SHO Sunstone Hotel Investors, Inc. - 10-K

Risk Factors

The statements in this section describe some of the material risks to our business and should be considered carefully in evaluating our business and the other information in this Form 10-K. In addition, these statements constitute our cautionary statements under the Private Securities Litigation Reform Act of 1995, as amended. The following is a summary of the material risks to our business, all of which are described in more detail below:

Risks Related to Our Business and Industry:

we own upper upscale and luxury hotels located in convention, urban, and resort destinations in an industry that is highly competitive;

events beyond our control, including economic slowdowns or recessions, uncertainty surrounding certain international economic and political relationships, including political disputes, government shutdowns, and the imposition of tariffs, natural disasters, civil unrest, and terrorism may harm the operating performance of the hotel industry generally and the performance of our hotels;

inflation may adversely affect our financial condition and results of operations;

system security risks, data protection breaches, cyber-attacks, and systems integration issues could disrupt the information technology network and systems used by us, our suppliers, our third-party managers or our franchisors;

a significant portion of our hotels are geographically concentrated and, accordingly, we could be disproportionately harmed by economic conditions, competition, new hotel supply, real and personal property tax rates, civil unrest, or natural disasters in these areas of the country;

we face possible risks associated with the physical and transitional effects of climate change;

uninsured or underinsured losses could harm our financial condition;

the operating results of some of our hotels are significantly reliant upon group and transient business generated by large corporate customers, and the loss of such customers for any reason could harm our operating results;

the increased use of virtual meetings and similar technologies could lessen the need for business-related travel and, therefore, demand for rooms in our hotels may be adversely affected;

our hotels require ongoing capital investment and we may incur significant capital expenditures in connection with acquisitions, repositionings, and other improvements, some of which are mandated by applicable laws or regulations or agreements with third parties, and the costs of such renovations, repositionings, or improvements, including cost increases resulting from inflation or the implementation of international tariffs, and delays due to supply chain disruptions, may exceed our expectations or cause other problems;

delays in the renovation or repositioning of hotel properties may have adverse effects on our results of operations and returns to our stockholders;

accounting for the acquisition of a hotel property or other entity involves assumptions and estimations to determine fair value that could differ materially from the actual results achieved in future periods;

volatility in the debt and equity markets may adversely affect our ability to acquire, renovate, refinance or sell our hotels;

we may pursue joint venture investments that could be adversely affected by our lack of sole decision-making authority, our reliance on a co-venturer’s financial condition and disputes between us and our co-venturer;

we may be subject to unknown or contingent liabilities related to recently sold or acquired hotels, as well as hotels we may sell or acquire in the future;

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we may seek to acquire a portfolio of hotels or a company, which could present more risks to our business and financial results than the acquisition of a single hotel;

the sale of a hotel or portfolio of hotels is typically subject to contingencies, risks and uncertainties, any of which may cause us to be unsuccessful in completing the disposition;

the illiquidity of real estate investments and the lack of alternative uses of hotel properties could significantly limit our ability to respond to adverse changes in the performance of our hotels;

we may originate loans secured by a hotel in connection with its disposition, which would expose us to risk of non-repayment or may cause us to incur significant costs to exercise our remedies under such loan if the borrower were to default on their obligations;

one of our hotels is subject to a ground lease with an unaffiliated party, the termination of which by the lessor for any reason, including due to our default on the lease, could cause us to lose the ability to operate the hotel altogether and may adversely affect our results of operations;

because we are a REIT, we depend on third parties to operate our hotels;

we are subject to risks associated with our operators’ employment of hotel personnel;

most of our hotels operate under a brand owned by Four Seasons, Hilton, Hyatt, Marriott, or Montage. Should any of these brands experience a negative event, or receive negative publicity, our operating results may be harmed;

our brand managers and franchisors may adopt new policies or change existing policies, which could result in increased costs that could negatively impact our hotels;

future adverse litigation judgments or settlements resulting from legal proceedings could have an adverse effect on our financial condition;

claims by persons regarding our properties could affect the attractiveness of our hotels or cause us to incur additional expenses;

the hotel business is seasonal and seasonal variations in business volume at our hotels will cause quarterly fluctuations in our revenue and operating results;

changes in the debt and equity markets may adversely affect the value of our hotels;

certain of our hotels have in the past become impaired and additional hotels may become impaired in the future;

laws and governmental regulations may restrict the ways in which we use our hotel properties and increase the cost of compliance with such regulations. Noncompliance with such regulations could subject us to penalties, loss of value of our properties or civil damages;

compliance with corporate responsibility initiatives and commitments, may impose additional costs and expose us to new risks that could adversely affect our results of operations, financial condition, and cash flows;

our brand managers and franchisors may require us to make capital expenditures pursuant to property improvement plans or to comply with brand standards, and the failure to make the required expenditures could cause the hotel brands or franchisors to terminate the management, franchise, or operating lease agreements;

termination of any of our management, franchise, or operating lease agreements could cause us to lose business;

the growth of alternative reservation channels could adversely affect our business and profitability;

the failure of tenants in our hotels to make rent payments or comply with the material terms of our retail and restaurant leases may adversely affect our results of operations;

we rely on our corporate and hotel senior management teams, the loss of whom may cause us to incur costs and harm our business;

we could be harmed by inadvertent errors, misconduct or fraud that is difficult to detect; and

if we fail to maintain effective internal control over financial reporting and disclosure controls and procedures, we may not be able to accurately report our financial results or identify and prevent fraud.

