Malvern, Pennsylvania 19355.

(8)
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 common shares and the shared power to dispose or direct the disposition with respect to 6,421,305 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 common shares and the shared power to dispose or direct the disposition with respect to 6,033,075 common shares. Wellington has its principal business office at c/o Wellington Management Company LLP, 280 Congress Street, Boston, Massachusetts 02210.

(9)
The number of common shares beneficially owned by the following persons does not include the number of 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"): 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 common shares exchangeable for the outstanding deferred shares, divided by the average closing price of our common shares on the NYSE during the ten trading days preceding the first day on which the common shares begin trading without entitlement to the applicable dividend. The total number of deferred shares for each trustee discussed in this footnote 9 includes additional deferred shares acquired through dividend reinvestment through June 4, 2018.

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NO DISSENTERS' RIGHTS OF APPRAISAL

              We are organized as a REIT under Maryland law. Under Section 8-501.1(j) of the MRL and Section 3-202 of the MGCL, because our common shares were listed on the NYSE on the record date for determining shareholders entitled to vote at the special meeting, our common shareholders who object to the merger do not have any appraisal rights, dissenters' rights or the rights of an objecting shareholder in connection with the merger. In addition, common shareholders may not exercise any appraisal rights, dissenters' rights or the rights of an objecting shareholder to receive the fair value of their shares in connection with the merger because, as permitted by Maryland law, our declaration of trust provides that shareholders are not entitled to exercise such rights unless expressly required by the MRL. However, our common shareholders can vote against the merger and the other transactions contemplated by the merger agreement.


SUBMISSION OF SHAREHOLDER PROPOSALS

              We intend to hold an annual meeting of shareholders in 2019 only if the mergers are not completed. If we hold such an annual meeting, proposals of shareholders intended to be presented at our annual meeting of shareholders to be held in 2019 must be received by us no later than November 22, 2018, in order to be included in our proxy statement and form of proxy relating to that meeting pursuant to Rule 14a-8 under the Exchange Act. Such proposals must comply with the requirements established by the SEC for such proposals in order to be included in the proxy statement.

              In order for an eligible shareholder or group of shareholders to nominate a trustee nominee for election at our 2019 Annual Meeting of Shareholders pursuant to the proxy access provision of our bylaws, notice of such nomination and other required information must be received by our Corporate Secretary at our principal executive offices no earlier than the close of business on October 23, 2018 and no later than the close of business on November 22, 2018. Our bylaws state that such notice and other required information must be received by our Corporate Secretary not earlier than 150 days nor later than 120 days prior to the first anniversary of the date of mailing of the notice for the prior year's annual meeting of shareholders (with adjustments if the date of the upcoming annual meeting of shareholders is advanced by more than 30 days or delayed by more than 60 days from the anniversary date of the prior year's annual meeting).

              Any shareholder proposal or nomination that is not submitted for inclusion in our 2019 Proxy Statement, but is instead sought to be presented directly at our 2019 Annual Meeting of Shareholders, must be received by our Corporate Secretary at our principal executive offices no earlier than the close of business on February 1, 2019 and no later than the close of business on March 3, 2019. Our bylaws state that such notice and other required information must be received by our Corporate Secretary not earlier than 90 days nor later than 60 days prior to the first anniversary of the date of the prior year's annual meeting of shareholders (with adjustments if the date for the upcoming annual meeting of shareholders is advanced by more than 30 days or delayed by more than 60 days from the anniversary date of the prior year's annual meeting).

              Any such proposal or nomination should be mailed to: LaSalle Hotel Properties, 7550 Wisconsin Avenue, 10th Floor, Bethesda, Maryland 20814, Attention: Kenneth G. Fuller, Corporate Secretary.

              If the shareholder fails to give timely notice as required by our current bylaws, the nominee or proposal will be excluded from consideration at the meeting. In addition, our current bylaws include other requirements for trustee nominations and proposals of other business with which a shareholder must comply to make a nomination or business proposal.

