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Greetings, and welcome to Pebblebrook Hotel Trust Fourth Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Raymond Martz, Co-President and Chief Financial Officer. Thank you. Please go ahead.

Thank you, Donna, and good morning, everyone. Welcome to our fourth quarter 2025 earnings call. Joining me today is Jon Bortz, our Chairman and Chief Executive Officer; and Tom Fisher, our Co-President and Chief Investment Officer. Before we begin, I'd like to remind everyone that our remarks are as of today, February 26, 2026, and comments may include forward-looking statements that are subject to various risks and uncertainties. Please refer to our SEC filings for a detailed discussion of these risk factors and visit our website for reconciliations of any non-GAAP financial measures mentioned today. Now let's jump into the fourth quarter and full year results. We wrapped up 2025 with stronger-than-expected fourth quarter growth despite the demand disruption from the government shutdown. Same-property total RevPAR increased 2.9% and same-property hotel EBITDA grew 3.9% to $64.6 million, $2.2 million above the midpoint of our outlook. This was led by continued strength in San Francisco and better-than-expected performance in Boston, Chicago and at our recently redeveloped resorts. Year-over-year, adjusted EBITDA climbed 11.1% to $69.7 million, about $6 million above the midpoint, supported by strong hotel results, lower corporate G&A and slightly higher-than-expected business interruption income related to LaPlaya. And with the benefit of a reduced share count from buybacks, adjusted FFO per share increased to $0.27, $0.05 above the midpoint of our outlook and up a robust $0.07 and 35% higher than the fourth quarter of 2024. From a full year perspective, 2025 was defined by 2 very different storylines. Our redeveloped resorts and our urban recovery markets, especially in San Francisco, drove strong tangible growth while markets like Los Angeles and Washington, D.C. weighed on the headline numbers due to unexpected events that obscured the underlying strength across much of our portfolio. The key point as we enter 2026 is simple. The hotel demand growth engines are getting stronger and several of last year's headwinds are fading and should increasingly become tailwinds. Looking at fourth quarter operating performance, same-property occupancy increased 190 basis points, while ADR declined 1.6%, resulting in a 1.2% RevPAR increase. Importantly, out-of-room performance continued to do the heavy lifting with non-room RevPAR climbing 5.5%, which drove total RevPAR growth of 2.9%. These results reflect a deliberate revenue management strategy we executed on throughout the year. We prioritized growing occupancy when it was a higher return lever because higher occupancy at our properties, especially our resorts, drives incremental profit across food and beverage, banquets and catering and other ancillary revenue streams. That occupancy level-led approach remains a core part of our 2026 playbook because it improves both revenue quality and profitability for our portfolio. Our fourth quarter results reinforce 3 important themes that matter most for 2026. First, leisure demand remains resilient and noticeably improved from Thanksgiving throughout the end of the year, and weekday business travel continues to recover, especially in markets like San Francisco. Second, out-of-room spend remains healthy and continues to be an important profit driver for us, and our strategic reinvestment program is helping capture more group catering, outlet and ancillary spend on property. And third, expense growth remains well contained through an intense focus on creating operating efficiencies, which positions us to expand margins as revenue growth accelerates in 2026. We saw that relationship clearly in Q4. Same-property revenues grew by 2.9%, while expenses increased 2.6%, supporting modest margin expansion and representing an encouraging setup as demand continues to recover further in 2026. And if you exclude L.A. and D.C., total RevPAR growth was 4.2% up in the quarter, reinforcing that the underlying trend line improves as we exited the year. Now let's turn to where we're seeing -- where demand show up across the portfolio, starting with the resorts. Our resort portfolio continues to benefit from our completed multiyear strategic reinvestment program. In the fourth quarter, resort occupancy increased by roughly 160 basis points, driving total RevPAR up 4.9% and same-property resort EBITDA up a strong 17.4%. For the full year, resort EBITDA increased 1.3%. Importantly, many of our redevelopment resorts are ramping towards stabilization, and we see further meaningful growth ahead. For example, Newport Harbor Island Resort in its first full year post redevelopment ramped extremely well with total RevPAR increasing 38.5% and EBITDA increasing a significant $9.3 million to $17.7 million with additional upside in 2026 as this property stabilizes. Turning to our urban markets. Performance remained mixed quarter-to-quarter, but the overall direction improved in our recovery cities where business group and transient are rebuilding and leisure demand is returning. San Francisco led the portfolio again with fourth quarter total RevPAR increasing more than 32%, which was driven by a broad-based recovery across all demand segments, including business transient, group, convention and leisure. For the full year, our San Francisco portfolio grew RevPAR by 15.1% -- total RevPAR by 15.1% and RevPAR by an even stronger 17.5%, with hotel