Risks Related to Our Debt and Financing:

we have outstanding debt which may restrict our financial flexibility;

our debt agreements contain various covenants, restrictions, requirements and other limitations, and should we default, we may be required to pay additional fees, provide additional security or repay the debt. Defaulting on existing debt may limit our ability to access additional debt financing in the future;

certain of our loans are subject to variable interest rates, which creates uncertainty in the amount of interest expense we will incur in the future and may negatively impact our operating results;

we may not be able to refinance our debt on favorable terms or at all; and

our organizational documents contain no limitations on the amount of debt we can incur, so we may become too highly leveraged.

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Risks Related to Our Status as a REIT:

if we fail to qualify as a REIT, our distributions will not be deductible by us and our income will be subject to federal and state taxation;

even as a REIT, we may become subject to federal, state, or local taxes on our income or property;

dividends payable by REITs generally do not qualify for the reduced tax rates available for some dividends;

if the leases between our hotels and the TRS Lessee are not respected as true leases for federal income tax purposes, we would fail to qualify as a REIT;

we may be subject to taxes in the event our operating leases are not held to be on an arm’s-length basis;

the TRS Lessee is subject to special rules that may result in increased taxes;

because we are a REIT, we depend on the TRS Lessee and its subsidiaries to make rent payments to us;

we may be required to pay a penalty tax upon the sale of a hotel;

we may be subject to corporate income tax on certain built-in gains;

a transaction intended to qualify as a Section 1031 Exchange may later be determined to be taxable; and

legislative or other actions affecting REITs could have a negative effect on us.

Risks Related to Our Common Stock and Corporate Structure:

the market price of our equity securities may vary substantially;

any future distributions to our common stockholders may vary, and distributions on our common stock may be made in the form of cash, stock, or a combination of both; however, the IRS may disallow our use of stock dividends;

shares of our common stock that are or become available for sale could affect the stock price;

our earnings and cash distributions may affect the market price of our common stock;

our stock repurchase program may not enhance long-term stockholder value, could cause volatility in the price of our common and preferred stock and could diminish our cash reserves;

provisions of Maryland law and our organizational documents may limit the ability of a third party to acquire control of the Company and may serve to limit our stock price;

our board of directors may change our significant corporate policies without the consent of our stockholders; and

we may be subject to actions or proposals from stockholders that do not align with our business strategies.

The following includes a more detailed discussion of our material risk factors:

Risks Related to Our Business and Industry

We own upper upscale and luxury hotels located in convention, urban, and resort destinations in an industry that is highly competitive.

The lodging industry is highly competitive. Our hotels compete with other hotels and alternative lodging options such as timeshares, vacation rentals or sharing services such as Airbnb based on location, price, physical attributes, service levels, brand affiliation, and reputation, among many other factors. New hotels may be constructed, creating additional competition, in some cases without corresponding increases in demand for hotel rooms. Some of our competitors may have hotels that are better located, have a stronger reputation, or possess superior physical attributes than our hotels. This competition could reduce occupancy levels and revenue at our hotels, which would harm our operations and limit or slow our future growth. In addition, in periods of low demand, profitability is negatively affected by the relatively high fixed costs of operating upper upscale and luxury hotels when compared to other classes of hotels.

In addition, our business strategy is predicated on a lifecycle approach to hotel acquisitions and dispositions, and we may not be successful in identifying or completing acquisitions or dispositions that are consistent with our strategy. We compete with institutional pension funds, sovereign wealth funds, private equity investors, high net worth individuals, other REITs and numerous local, regional, national and international owners who are engaged in the acquisition of hotels. We also rely on the foregoing entities as potential purchasers of hotels we seek to sell. These competitors may affect the supply/demand dynamics and, accordingly, increase the price we must pay for hotels or hotel companies we seek to acquire, and these competitors may succeed in acquiring those hotels or hotel companies themselves. Furthermore, owners of our potential acquisition targets may find our competitors to be more attractive suitors because they may have greater financial resources, may be willing to pay more, or may have a more compatible operating philosophy.

We believe that both new hotel construction and new hotel openings were delayed or even cancelled over the past several years due to construction supply constraints, the cost and availability of financing, economic uncertainty, and inflationary pressures on the cost of building materials which made new hotel development less financially feasible. We believe that many of these same factors combined with the recent imposition of tariffs, will continue to discourage new hotel supply in many markets although some markets may experience new hotel openings at or greater than historical levels. We are unable to predict certain market changes, including

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changes in the supply of, or demand for, similar real properties in a particular area. If we pay higher prices for hotels, our profitability may be reduced. Also, future acquisitions of hotels or hotel companies may not yield the returns we expect and, if financed using our equity, may result in stockholder dilution. In addition, our profitability may suffer because of acquisition-related costs, and the integration of such acquisitions may cause disruptions to our business and may strain management resources.

Events beyond our control, including economic slowdowns or recessions, uncertainty surrounding certain international economic and political relationships, including political disputes, government shutdowns, and the imposition of tariffs, natural disasters, civil unrest, and terrorism may harm the operating performance of the hotel industry generally and the performance of our hotels.