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Table of Contents


SHAREHOLDERS SHARING THE SAME ADDRESS

              The rules promulgated by the SEC permit companies, brokers, banks or other intermediaries to deliver a single copy of a proxy statement and annual report to households at which two or more shareholders reside. This practice, known as "householding," is designed to reduce duplicate mailings and save significant printing and postage costs as well as natural resources. Shareholders sharing an address who have been previously notified by their broker, bank or other intermediary and have consented to householding will receive only one copy of our proxy statement. If you would like to opt out of this practice for future mailings and receive separate proxy statements for each shareholder sharing the same address, please contact your broker, bank or other intermediary. You may also obtain a separate proxy statement without charge by sending a written request to LaSalle Hotel Properties, 7550 Wisconsin Avenue, 10th Floor, Bethesda, Maryland 20814, Attention: Kenneth G. Fuller, Corporate Secretary, or by telephone at (301) 941-1500. We will promptly send additional copies of the proxy statement upon receipt of such request. Shareholders sharing an address that are receiving multiple copies of this proxy statement can request delivery of a single copy of future proxy statements and annual reports by contacting their broker, bank or other intermediary or sending a written request to us at the address above.


OTHER MATTERS

              No matter may be presented at the special meeting which is not listed on the Notice of Special Meeting and discussed above.


WHERE YOU CAN FIND MORE INFORMATION

              We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any document we file 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. Our SEC filings, including this proxy statement, are also available to you on the SEC's website at www.sec.gov.

              The SEC allows us to "incorporate by reference" the information we file with the SEC, which means that we can disclose important information to you by referring to those documents. The information incorporated by reference is an important part of this proxy statement. The incorporated documents contain significant information about us, our business and our finances. Any information contained in this proxy statement or in any document incorporated or deemed to be incorporated by reference in this proxy statement will be deemed to have been modified or superseded to the extent that a statement contained in this proxy statement, or in any other document we subsequently file with the SEC that also is incorporated or deemed to be incorporated by reference in this proxy statement, modifies or supersedes the original statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to be a part of this proxy statement. We incorporate by reference the following documents we filed with the SEC (other than any portion of these documents that is furnished or otherwise deemed not to be filed):

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              All documents that we file (but not those that we furnish) with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act on or after the date of this proxy statement and prior to the date of the special meeting are deemed to be incorporated by reference into this proxy statement and will automatically update and supersede the information in this proxy statement and any previously filed documents.

              To the extent that any information contained in any filing with the SEC, or any exhibit thereto, is or was furnished to, rather than filed with, the SEC, such information or exhibit is specifically not incorporated by reference in this proxy statement.

              We will provide without charge to each person, including any beneficial owner of our common shares, to whom a 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 are specifically incorporated by reference into those documents. A request should be addressed to LaSalle Hotel Properties, 7550 Wisconsin Avenue, 10th Floor, Bethesda, Maryland 20814, Attention: Kenneth G. Fuller, Corporate Secretary or by telephone at (301) 941-1500.

              If you have any questions about this proxy statement, the special meeting or the mergers, or if you would like additional copies of this proxy statement, please contact Innisfree M&A Incorporated, our proxy solicitor, at:

Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
Toll-Free: (888) 750-5834

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT TO VOTE YOUR 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 IN THIS PROXY STATEMENT. THIS PROXY STATEMENT IS DATED [    ·    ], 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 OUR SHAREHOLDERS DOES NOT CREATE ANY IMPLICATION TO THE CONTRARY.

135



Exhibit A

AGREEMENT AND PLAN OF MERGER

BY AND AMONG:

BRE LANDMARK PARENT L.P.,

BRE LANDMARK L.P.,

BRE LANDMARK ACQUISITION L.P.,

LASALLE HOTEL PROPERTIES

and

LASALLE HOTEL OPERATING PARTNERSHIP, L.P.

Dated as of May 20, 2018



TABLE OF CONTENTS

 
   
  Page  

Article 1 DEFINITIONS

    A-2  

Section 1.1

 

Definitions

    A-2  

Section 1.2

 

Other Definitional and Interpretative Provisions

    A-12  

Article 2 THE MERGERS

   
A-13
 

Section 2.1

 

The Mergers

    A-13  

Section 2.2

 

Effect of the Mergers

    A-13  

Section 2.3

 

Closing; Effective Times

    A-14  

Section 2.4

 

Organizational Documents; Officers and General Partners

    A-14  

Section 2.5

 

Merger Consideration; Effect on Company Capital Shares

    A-15  

Section 2.6

 

Merger Consideration; Effect on Partnership Units

    A-17  

Section 2.7

 