EBITDA increasing by 58.5%. These were great results, and we're very encouraged by the 2026 set in San Francisco, which Jon will provide more color on. Outside San Francisco, we saw steady improvements in 2025 in select urban markets like Portland and Chicago. Market-specific disruptions such as fires, ICE raids, national guard deployments, government shutdowns and softer convention calendars impact markets like San Diego, Washington, D.C. and Los Angeles. Encouragingly, L.A. improved sequentially as the year progressed with RevPAR finally turning positive in Q4 and early 2026 trends are improving further, which Jon will touch on later. And from a demand standpoint, fourth quarter leisure transient demand was a bright spot with transient room nights up 5.9%, aided by strength in consortia and wholesale channels. Group occupancy declined slightly, primarily due to lower attendance and cancellations from government and government-impacted segments. On the cost side, the story remains disciplined and consistent. For the full year, same-property expenses rose 3%. And excluding last year's real estate tax and other credits, total expense growth was just 2.2%, with cost per occupied room basically flat. Energy cost growth was held to roughly 2% for the year, reflecting continued progress on property level operating initiatives, investments and productivity programs. We're applying that same efficiency mindset at the corporate level as well. We made progress streamlining our organizational structure, reducing corporate staffing levels by about 10% year-over-year and lowering run rate costs through process improvements, automation and productivity initiatives. As a result, we expect total run rate corporate cash G&A to decline modestly in 2026. So when you put it together, we've got revenues improving, non-room spend positive and resilient and costs staying well controlled. We like the trend line heading into 2026. Turning to LaPlaya Beach Resort and Club in Naples, Florida. Our weather resiliency improvements are complete, and the resort is fully restored following Hurricanes Helene and Milton. We finalized our insurance settlement before year-end and recorded $3.1 million in business interruption proceeds in the quarter, about $1.1 million above our outlook, bringing total BI proceeds for 2025 to $12.7 million. With our claims now settled, we don't expect additional BI income in 2026. We're currently forecasting LaPlaya to generate hotel EBITDA of $28 million to $30 million in 2026 as resort continues to recover from the extended weather and rebuilding disruptions. Let me shift now to our capital allocation and balance sheet actions because that's where our increased flexibility shows up. On the capital side, we invested $74.6 million in 2025, including weather resiliency improvements at LaPlaya, refreshes at Argonaut and Hyatt Centric Delfina, the guestroom refresh that commenced at Revere Boston Common, the renovation of the conference center and meeting space at Paradise Point Resort and various sustainability investments across the portfolio. For 2026, we expect capital investments of $65 million to $75 million, reflecting the second year in a row of a more normalized lower capital investment run rate now that our multiyear redevelopment program is largely complete. This lower capital run rate is an important tailwind for 2026 as it supports higher discretionary free cash flow for debt paydowns and share repurchases. On the transactions front, we completed 2 strategic dispositions in the fourth quarter for gross proceeds of over $116 million, selling both Montrose at Beverly Hills and the Westin Michigan Avenue Chicago and redeploying those proceeds towards debt reduction and repurchasing common and preferred shares at very attractive discounts. Regarding share repurchases in 2025, we retired $13.3 million of preferred shares, buying them back at an attractive 24% discount to par. We also repurchased approximately 6.3 million common shares at an average price of $11.37 per share for a total of $71.3 million. We believe these repurchases represent an attractive discount to the underlying value of our portfolio and a high return use of capital that directly increases value per share. Turning to our balance sheet. Earlier this month, we refinanced our near-term maturities by closing on a new $450 million senior unsecured term loan due in 2031 and repaying the remaining Margaritaville Hollywood Beach Resort loan using cash on hand. These proactive measures extended our debt maturity profile, increased our unencumbered asset base and provided a clear fully funded path to address the remaining $350 million convertible notes due December 2026. And as a result, we have $150 million of cash on hand and roughly $640 million of revolver capacity. Outside of the convertible notes, we have no significant debt maturities until 2028, and our weighted average interest cost of 4.1% is the lowest in the hotel lodging REIT sector. All told, the important takeaways from the fourth quarter are about the trend line. The urban recovery is gaining traction. LaPlaya is back online and ramping. Total revenue quality remains strong, especially out-of-room spend, and our underlying cost discipline and search for efficiencies continue to position us for margin expansion as revenues grow. Combined with a lower capital investment run rate, we expect free cash flow to grow again in 2026, providing us with more momentum and capital flexibility. And with that, I'd like to turn the call over to Jon for more on the 2025 performance trends and our outlook for 2026. Jon?