The operating and financial performance of the lodging industry has traditionally been closely linked with the performance of the general economy. Our hotels are classified as either upper upscale or luxury hotels. In periods of economic difficulties, including those caused by inflation or recession, these types of hotels may be more susceptible to a decrease in revenue, as compared to hotels in other categories that have lower room rates in part because upper upscale and luxury hotels generally target business and leisure travelers at higher price points, and these groups may seek to curtail spending in periods of economic decline. In addition, changes in the value of the U.S. dollar relative to other currencies may impact the demand for our hotels by making international travel more or less affordable. Also, operating results at our hotels may be negatively affected by uncertainty surrounding certain international economic and political relationships, including political disputes and unfavorable perceptions of travel to the U.S., which could further reduce international travel demand. Also, volatility in transportation fuel costs, increases in air and ground travel costs, decreases in airline capacity, government shutdowns, the imposition of tariffs, and prolonged periods of inclement weather in our markets may reduce the demand for our hotels.

Natural disasters, civil unrest and terrorism may also negatively impact our operations. We own hotels located in wildfire-prone or seismically active areas of California and hotels located in areas that have an increased potential to experience hurricanes. In addition, we own hotels that are located in concentrated business sectors in major cities that may be subject to an elevated risk of terrorist attacks. We have acquired and intend to maintain comprehensive insurance on each of our hotels, including liability, terrorism, fire and extended coverage, of the type and amount that we believe are customarily obtained for or by hotel owners. We cannot guarantee that such coverage will continue to be available at reasonable coverage levels, at reasonable rates or at reasonable deductible levels.

Additionally, deductible levels are typically higher for earthquakes, floods, and named windstorms, and there remains considerable uncertainty regarding the extent and adequacy of terrorism coverage that will be available to protect our interests in the event of future terrorist attacks that impact our hotels. Accordingly, our financial results may be harmed if any of our hotels are damaged by natural disasters or terrorist attacks resulting in losses (either insured or uninsured) or causing a decrease in average daily room rates and/or occupancy. Even in the absence of direct physical damage to our hotels, the occurrence of any natural disasters, terrorist attacks, military actions, outbreaks of diseases, or other casualty events, may have a material adverse effect on our business, the impact of which could result in a material adverse effect on our financial condition, results of operations, and our ability to make distributions to our stockholders.

Inflation may adversely affect our financial condition and results of operations.

Inflation in the United States, Europe, and other regions rose in 2022 to levels not experienced in recent decades before moderating in 2023 and remaining relatively stable through 2025. Future increases in inflation could adversely affect consumer confidence, which could reduce consumer purchasing power and demand for lodging. Additionally, inflation affects our expenses, including, without limitation, by increasing such costs as wages, employee-related benefits, food costs, commodity costs, including those used to renovate or reposition our hotels, property taxes, property and liability insurance, utilities, and borrowing costs. We rely on our hotel operators to adjust room rates and pricing for hotel services to reflect the effects of inflation. However, previously contracted rates, competitive pressures or other factors may limit the ability of our operators to respond to inflation. As a result, our expenses may increase at higher rates than our revenue and our expenses may not decrease if revenue decreases.

System security risks, data protection breaches, cyber-attacks, and systems integration issues could disrupt the information technology network and systems used by us, our suppliers, our third-party managers or our franchisors, and any such disruption could reduce our expected revenue, increase our expenses, compromise confidential information, damage our reputation, increase our potential liability and adversely affect our common stock price.

We and our third-party managers and franchisors rely on information technology networks and systems, including the internet, to access, process, transmit and store electronic customer and financial information. The systems operated by our third-party managers and franchisors require the collection and retention of large volumes of our hotel guests’ personally identifiable information, including credit card numbers. Our third-party managers and franchisors may store and process such proprietary and customer information on systems located at our hotels and other hotels that they operate and manage, their corporate locations and at third-party owned

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facilities, including, for example, in a third-party hosted cloud environment. In addition to the systems operated by our third-party managers and franchisors, we have our own technologies and systems to support our corporate business.

Certain of our third-party managers and their service providers have been subject to, and previously publicly released statements disclosing, cyber-attacks and/or unauthorized access to their guest reservation, point-of-sale systems, and other sensitive databases, some of which have or may have impacted our hotels and guests who have used our hotels’ services or amenities. The risk of a security breach or disruption, particularly through cyber-attack or cyber intrusion, including by computer hackers, nation-state affiliated actors and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world has increased. Our information network and systems and those used by our third-party managers and franchisors can be vulnerable to threats such as: system, network or internet failures; computer hacking or business disruption, including through network- and email-based attacks; cyber-terrorism; viruses, worms, ransomware or other malicious software programs; social engineering; and employee error, negligence or fraud. The introduction of artificial intelligence (“AI”) technologies, including generative AI, may further increase the complexity of cyber threats, create new vulnerabilities, and expose us and our third-party managers and franchisors to regulatory scrutiny, intellectual property disputes, compliance challenges, and privacy concerns. If generative AI contributes to a security breach or other incident, we or our third-party managers and franchisors could lose confidential information or intellectual property, which may result in reputational harm. Any compromise of the function, security, and availability of our network and systems or those of our third-party managers and franchisors could result in disruptions to operations, misappropriated or compromised confidential hotel or hotel guest information, systems disruptions, the shutdown of our hotels, exploited security vulnerability of our respective networks, delayed sales or bookings, lost guest reservations, damage to our reputation or the reputations of our third-party managers and franchisors, increased costs and lower margins. The costs for us to eliminate or alleviate cyber or other security problems could be significant, and our efforts to address these problems may not be successful and could result in interruptions, delays, cessation of service and loss of existing or potential business at our hotels. Any of these events could adversely affect our financial results, common stock price, and reputation, lead to unauthorized disclosure of confidential information, result in delayed or misstated financial reports, monetary losses or regulatory penalties and subject us to potential litigation and liability.