Payment of Merger Consideration

    A-17  

Section 2.8

 

Company Compensatory Awards

    A-19  

Section 2.9

 

Appraisal Rights

    A-20  

Section 2.10

 

Further Action

    A-20  

Section 2.11

 

Withholding of Tax

    A-20  

Section 2.12

 

Tax Consequences

    A-21  

Article 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY PARTIES

   
A-21
 

Section 3.1

 

Organization and Good Standing; Subsidiaries

    A-21  

Section 3.2

 

Organizational Documents

    A-22  

Section 3.3

 

Capitalization

    A-22  

Section 3.4

 

SEC Filings; Financial Statements

    A-24  

Section 3.5

 

Absence of Certain Changes

    A-26  

Section 3.6

 

Properties

    A-26  

Section 3.7

 

Environmental Matters

    A-27  

Section 3.8

 

Material Contracts

    A-27  

Section 3.9

 

Permits; Compliance

    A-29  

Section 3.10

 

Legal Proceedings; Orders

    A-30  

Section 3.11

 

Tax Matters

    A-30  

Section 3.12

 

Employee Benefit Plans

    A-32  

Section 3.13

 

Labor Matters

    A-33  

Section 3.14

 

Intellectual Property

    A-34  

Section 3.15

 

Insurance

    A-35  

Section 3.16

 

Authority; Binding Nature of Agreement

    A-35  

Section 3.17

 

Vote Required

    A-36  

Section 3.18

 

Non-Contravention; Consents

    A-36  

Section 3.19

 

Opinion of Financial Advisor

    A-36  

Section 3.20

 

Brokers

    A-36  

Section 3.21

 

Investment Company Act

    A-37  

Section 3.22

 

Takeover Statutes

    A-37  

Article 4 REPRESENTATIONS AND WARRANTIES OF THE PARENT PARTIES

   
A-37
 

Section 4.1

 

Organization and Good Standing

    A-37  

Section 4.2

 

Legal Proceedings; Orders

    A-38  

Section 4.3

 

Authority; Binding Nature of Agreement

    A-38  

Section 4.4

 

Non-Contravention; Consents

    A-38  

Section 4.5

 

Not an Interested Stockholder

    A-38  

Section 4.6

 

Available Funds

    A-39  

A-i


 
   
  Page  

Section 4.7

 

Solvency

    A-39  

Section 4.8

 

Guarantee

    A-40  

Section 4.9

 

Brokers

    A-40  

Section 4.10

 

Absence of Certain Agreements

    A-40  

Section 4.11

 

Compliance

    A-40  

Article 5 COVENANTS

   
A-41
 

Section 5.1

 

Interim Operations of the Company Parties

    A-41  

Section 5.2

 

No Solicitation

    A-44  

Section 5.3

 

Preparation of Proxy Statement; Shareholders Meeting; Vote of Parent

    A-48  

Section 5.4

 

Filings; Other Action

    A-50  

Section 5.5

 

Access

    A-51  

Section 5.6

 

Interim Operations of Merger Sub and Merger OP

    A-51  

Section 5.7

 

Publicity

    A-51  

Section 5.8

 

Other Employee Benefits

    A-52  

Section 5.9

 

Indemnification; Directors' and Officers' Insurance

    A-53  

Section 5.10

 

Section 16 Matters

    A-55  

Section 5.11

 

Transaction Litigation

    A-55  

Section 5.12

 

Financing and Cooperation

    A-55  

Section 5.13

 

Confidentiality

    A-58  

Section 5.14

 

Other Transactions; Parent-Approved Transactions

    A-59  

Section 5.15

 

Distribution by Company of REIT Taxable Income

    A-60  

Section 5.16

 

Certain Tax Matters

    A-60  

Section 5.17

 

Stock Exchange Delisting; Deregistration

    A-61  

Section 5.18

 

Takeover Statutes

    A-61  

Article 6 CONDITIONS TO THE MERGERS

   
A-61
 

Section 6.1

 

Conditions to the Obligations of Each Party

    A-61  

Section 6.2

 

Conditions to the Obligations of the Parent Parties

    A-61  

Section 6.3

 

Conditions to the Obligations of the Company Parties

    A-62  

Section 6.4

 