Thanks, Ray. I believe that we may finally be reaching a favorable transition point in the industry and for Pebblebrook. I'm going to detail the fundamentals behind that view. So I'm going to spend a little time providing some color on Q4 of last year, but my focus will be on the setup for 2026 and what we're already seeing happening here in the first quarter. After all, we're already at the end of February, so it's important that you understand how we think the full year sets up for Pebblebrook and how the first quarter is going so far. In Q4, our operating performance turned out better than we expected despite the government shutdown and the resulting travel disruptions that followed. This better performance was primarily driven by 3 factors. First, stronger leisure demand throughout our upper upscale and luxury leaning portfolio, and that strength more than made up for the negative impacts from the shutdown and the softer group demand. Second, San Francisco outperformed our expectations. And third, we again delivered strong growth in out-of-room spend, which is being led by the performance of our resorts, particularly our more recently redeveloped resorts. Our RevPAR in Q4 increased 1.2%, not bad considering the impact from the government shutdown, while the industry's RevPAR declined 1.1%. San Francisco RevPAR increased a massive 37.9%. San Francisco is benefiting from a recovery in all travel demand segments, leisure, business transient and group and convention. For those who believe it's being driven by the recovering citywide convention business, that is true, but it's only part of the story. And as an example, in December, with 0 conventions in San Francisco, that's right, 0 conventions, RevPAR for our San Francisco portfolio climbed 16.2% while the rest of our portfolio, excluding our San Francisco properties experienced a RevPAR decline of 2.5%. San Francisco has gone from a doom loop to a boom loop with all facets of business and real estate benefiting from a cleaner, safer city and governmental policies and leadership that support the city's recovery. San Francisco, along with the bounce back in Los Angeles, will lead our growth in 2026. And San Francisco showed very well over Super Bowl week with huge positive publicity that will help drive an even faster and stronger hotel recovery. Before I turn to 2026, I think it's important first to summarize what happened last year as it provides a foundation for our views on this year. Recall that a year ago, we were very excited about the setup for the year with a new business-friendly President, an already well-performing economy, essentially full employment, inflation and interest rates declining, and we were coming off an improving quarter in our industry at the end of 2024, where we saw demand re-correlate to GDP growth. Historically, that relationship holds best when policy noise is limited. We were expecting good things for the economy, for travel and our company. Well, as we all know, it didn't quite turn out as we expected. So what happened? Well, government policies that created economic uncertainty or downright negative impacts like the freeze on government travel got in the way, along with the government shutdown later in the year. This is very evident in the STR industry numbers. Industry demand started out the year well, but began to weaken in February following a deterioration in our relations with Canada. Then it turned negative in April, coinciding with Liberation Day and heightened policy uncertainty then worsened in October and November with the government shutdown, cutback on airlift and fears about flight safety. Fortunately, once the shutdown ended, travel began to recover with strong leisure trends arriving with Thanksgiving and continuing all the way through the Christmas and New Year's holidays. The industry also faced a worsening international trade imbalance all year with international outbound travel from the U.S. continuing to grow in 2025, while international inbound travel to the U.S. declined. International outbound travel now sits well above 2019 levels and inbound sits well below 2019 levels. Government travel was also lower than 2024 throughout the year as was government-related travel and government-impacted travel, such as travel associated with health care, universities, research and defense. So the so-called K-shaped economy developed during the year with the upper half of the socioeconomic spectrum seeing their financials improve and therefore, spend more and the bottom half pulled back and focused more on necessities instead of discretionary purchases like travel. This created a clear bifurcation of performance in the hotel industry, with the upper half performing significantly better than the bottom half. Our portfolio, which almost entirely consists of upper upscale and luxury properties performed better as a result. But the true underlying performance of our portfolio was obscured by the 9-month impact of the L.A. fires and our then 9 properties in that market and by the negative government-related impact on travel to D.C. and San Diego. Excluding L.A. from our calculations, highlights that the rest of the portfolio performed 180 basis points better in RevPAR and 160 basis points better in total RevPAR. D.C., which is a smaller market for us with 4 properties, negatively impacted RevPAR by 30 basis points and total RevPAR by roughly 60 basis points. These are not excuses. We're just providing the facts and the math so you can understand the performance of the underlying portfolio. As we look at 2026, we believe both the industry and our portfolio are set up extremely well for the year. Yet our outlook is appropriately cautious given policy and geopolitical risks. If not for the surprises we experienced last year, we'd be more confident providing an outlook for the industry and for Pebblebrook that would be much higher. So our outlooks are cautious and therefore, conservative, but our setup is not. That said, while we're building conservative into our