As of December 31, 2025, we have no known instances of material cybersecurity incidents, including third-party incidents, during any of the prior three fiscal years.

Portions of our information technology infrastructure or that of our third-party managers and franchisors also may experience interruptions, delays or cessations of service or produce errors in connection with systems installation, integration or migration work that takes place from time to time. We or our third-party managers and franchisors may not be successful in implementing new systems and transitioning data or may procure hardware or operating system software and applications from third-party suppliers that may contain defects in design or manufacture, which could cause business disruptions, capital expenses, and be more expensive, time consuming and resource-intensive. Such disruptions could adversely impact the ability of our third-party managers and franchisors to fulfill reservations for guestrooms, impact guest safety or hotel operations, and other services offered at our hotels or to deliver to us timely and accurate financial information.

Although we have taken steps to protect the security of our information systems and the data maintained in these systems, there can be no assurance that the security measures we have taken will prevent failures, inadequacies, or interruptions in system services, or that system security will not be compromised through physical or electronic breaches, spoofed emails, phishing attacks, computer viruses, cyber extortionists or attacks by hackers. In addition, we rely on the security systems of our third-party managers and franchisors to protect proprietary and customer information from these threats. We and our third-party managers and franchisors may be unable to identify, investigate or remediate cyber events or incidents because attackers are increasingly using techniques and tools (including AI and machine learning) designed to avoid detection, circumvent security controls, and remove or obfuscate forensic evidence. Further, any adoption of AI by us or by third parties may pose new security challenges.

Our third-party managers and franchisors carry cyber insurance policies to protect and offset a portion of the potential costs that may be incurred from a security breach. Additionally, we have a cyber insurance policy to cover breaches of our corporate infrastructure and systems and to provide supplemental coverage above that carried by our third-party managers and franchisors. We cannot guarantee that such coverage will continue to be available at reasonable coverage levels, at reasonable rates or at reasonable deductible levels. Our policy is subject to limits and sub-limits for certain types of claims, and we do not expect that this policy will cover all of the losses that we could experience from these exposures. Despite various precautionary steps to protect our hotels from losses resulting from cyber-attacks, any occurrence of a cyber-attack could still result in losses at our properties, which could affect our results of operations.

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A significant portion of our hotels are geographically concentrated and, accordingly, we could be disproportionately harmed by economic conditions, competition, new hotel supply, real and personal property tax rates, civil unrest, or natural disasters in these areas of the country.

As of December 31, 2025, most of our hotels were geographically concentrated in California, Florida, Hawaii, and Washington, DC as follows:

Percentage of

Percentage of Total

Number of Hotels

Total Rooms

Consolidated Revenue

Northern California

Southern California

Florida

Hawaii

Washington, DC

The concentration of our hotels in California, Florida, Hawaii, and Washington, DC exposes our business to economic conditions, competition, new hotel supply, and real and personal property tax rates unique to these locales. In addition, natural disasters in these locales would disproportionately affect our hotel portfolio. The economies and tourism industries in these locales, in comparison to other parts of the country, are negatively affected to a greater extent by changes and downturns in certain industries, including the entertainment, high technology, financial industries, and governmental agencies. It is also possible that because of our California, Florida, Hawaii, and Washington, DC concentrations, a change in laws applicable to such hotels and the lodging industry may have a greater impact on us than a change in comparable laws in another geographical area in which we have hotels. Adverse developments in these locales could harm our revenue or increase our operating expenses.

We face possible risks associated with the physical and transitional effects of climate change.

We are subject to the risks associated with the physical effects of climate change, which can include more frequent or severe storms, hurricanes, flooding, tornados, extreme temperatures, droughts, and wildfires, any of which could have a material adverse effect on our hotels, operating results, and cash flows. To the extent climate change causes changes in weather patterns, our coastal and high flood zone markets could experience increases in storm intensity and rising sea-levels, while our hotels in drought-prone regions could encounter increased wildfire risk, potentially resulting in property damage and operational disruptions. As a result, we could become subject to significant losses and/or repair costs that may or may not be fully covered by insurance. Other markets may experience prolonged variations in temperature or precipitation that may limit access to the water needed to operate our hotels, increase the frequency or duration of power outages, or significantly increase energy costs, which may subject those hotels to additional regulatory burdens, such as limitations on water usage or stricter energy efficiency standards. Climate change also may affect our business by increasing the cost or limiting the availability of property insurance on terms we find acceptable in areas most vulnerable to such events, increasing operating costs at our hotels, such as the cost of water or energy, and requiring us to expend financial resources as we seek to mitigate, repair and protect our hotels against such risks.

We are subject to the climate change risks associated with the transitional effects to a low carbon scenario, which can include increased regulation for building efficiency and equipment specifications, increased regulations or investor requirements for environmental and social disclosures, increased cost of goods and raw materials, and increased costs to manage the shift in consumer preferences. In an effort to mitigate the impact of climate change, our hotels could become subject to increased governmental laws and regulations mandating energy efficiency standards, the usage of sustainable energy sources and updated equipment specifications, which may require additional capital investments or increased operating costs. Climate change may also affect our business by shifting consumer preferences to sustainable travel or by changing the relative attractiveness of certain travel locations, and as a result, some of our hotels may be more or less in demand in the future. Our hotels may be subject to additional costs to manage consumer expectations for sustainable buildings and hotel operations.

There can be no assurance that climate change will not have a material adverse effect on our hotels, operating results or cash flows.