Frustration of Closing Conditions

    A-62  

Article 7 TERMINATION

   
A-63
 

Section 7.1

 

Termination

    A-63  

Section 7.2

 

Effect of Termination

    A-64  

Section 7.3

 

Expenses; Termination Fees

    A-64  

Section 7.4

 

Payment of Amount or Expense

    A-66  

Article 8 MISCELLANEOUS PROVISIONS

   
A-67
 

Section 8.1

 

Amendment

    A-67  

Section 8.2

 

Waiver

    A-67  

Section 8.3

 

No Survival of Representations and Warranties

    A-67  

Section 8.4

 

Entire Agreement

    A-68  

Section 8.5

 

Applicable Law; Jurisdiction; Wavier of Jury Trial

    A-69  

Section 8.6

 

Assignability; Parties in Interest

    A-69  

Section 8.7

 

Notices

    A-70  

Section 8.8

 

Severability

    A-71  

Section 8.9

 

Counterparts

    A-71  

Section 8.10

 

Obligation of Parent

    A-71  

Section 8.11

 

Specific Performance; Parent Liability Cap

    A-72  

Exhibit A—Form of Company Counsel Tax Opinion

   
 
 

A-ii



AGREEMENT AND PLAN OF MERGER

        This Agreement and Plan of Merger (this "Agreement") is made and entered into as of May 20, 2018, by and among: BRE Landmark Parent L.P., a Delaware limited partnership ("Parent"); BRE Landmark L.P., a Delaware limited partnership ("Merger Sub"); BRE Landmark Acquisition L.P., a Delaware limited partnership ("Merger OP" and, collectively with Parent and Merger Sub, the "Parent Parties"); LaSalle Hotel Properties, a Maryland real estate investment trust (the "Company") and LaSalle Hotel Operating Partnership, L.P., a Delaware limited partnership and whose sole general partner is the Company (the "Operating Partnership" and, together with the Company, the "Company Parties"). Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed thereto in Section 1.1.


RECITALS

        A.    BRE Landmark LLC, a Delaware limited liability company ("Merger Sub GP"), as the sole general partner of Merger Sub has approved this Agreement and determined that it is advisable and in the best interests of Merger Sub and its limited partner to enter into this Agreement and consummate the merger of the Company with and into Merger Sub (the "Company Merger"), with Merger Sub surviving the Company Merger as a wholly-owned Subsidiary of Parent pursuant to the Delaware Revised Uniform Limited Partnership Act (the "DRULPA") and the Maryland REIT Law, as amended (the "MRL"), pursuant to which each outstanding common share of beneficial interest, par value $0.01 per share, of the Company (the "Company Common Shares") (other than Excluded Shares) shall be converted into the right to receive cash as set forth herein, upon the terms and conditions of this Agreement.

        B.    The board of trustees of the Company (the "Company Board") has unanimously (a) approved this Agreement, the Mergers and the other Transactions, (b) determined that this Agreement, the Mergers and the other Transactions are advisable and in the best interests of the Company, its shareholders and the limited partners of the Operating Partnership and (c) resolved to recommend that its shareholders approve the Company Merger.

        C.    Each of the Company, as the sole general partner of the Operating Partnership and BRE Landmark Acquisition LLC, a Delaware limited liability company ("Merger OP GP"), as the sole general partner of Merger OP have approved this Agreement and determined that it is advisable and in the best interests of their respective limited partners to consummate the merger of Merger OP with and into the Operating Partnership (the "Partnership Merger" and, together with the Company Merger, the "Mergers"), with the Operating Partnership surviving the Partnership Merger in accordance with the DRULPA, pursuant to which each outstanding common unit of the Operating Partnership (the "Partnership Common Units") (other than Excluded Units) shall be converted into the right to receive cash as set forth herein, upon the terms and conditions of this Agreement.

        D.    Concurrently with the execution and delivery of this Agreement, and as an inducement to the Company Parties' willingness to enter into this Agreement, the Sponsor (as defined below) is entering into a guarantee in favor of the Company (the "Guarantee"), with respect to certain obligations of the Parent Parties under this Agreement.

        E.    Concurrently with the execution and delivery of this Agreement, and as an inducement to each party's willingness to enter into this Agreement, Blackstone Real Estate Partners VIII L.P. (the "Sponsor") is entering into an equity fin