outlook, we're staying nimble with revenue management and cost controls. But consider the following positives for 2026. Broadly, we have very easy demand and performance comparisons to a very disrupted 2025. Industry demand declined 0.5% last year, and RevPAR was down 0.3%, both of which are historically inconsistent with a growing economy and limited supply growth. Forecasts are indicating an improving macroeconomic environment with less uncertainty, supported by a stable and fully employed labor force, significant increases in business investments and substantially higher income tax refunds. [indiscernible] World Cup in many cities throughout the U.S., including 4 of our cities that will drive compression and longer stays. America250, which is broader than just July 4th events, will be very beneficial. For Pebblebrook, we already had the Super Bowl in San Francisco in February and it performed exceedingly well. NBA All-Star week in L.A. in February, which also performed well. We have upcoming NCA Men's basketball tournament rounds in 4 of our markets and numerous other special demand-generating events in 2026 throughout our markets. The year also has the best holiday calendar that I can ever remember, with most major holidays falling on or adjacent to weekends, which helps both weekday business travel as well as leisure on the weekends. We've already seen benefits from this favorable holiday calendar, starting with New Year's Day and then the Valentine's Day President's Day combined weekend and the rest is still unwritten. Assuming no big macro or geopolitical surprises, we believe demand will re-correlate to GDP as it did in Q4 2024 and early 2025 before all of last year's disruptions, and we're already seeing signs of that this year. Although Winter Storm Fern obscured that reconnection in January, when we look at the first 24 days before the storm hit, industry room demand improved to plus 1.5%. We're definitely seeing that reconnection in February with industry demand in the first 3 weeks up 3.5%, though this week's winter storm will depress the full month numbers somewhat. We have very easy comparisons in Los Angeles and Washington, D.C., and we've already been seeing the snapback in L.A. from the beginning of the year with RevPAR at our L.A. properties increasing 33.1% in January, basically recouping all of the lost room revenue in that month from last year. We're also on track to recoup last year's losses in February, so we're on a good trend so far. San Francisco is going through a very powerful recovery, and we're expecting another year of double-digit RevPAR growth this year. We're off to a very strong start with RevPAR climbing 12.2% in January, even with a year-over-year decline in citywide rooms on the books for the month. And we're heading for a 65%-plus RevPAR increase in February with the benefit of a very strong performance from Super Bowl and its almost week-long events. We have extremely limited supply growth in the industry to the point of it being a nonfactor, especially in our markets. We also have further ramp-up to go from our recently redeveloped and repositioned properties that benefited from the huge capital investments we made over the last few years, including at LaPlaya, which has been rebuilt and is even better and more resilient than before the last hurricanes. And finally, our portfolio is essentially all upper upscale and luxury with half of our EBITDA coming from our high-end resorts, all of which should continue to benefit from the strength of the more affluent consumer. Our first quarter performance so far and our outlook for Q1 illustrate the benefits of the setup that I just described. January RevPAR grew 4.6% and would have been almost 7%, but for Winter Storm Fern, which severely disrupted travel in the last week of January. We also were up against a tough comparison in Washington, D.C., which hosted the inauguration in January last year. February is on pace to achieve RevPAR growth of 15%-plus. As a result, our RevPAR outlook for the first quarter is 7.5% to 9%, with total RevPAR growing 6% to 7.5%. We're still seeing healthy growth in out-of-room spend by both group and transient guests, but the range for total RevPAR revenues -- for total revenues in the first quarter is lower because these non-room revenues have a harder time keeping up with room revenue growth when RevPAR growth reaches such a high level. For the full year, we're more cautious given the policy and geopolitical risks. We'll take it a quarter at a time. Our outlook provides for RevPAR growth of 2% to 4% for the year, with total RevPAR forecasted to grow between 2.25% and 4.25%. As of the end of January, our combined group and transient pace for the year was ahead of the same time last year by $21 million. That represents an increase of 2.4% over last year's final same-property room revenues. Pace growth is widespread and is up throughout our markets, except for D.C., which compares against the inauguration in January last year. We were encouraged by the revenue we picked up in January for the full year, which was favorable by $8.1 million over last year. But to be clear, that $8.1 million is part of the $21 million pace advantage for the year. The key takeaway is we're starting the year ahead. January was a very good pickup month, and we're watching pickup closely. But we believe our outlook is prudent given the risks and uncertainties. For 2026, we expect to continue delivering operating efficiencies and keep total property expense growth well controlled as indicated in our outlook. As a result, we're forecasting same-property EBITDA to increase by 2.1% to 6% with the midpoint at 4%. So even at the 2.25% bottom of the range for total RevPAR growth, we still expect growth in EBITDA. To wrap up, I hope you can tell that we're very excited about the setup for Pebblebrook for 2026. Now we just need the year to cooperate and provide a more stable environment. So with that, we'd now be happy to take your questions. Donna, you may proceed with the Q&A.