Uninsured or underinsured losses could harm our financial condition, results of operations, and ability to make distributions to our stockholders.

Various types of litigation losses and catastrophic losses, such as those due to wars, terrorist acts, earthquakes, floods, hurricanes, pollution, climate change or other environmental matters, generally are either uninsurable or not economically insurable, or may be subject to insurance coverage limitations, such as large deductibles or co-payments. Should an uninsured loss or a loss in excess of insured limits occur, we could lose all or a portion of the capital we have invested in a hotel, as well as the anticipated future

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revenue from the hotel. In that event, we might nevertheless remain obligated for any notes payable or other financial obligations related to the property, in addition to obligations to our ground lessor, third-party managers and franchisors.

We own hotels in states that have historically experienced a greater risk of certain catastrophic acts of nature, including wildfires, earthquakes, mudslides, strong winds, tropical storms, and hurricanes, than other states. In the event of a catastrophic loss, our insurance coverage may not be sufficient to cover the full current market value or replacement cost of our lost investment. Inflation, changes in building codes and ordinances, environmental considerations and other factors might also keep us from using insurance proceeds to replace or renovate a hotel after it has been damaged or destroyed. Under those circumstances, the insurance proceeds we receive might be inadequate to restore our economic position on the damaged or destroyed hotel. Acts of nature that do not result in physical loss at our hotels could diminish the desirability or accessibility of our hotel’s location, resulting in less demand by travelers.

Property and casualty insurance, including coverage for terrorism, can be difficult or expensive to obtain. We carry, or in certain instances cause our third-party managers to carry, insurance with respect to all our hotels and other properties. When the existing insurance policies expire, we or our third-party managers and franchisors may encounter difficulty in obtaining or renewing property or casualty insurance on our hotels at the same levels of coverage and under similar terms. Such insurance may be more limited and for some catastrophic risks (e.g., earthquake, fire, flood, and terrorism) may not be generally available at current levels. Even if we or our third-party managers are able to renew the policies or to obtain new policies at levels and with limitations consistent with the current policies, we cannot be sure that we or our third-party managers and franchisors will be able to obtain such insurance at premium rates that are commercially reasonable. If we or our third-party managers are unable to obtain adequate insurance on our hotels, it could cause us to be in default under certain covenants of our indebtedness or other contractual commitments we have to our ground lessor, third-party managers and franchisors, which require us to maintain adequate insurance on our properties to protect against the risk of loss. If this were to occur, or if we or our third-party managers were unable to obtain adequate insurance and our properties experienced damages which would otherwise have been covered by insurance, it could harm our financial condition and results of operations.

In addition, there are other risks, such as certain environmental hazards, that may be deemed to fall completely outside the general coverage limits of our policies or may be uninsurable or too expensive to justify coverage. We also may encounter challenges with an insurance provider regarding whether it will pay a particular claim that we believe to be covered under our policy.

The operating results of some of our hotels are significantly reliant upon group and transient business generated by large corporate customers, and the loss of such customers for any reason could harm our operating results.

Group contract business and room nights generated by large corporate transient customers can significantly impact our hotels’ operating results. These contracts and customers vary from hotel to hotel and change from time to time. Such group contracts are typically for a limited period of time after which they may be put up for competitive bidding. The impact and timing of large events are not always easy to predict. Some of these contracts and events may also be cancelled, which could reduce our expectations for future revenues or result in potential litigation in order to collect cancellation fees. As a result, the operating results for our individual hotels can fluctuate as a result of these factors, possibly in adverse ways, and these fluctuations can affect our overall operating results.

The increased use of virtual meetings and similar technologies could lessen the need for business-related travel and, therefore, demand for rooms in our hotels may be adversely affected.

The use of teleconferencing and video-conference technology by businesses may continue to increase in the future, which could result in a sustained reduction in business travel. To the extent that such technologies, or new technologies, play an increased role in business interactions and the need for business-related travel decreases, demand for hotel rooms may decrease and our hotels could be adversely affected.

Our hotels require ongoing capital investment and we may incur significant capital expenditures in connection with acquisitions, repositionings, and other improvements, some of which are mandated by applicable laws or regulations or agreements with third parties, and the costs of such renovations, repositionings, or improvements, including cost increases resulting from inflation or the implementation of international tariffs, and delays due to supply chain disruptions, may exceed our expectations or cause other problems.

In addition to capital expenditures required by our management and franchise agreements, we make capital expenditures to comply with applicable laws and regulations, to remain competitive with other hotels and to maintain the economic value of our hotels. We also may need to make significant capital improvements to hotels that we acquire. During 2025 and 2024, we invested $103.0 million and $157.4 million into our hotels, respectively, which included substantial renovations and conversions of The Confidante Miami Beach and Renaissance Long Beach to Andaz Miami Beach and Marriott Long Beach Downtown, respectively, a

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rooms renovation at Wailea Beach Resort, and meeting space renovations at Hyatt Regency San Antonio Riverwalk and Hilton San Diego Bayfront. Operating results are often affected by the maintenance and capital improvements at a hotel, especially if the maintenance or improvements are not completed on schedule or if the improvements result in significant disruption at the hotel. The costs of capital improvements we need or choose to make could harm our financial condition and reduce amounts available for distribution to our stockholders. These capital improvements may give rise to the following additional risks, among others:

construction cost overruns and delays, including commodity cost increases resulting from inflation or the implementation of tariffs, and delays due to supply chain disruptions;

a possible shortage of available cash to fund capital improvements and the related possibility that financing for these capital improvements may not be available to us on affordable terms;

uncertainties as to market demand or a loss of market demand after capital improvements have begun;

disruption in service and room availability causing reduced demand, occupancy, and rates;

possible environmental problems; and

disputes with third party managers and franchisors regarding our compliance with the requirements under the relevant management, franchise or operating lease agreements.