[Operator Instructions] Today's first question is coming from Smedes Rose of Citi.

Jon, I appreciate all your opening remarks. And I guess I was just wondering on kind of the one piece where there is maybe some better visibility. Could you just talk a little bit about what you're seeing on the group side and sort of maybe sort of the composition of those groups in terms of kind of who's coming?

Sure. Well, when we look at our pace, most of our pace advantage is in transient, both leisure and business transient and contract business. So group itself, group room nights right now are down 0.6% for the year. ADR is up 2.4% and group revenue is up 1.8% whereas transient room nights up 11.6%, ADR plus 0.6% and revenue plus 12.2%. Now the one thing I'd say about the group pace, it's still very widespread. We do continue to see the same softness when it comes to government and government-related government-impacted industries. But one of the things our properties are doing based upon their experience last year is the group that's on the books is washed to a greater extent than it was going into last year. So I think it's a little bit more realistic when you consider what the trends were in terms of attrition and attendance compared to this year where at least right now, I think it's more representative of the trends that we were seeing late last year.

The next question is coming from Rich Hightower of Barclays.

A question on your resort portfolio and specifically the portion that's been -- that's had sort of heavy renovation CapEx over the last number of years. I guess if we look to the end of 2026, embedded with the guidance, what sort of unlevered cash returns do you anticipate on that spend? Or what's baked in the guidance? And then obviously, those assets are still ramping to stabilization. So what's sort of the ultimate stabilized target on that spend, if you don't mind?

Sure, Rich. Yes. and we updated some good detail in our investor presentation, which I encourage you to look at, which talks a lot about these redevelopments where we lay each of these out. The good news is on the 2023 and '24 projects where we invested a little over $100 million of ROI capital, we've realized already about $20 million of that, some of it we talked about today with Newport, a pretty phenomenal improvement during the year. And we have a remaining kind of $4 million to $8 million that we expect here in the next 2 to 3 years as it's further realized. So we've been -- and for these projects, that's actually closer to an ROI -- a cash ROI in that 22% to 26% range. So that's...

Annual cash yield.

Yes. Annual cash yield. So that's the ROI increased cash that we're generating the properties. And then when you look at the projects, overall, our strategic reinvestment program, and that's the one where for the last several years, we invested since 2018 in number of projects, we're averaging closer to that 16% to 17% annualized cash-on-cash ROI return. So these projects that were done recently from these resorts, it's adding on a lot of additional areas where we have additional food and beverage outlets, other revenue-generating areas that creates a lot of out-of-room spend. And that's where we touched upon earlier, our focus has been the occupancy-driven approach, especially at our resorts because when the guest comes to the resort, they stay and they spend a lot of money. That's why these returns have been very healthy and encouraging, and we feel good about the progress. We expect more in '26.

The next question is coming from Cooper Clark of Wells Fargo.