Delays in the renovation or repositioning of hotel properties may have adverse effects on our results of operations and returns to our stockholders .

Delays we encounter in the renovation or repositioning of hotel properties could adversely affect investor returns. Our ability to complete renovation and repositioning projects will depend, in part, on the amount of our available cash. Renovation or repositioning projects may take longer, cost more than initially expected, and negatively impact the amount of operating cash distributions we receive from such hotels. If our projections are inaccurate, we may not achieve our anticipated returns.

Accounting for the acquisition of a hotel property or other entity involves assumptions and estimations to determine fair value that could differ materially from the actual results achieved in future periods.

Accounting for the acquisition of a hotel property or other entity requires an analysis of the transaction to determine if it qualifies as the purchase of a business or an asset. Such analysis requires subjective inputs and estimates, and the result of our prior analyses, and any future analyses, affects both our balance sheet and our statement of operations.

Accounting for the acquisition of a hotel property or other entity requires either allocating the purchase price to the assets acquired and the liabilities assumed in the transaction at their respective relative fair values for an asset acquisition or recording the assets and liabilities at their estimated fair values with any excess consideration above net assets going to goodwill for a business combination. The determination of fair value is subjective and is based in part on assumptions and estimates that could differ materially from the actual results in future periods. Should our allocations be incorrect, our assets and liabilities may be overstated or understated, which may also affect depreciation expense on our consolidated statement of operations. In addition, should any of our allocations overstate our assets, we may be at risk of incurring an impairment charge.

Volatility in the debt and equity markets may adversely affect our ability to acquire, renovate, refinance or sell our hotels.

Volatility in the global financial markets may have a material adverse effect on our financial condition or results of operations. Dislocations in the debt markets may reduce the amount of capital that is available to finance real estate, which, in turn may limit our ability to finance the acquisition of hotels or the ability of purchasers to obtain financing for hotels that we wish to sell, either of which may have a material adverse impact on revenues, income and/or cash flow.

We have historically used capital obtained from debt and equity markets to acquire, renovate, and refinance hotel assets. If these markets become difficult to access as a result of low demand for debt or equity securities, higher capital costs and interest rates, a low value for capital securities (including our common or preferred stock) and more restrictive lending standards, our business could be adversely affected. In particular, increases in interest rates could make it more difficult or expensive for us to obtain debt or equity capital. Similar factors could also adversely affect the ability of others to obtain capital and therefore could make it more difficult for us to sell hotel assets.

We may pursue joint venture investments that could be adversely affected by our lack of sole decision-making authority, our reliance on a co-venturer’s financial condition and disputes between us and our co-venturer.

We may co-invest in the future with third parties through partnerships, joint ventures or other entities, acquiring noncontrolling interests in or sharing responsibility for managing the affairs of a property, partnership, joint venture or other entity. Accordingly, we

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may not be in a position in the future to exercise sole decision-making authority regarding another property, partnership, joint venture or other entity. Investments in partnerships, joint ventures or other entities may, under certain circumstances, involve risks not present were a third party not involved, including the possibility that partners or co-venturers might become bankrupt or fail to fund their share of required capital contributions. Partners or co-venturers may have economic or other business interests or goals which are inconsistent with our business interests or goals and may be in a position to take actions contrary to our policies or objectives. Such investments may also have the potential risk of impasses on decisions, such as a sale, because neither we nor the partner or co-venturer would have full control over the partnership or joint venture. Disputes between us and partners or co-venturers may result in litigation or arbitration that would increase our expenses and prevent our officers and/or trustees from focusing their time and effort on our business. Consequently, actions by, or disputes with, partners or co-venturers might result in subjecting properties owned by the partnership or joint venture to additional risk. In addition, we may in certain circumstances be liable for the actions of our third-party partners or co-venturers.

W e ma y b e subjec t t o unknow n o r contingen t liabilitie s relate d t o recentl y sold or acquire d hotels, as well as hotels we may sell or acquire in the future .

Ou r recentl y sold or acquire d hotels , as well as hotel s w e ma y sell or acquir e i n th e future , ma y b e subjec t t o unknow n o r contingen t liabilitie s fo r whic h w e may be liable to the buyers or for which we may hav e n o recourse , o r onl y limite d recourse , agains t th e seller s. I n general , th e representation s an d warrantie s provide d unde r our transactio n agreement s relate d t o th e sal e o r purchas e o f a hotel ma y surviv e fo r a define d perio d o f tim e afte r th e completio n o f th e transaction. Furthermore , indemnificatio n unde r suc h agreement s ma y b e limite d an d subjec t t o variou s materialit y thresholds , a significan t deductible , o r a n aggregat e ca p o n losses . As a result , w e may b e obligate d t o reimburs e buyer s fo r thei r losses or be unable to recove r losse s du e t o breache s b y seller s o f thei r representation s an d warrantie s. I n addition , th e tota l amoun t o f cost s an d expense s tha t ma y b e incurre d wit h respec t t o th e unknow n o r contingent liabilitie s ma y excee d ou r expectations , an d w e ma y experienc e othe r unanticipate d advers e effects , al l o f whic h coul d adversel y affec t ou r operating results an d cash flows .

We may seek to acquire a portfolio of hotels or a company, which could present more risks to our business and financial results than the acquisition of a single hotel.

We have acquired in the past, and may acquire in the future, multiple hotels in single transactions. We may also seek to acquire companies that own hotels. Multiple hotel and company acquisitions are generally more complex than single hotel acquisitions and, as a result, the risk that the transaction may not be completed is greater. These acquisitions may also result in our owning hotels in new markets, which places additional demands on our ability to actively asset manage the hotels. In addition, we may be required by a seller to purchase a group of hotels as a portfolio, even though one or more of the hotels in the portfolio do not meet our investment criteria. In those events, we expect to attempt to sell the hotels that do not meet our investment criteria but may not be able to do so on acceptable terms, or if successful, the sales may be recharacterized by the IRS as dealer sales and subject to a 100% “prohibited transactions” tax on any gain. These hotels may harm our operating results if they operate below our underwriting or if we sell them at a loss. Also, a portfolio of hotels may be more difficult to integrate with our existing hotels than a single hotel, may strain our management resources, and may make it more difficult to find one or more management companies to operate the hotels. Any of these risks could harm our operating results.

The sale of a hotel or portfolio of hotels is typically subject to contingencies, risks and uncertainties, any of which may cause us to be unsuccessful in completing the disposition.

As part of our ongoing portfolio management strategy, on an opportunistic basis, we may selectively sell hotel properties that we believe no longer meet our ownership criteria, are unlikely to offer long-term returns in excess of our cost of capital, will achieve a sale price in excess of our internal valuation, or that have high risk relative to their anticipated returns. We may not be successful in completing the sale of a hotel or portfolio of hotels, which may negatively impact our business strategy. Hotel sales are typically subject to customary risks and uncertainties. In addition, there may be contingencies related to, among other items, seller financing, franchise agreements, ground leases and other agreements. As such, we can offer no assurances as to whether any closing conditions will be satisfied on a timely basis or at all, or whether the closing of a sale will fail to occur for these or any other reasons.

The illiquidity of real estate investments and the lack of alternative uses of hotel properties could significantly limit our ability to respond to adverse changes in the performance of our hotels and harm our financial condition.

Because commercial real estate investments are relatively illiquid, our ability to promptly sell one or more of our hotels in response to changing economic, financial, and investment conditions is limited. The real estate market, including the market for our hotels, is affected by many factors, such as general economic conditions, availability of financing, interest rates, and other factors, including supply and demand, that are beyond our control. We may not be able to sell any of our hotels on favorable terms. If we elect to sell a hotel, it may take a long time to find a willing purchaser and to close the sale of a hotel. Should we sell a hotel during the term

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of its management agreement, we may have to pay termination fees to the applicable management company, which payment could be substantial.

In addition, hotels may not be readily converted to alternative uses if they were to become unprofitable due to competition, age of improvements, decreased demand or other factors. The conversion of a hotel to alternative uses would also generally require substantial capital expenditures and may give rise to substantial payments to our third-party managers, franchisors, and other parties.

We may be required to expend funds to correct defects or to make improvements before a hotel can be sold. We may not have funds available to correct those defects or to make those improvements and, as a result, our ability to sell the hotel would be restricted. In acquiring a hotel, we may agree to lock-out provisions that materially restrict us from selling that hotel for a period of time or impose other restrictions on us, such as a limitation on the amount of debt that can be placed or repaid on that hotel to address specific concerns of sellers. These factors and any others that would impede our ability to respond to adverse changes in the performance of our hotels could harm our financial condition and results of operations.

We may originate loans secured by a hotel in connection with its disposition, which would expose us to risk of non-repayment or may cause us to incur significant costs to exercise our remedies under such loan if the borrower were to default on their obligations .

We have periodically evaluated making loans to potential buyers of our hotels to help facilitate a sale. If we were to make such loans, it would expose us to the risk of non-repayment from the borrower. While we expect to have customary lender protections, we cannot guarantee that such loan would be on market terms, and we may incur significant costs in exercising any remedies available to us if the borrower were to default on their obligations.

One of our hotels is subject to a ground lease with an unaffiliated party, the termination of which by the lessor for any reason, including due to our default on the lease, could cause us to lose the ability to operate the hotel altogether and may adversely affect our results of operations.

Our rights to use the underlying land at the Hilton San Diego Bayfront is based upon our interest under a long-term lease with an unaffiliated party, which expires in 2071. Pursuant to the lease terms, we are required to pay all rent due and comply with all other lessee obligations.

Any pledge of our interest in the ground lease requires the consent of the lessor. As a result, in the future, we may not be able to sell, assign, transfer or convey our lessee’s interest in the hotel absent the lessor’s consent even if the transaction may be in the best interest of our stockholders.

The lessor may require us, at the expiration or termination of the remaining ground lease, to surrender or remove any improvements, alterations or additions to the land at our own expense. The lease also generally requires us to restore the premises following a casualty and to apply in a specified manner any proceeds received in connection therewith. We may have to restore the premises if a material casualty, such as a fire or an act of nature, occurs and the cost thereof may exceed available insurance proceeds.

Because we are a REIT, we depend on third parties to operate our hotels, which could harm our results of operations.

In order to qualify as a REIT, we cannot directly or indirectly operate our hotels. Accordingly, we must enter into management or operating lease agreements (together, “management agreements”) with eligible independent contractors to manage our hotels. As of December 31, 2025, our third-party managers consisted of Four Seasons, Hilton, Hyatt, Marriott, Montage, Sage and Singh. These independent management companies control the daily operations of our hotels, and we rely on them to operate our hotels as provided in the applicable management agreements.