I appreciate the color on the strong first quarter. Curious as we think about the lower implied RevPAR guidance for 2Q through 4Q despite your higher exposure to really strong calendar events. Can you walk us through some of the puts and takes embedded in guidance with respect to leisure trends in the year for the year group pickup or other items where you maybe started a bit more conservatively, as you mentioned earlier, given the macro uncertainty?

Sure. So when we look at last year, we went from a very significant advantage in pace when we reported same time last year to a decline in pace by the end of the year. And that all had to do with events, starting with the fires, the first week of the year that -- where the impact really lingered through much of the year, really 9 months. And so our outlook for this year, and I'm trying to be clear in my comments that we're being very conservative where we don't have full visibility, knowing that there are disruptions that can pop up that we don't anticipate pretty much any given day of the year. And so when we look at the last 9 months of the year, it really is an implied RevPAR growth of 1% to 2% for our range. And that really doesn't take into account significant benefit from World Cup, from America250, from other events, from the benefit of the holiday calendar. And it doesn't really take into account the assumption that demand re-correlates with GDP because otherwise, with forecast of GDP in the 2%, 2.5% range, our forecast for the industry would be higher than the range that we laid out at 0% to 2%. So we're being very conservative. We think very prudent right now given our experience last year with our outlook for the last 3 quarters. In terms of the trends we're seeing right now, they're all positive. I mean, other than the weather, where we had a second weather event, a blizzard with Winter Storm Hernando, which really put a damper on what was looking to be a really great month in February for the industry and clearly impacted travel all over the country. So we're still seeing the trends be positive. We are seeing this re-correlation with GDP, but for the weather. And we think so far, despite all the things that have happened geopolitically so far this year, it hasn't really had a big impact on the underlying demand trends. So from that perspective, despite all those things, travel demand seems to be continuing to improve. Does that address your question, Cooper?

[Operator Instructions] Our next question is coming from Aryeh Klein of BMO Capital Markets.

Jon, maybe just on the transaction market. You did sell a couple of hotels late in the year. Just curious what you're seeing about the out there, how you're thinking about the portfolio and just the potential to maybe sell a few more assets this year?

Aryeh, it's Tom. Yes, I mean, obviously, what you've seen is the market is becoming certainly more constructive. You've been reading about more trades, especially kind of the bid for luxury. And I think a number of the trades that have been announced recently have also skewed to much larger transactions. So I think that's a trend that you're going to continue to see. And part of that is the debt markets and the cost and availability of debt continues to improve. Brokers are certainly more optimistic. Buyer debt seems to be improving. There's a lot of equity capital out there looking for opportunities. But as we've talked about for the last 18 months, they're looking for conviction. And what does that mean? That basically means growth. And as we all know, performance or capital follows performance. So I think everybody is kind of waiting to kind of see if the setup that we've set out for 2026 kind of comes to fruition, you'll continue to see momentum as it relates to the transaction and trades in the market. And I think you'll continue to see us be engaged and be heavy participants in the market as well.

Aryeh, one other thing just to add on the transaction side. We did do those 2 transactions in November. And there were quite a number of sell-side analysts who never updated their numbers for 2026 for the lost EBITDA from those assets sold at the end of 2025. And at least for the community that's on the phone, we'd ask if you could please update your numbers because it's inappropriately skewing consensus numbers for 2026 and then really doing a disservice to the investment community out there. So if the sell side could keep their models up, particularly for these material events that occur that impact future numbers, we think that would be much better for the investment community. That was not directed at you, Aryeh.

For what it's worth, it was out of our numbers, but...

The next question is coming from Michael Bellisario of Baird.

Sort of along those same lines, just relative to your very positive outlook, good start to the year. I mean how do you balance that better performance with those potential asset sales you talked about and further deleveraging in the balance sheet? I guess, maybe said another way, do you rely a little bit more on organic growth to delever in 2026 as opposed to maybe selling a few more hotels to get you to your balance sheet targets?

Yes. I mean I think our strategy continues to be a dual approach. First, it's how do we create value for the shareholders. And one of the ways we do that is by buying our existing assets back at a big discount to what they would trade for in the marketplace. And so I think what the improving underlying performance does is it's going to have an impact on the buyer community. And as Tom said, help it become more constructive because to date, the buyer community, one, has been in no hurry and two, hasn't really been underwriting growth in the future. And for the most part, for the last couple of years, that -- those assumptions have been right. We haven't had growth. We've had shrinkage. So I think as we get on this positive trend, I mean, remember, we have extremely limited supply growth for the next 3 to 4 years. If you don't start this year, you're not delivering for 3 years at a minimum in the major urban markets and in the resort market. So I think for us, as long as this public-private arbitrage opportunity exists, we're going to continue to sell assets. And we're going to -- we'll pay down debt in order for our ratios to remain the same with the organic growth in EBITDA really driving down the overall ratio because we're not at a stabilized level of EBITDA given the impact on the markets during the pandemic and post pandemic, particularly the urban market. So we think that will naturally recover as we laid out in our investor presentation in a very significant way. Start -- some of it started over the last couple of years, and it's accelerating, particularly in markets like San Francisco and with the snapback in L.A. from the fire impact last year. So we're really going to focus on taking advantage of the public-private arbitrage opportunity. We'll continue to sell assets as the transaction market allows, if you will, as a functioning market. And we'll use that capital to do 2 things. One is pay down debt related to the EBITDA that we're selling and two, to buy back our stock, both common and preferred, trading at material discounts.

Got it. If I could just sneak in a quick follow-up. Just the new slide in your deck on the brand management encumbrances that you added. What drove that? And what should we read into that data?

Yes. I mean I think the reason we put it together are some misconceptions out in the industry about what unencumbered means and what the impact of being unencumbered has on values. A lot of times, people have this tendency just to look at cap rates, which our industry doesn't really trade at cap rates. Cap rates are really the result of how people are underwriting the future performance of an asset. And as I said in my earlier comments, the buyer community hasn't been underwriting any growth in the future. And that's not normal, but it is consistent with an operating environment that hasn't been increasing. And so as I said, the buyer community is right. But we wanted to lay out the fact that the vast majority of our portfolio is unencumbered by both brand and by operator, 77% of the portfolio. And those assets trade historically at a 10% to 20% premium on EBITDA multiples or on underwriting future because the buyer community is as broad as it possibly can be. So you get the greatest competition, you get strategic buyers, you get capital being provided by strategic buyers that increases transaction values. And you have upside that people assume from being able to put a flag on or changing operators that improves future performance that also leads to higher values. So we wanted to provide that detail so people could understand it. It's not always clear, particularly in cases where we have rights like termination on sale that will free an encumbrance that is otherwise a long-term encumbrance for us. But to a new buyer, it becomes free and clear. So we've laid that out here. We also wanted to clarify the understanding about ground leases from 2 perspectives. First, there's some out there who actually take the future liability of ground leases and put that as a liability in calculating NAV. And that's -- it's double counting because we're already reducing EBITDA by the ground rent payments, and therefore, it's factored in. They do tend to trade at higher cap rates, resulting cap rates or lower EBITDA multiples in some cases, because it's not fee simple, and that, of course, makes sense. But also, the ones that have public entities, those tend to get extended on a regular basis over time because the public entity has no interest in owning the asset. It wants the income and it wants the income to increase over time. So there is a difference, just like there's a difference in debt between CMBS and bank debt. There's a difference between ground leases depending upon whether they're privately -- the landlord is a private entity or whether it's a public entity. And so we wanted to call that out, Mike.

The next question is coming from Gregory Miller of Truist Securities.

I wanted to ask about the Boston market. I was looking on Page 12 of your investor presentation, where you analyze market level anticipated upside from a continued urban recovery. And one of the parts of that slide noted that Boston ranks third on the implied EBITDA recovery despite 2025 occupancy already at 80%. The anticipated EBITDA recovery is almost as big as San Francisco, which remains a more depressed market. So I'm curious where you see Boston's EBITDA growth coming from in the next couple of years? Just general thoughts about the upside in the market going forward.

Sure. Thanks, Greg. So first of all, it's a couple of things. And when comparing it to San Francisco, it's a much bigger market for us in terms of the asset base that we have in that market. We have 5 assets, but they tend to be larger assets and they tend to be higher ADR assets in the marketplace. So those assets have historically run in the upper 80s, mid- to upper 80s and in '19, ran at 88%. Our forecast is to get it to 80%. So Boston as a market and those properties as well have historically run at a higher level. I think when we look at San Francisco, we're being very -- we're still being conservative with where we think that market can run at. But you can see in the slide, it's very similar to Boston in terms of the recovery range that we've laid out, 80% to 85%. We also think there's more growth in total revenues in that market. We have a lot more meeting and event space in that marketplace. We have a lot more ancillary revenues in that marketplace. And those we think will continue to grow and drive a significant operating leverage in that business because while we've had a decent recovery in Boston, our assets were still running below '19 from an EBITDA perspective, we think there's a lot more upside there.

[Operator Instructions] The next question is coming from Chris Darling of Green Street.

Thinking about your CapEx outlook for the year, obviously, a lower near-term run rate there, and that is supportive from a free cash flow perspective. But the flip side of that equation is obviously the potential over time for deferred maintenance and/or loss of market share. So hoping you could speak to how you balance that trade-off. And maybe you could speak to balancing that trade-off both from sort of a corporate level financial perspective, but also from the standpoint of maximizing value with any future dispositions.

Yes. So first of all, we don't have the issue. We're not doing a trade-off in capital. We're not deferring capital. In fact, we continue to do what we've always done, which is protect the real estate, do all the infrastructure improvement and capital investing, improve systems when new technology comes out and we can lower operating expenses. A significant part of our overall capital relates to that infrastructure, whether it be HVAC systems or modernizing elevators or new roofs or new windows in -- at our properties. And as it relates to the ongoing -- and of course, there's little to no revenue that we get from those infrastructure investments, but it obviously protects the downside. So the trade-off is if you don't do that stuff is exactly what you're talking about. As it relates to maintaining the interiors, we do that on a regular basis. The major redevelopments that we've done, we did because we bought the asset or we bought LaSalle, and we saw that there was very significant opportunity to reposition those assets. And in some cases, we had to invest capital because capital was deferred. And so we did that. So we don't wait around for 8 years or 10 years to do major renovations in order to catch up on deferred maintenance or deferred investment in the interiors. We're doing that constantly within the portfolio. And fortunately, because we do it at a very high-quality level, we invest very significant dollars in the kind of case goods we buy, the quality of the fabrics that we buy, the lighting, et cetera. Those generally are fairly limited in terms of how much capital we need to invest. They last longer because we're designed forward in our hotels, they tend not to go out of style. And so in our portfolio, you really don't have deferred capital. We don't have a trade-off issue as a result of that. And we see it 2 ways, Chris, and this is to understand how we do, we're always looking at our customer reviews. We're looking at our rankings on TripAdvisor, on Expedia, on Yelp and the different rating services. And they tell us whether we need to do refreshes or not. They confirm what we're doing or they don't. And if there are issues that come up there with customers, we see it. We obviously also get the customer reviews that our operators do, but we really look at the public ones because we think, one, they're skewed, they tend to be more negative than positive anyway. But at the end of the day, we look at our rankings and how we compare to the competitive sets. And what we've seen over the last 3 and 4 years is we continue to gain in our rankings with our customers. So we continue to go higher. We continue to increase customer service. We just find more efficient ways to do it. We have better training programs. We provide better service levels. We get more individual employee comments from our guests about the higher quality level of service and more personalized service that they're getting. So it's really critical to gaining share over time, which is what we've been doing. And that's the other way to see how does your property compete. And if you're gaining share, it's another indication that your property competitively is in the best shape in the marketplace.

And Chris, also, what we found is this leads to better ROI and look at a lot of the capital we've invested into our resorts since we don't have any branded resorts. We have complete discretion on how we want to choose to invest the capital versus a brand telling us, oh, you need to replace that door lock because this is a new brand standard, which has no ROI. So we can really target the capital, which is why in our investor presentation, we detailed some of those returns, and I encourage our investors to look at that. It's some really high returns because, again, a lot of that capital is areas where, to Jon's point, it's going to speak to what the customer is looking for. It's going to lead to higher revenues and other revenue sources, and that also leads to higher ROI and EBITDA growth.

Unfortunately, that is all the time we have today for questions. I would like to turn it back over to Mr. Bortz for closing comments.

Thank you all for participating today. Look, we're -- we'll be back to you in the next 60 days. And of course, we're going to see many of you down at the Citi Conference down in Hollywood, Florida. And let's all continue to root for a more stable environment because that will have a big positive impact on the industry and our own performance over the course of 2026. And we look forward to catching up with you in the not-too-distant future. Thank you.