If a management company violates the terms of its applicable management agreement or fails to meet performance objectives set forth in the applicable management agreement, we can seek redress but our remedies may be limited by the terms of the management agreement.

A failure by our management companies to successfully manage our hotels could lead to an increase in our operating expenses or a decrease in our revenue, or both, which may affect the TRS Lessee’s ability to pay us rent and would reduce the amount available for dividends on our common stock and our preferred stock. In addition, the management companies may operate other hotels that may compete with our hotels or divert attention away from the management of our hotels.

While our management agreements typically provide for contractual penalties in the event that we terminate the applicable management agreement upon an event of default, such terminations could result in significant disruptions at the affected hotels. If we

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were to terminate any of these agreements and enter into new agreements with different hotel operators, we cannot assure you that any new management agreement would contain terms that are favorable to us, or that a new management company would be successful in managing our hotels. If any of the foregoing occurs at franchised hotels, our relationships with the franchisors may be damaged, and we may be in breach of one or more of our franchise agreements.

We are subject to risks associated with our operators’ employment of hotel personnel, which could increase our expenses or expose us to additional liabilities.

Our third-party managers are responsible for hiring and maintaining the labor force at each of our hotels. Although we do not directly employ or manage employees at our hotels, we are still subject to many of the costs and risks generally associated with the hotel labor force. Increases in minimum wages, inflation related labor cost pressures, changes in workplace rules and regulations, or labor shortages, including those resulting from immigration policies or other factors, could negatively impact our operating results. Additionally, from time to time, hotel operations may be disrupted as a result of strikes, lockouts, public demonstrations, or other negative actions and publicity. For example, during the third and fourth quarters of 2024 the Hilton San Diego Bayfront was impacted by labor activity which led to the cancellation of certain group events and overall lower business volume at the hotel. We also have incurred and may in the future incur increased legal costs and indirect labor costs as a result of contract disputes involving our third-party managers and their labor force or other events. The resolution of labor disputes or re-negotiated labor contracts could lead to increased labor costs, a significant component of our costs, either by increases in wages or benefits or by changes in work rules that raise hotel operating costs. We do not have the ability to determine the outcome of these negotiations.

Most of our hotels operate under a brand owned by Four Seasons, Hilton, Hyatt, Marriott, or Montage. Should any of these brands experience a negative event, or receive negative publicity, our operating results may be harmed.

As of December 31, 2025, all of our hotels except the Oceans Edge Resort & Marina are operated under the following widely recognized lodging industry brands: Four Seasons, Hilton, Hyatt, Marriott, and Montage. As a result, a significant component of our success is dependent in part on the success of these companies and their respective brands. Consequently, if market recognition or the positive perception of any of these companies is reduced or compromised, the goodwill associated with their respective brands on our hotels may be adversely affected, which may have an adverse effect on our results of operations, as well as our ability to make distributions to our stockholders. Additionally, any negative perceptions or negative impact to operating results from any proposed or future consolidations between nationally recognized brands could have an adverse effect on our results of operations, as well as our ability to make distributions to our stockholders.

Our brand managers and franchisors may adopt new policies or change existing policies, which could result in increased costs that could negatively impact our hotels.

Our brand managers and franchisors incur certain costs that are allocated to our hotels subject to our management, franchise, or operating lease agreements. Those costs may increase over time, or our brand managers and franchisors may elect to introduce new programs that could increase costs allocated to our hotels. In addition, certain policies, such as our third-party managers’ frequent guest programs, may be altered resulting in reduced revenue or increased costs to our hotels.

Future adverse litigation judgments or settlements resulting from legal proceedings could have an adverse effect on our financial condition.

In the normal course of our business, we are involved in various legal proceedings, including those involving our third-party managers that relate to the management of our hotels. While we may agree to pay or share any legal costs with our third-party managers, any adverse legal judgments or settlements resulting in payment by us of a material sum of money may materially and adversely affect our financial condition and results of operations.

Claims by persons regarding our properties could affect the attractiveness of our hotels or cause us to incur additional expenses.

We could incur liabilities resulting from loss or injury to our hotels or to persons at our hotels. These losses could be attributable to us or result from actions taken by a hotel management company. If claims are made against a management company, it may seek to pass those expenses through to us. Claims such as these, regardless of their merit, could harm the reputation of a hotel, or cause us to incur expenses to the extent of insurance deductibles or losses in excess of policy limitations, which could harm our results of operations.

We have in the past and could in the future incur liabilities resulting from claims by hotel employees. While these claims are, for the most part, covered by insurance, some claims (such as wage and hour claims) generally are not insured or insurable. These claims, regardless of their merit, could harm the reputation of a hotel, or cause us to incur losses which could harm our results of operations.

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The hotel business is seasonal and seasonal variations in business volume at our hotels will cause quarterly fluctuations in our revenue and operating results.

As is typical of the lodging industry, we experience some seasonality in our business. Revenue for certain of our hotels is generally affected by seasonal business patterns. We can provide no assurances that our cash flows will be sufficient to cover any shortfalls that occur as a result of these seasonal fluctuations. Seasonal variations in revenue could adversely affect our business, financial conditions, results of operations and our ability to make distributions to our stockholders or to service our debt.

Changes in the debt and equity markets may adversely affect the value of our hotels.

In general, the value of hotel real estate has an inverse correlation to the capital costs of hotel investors. If capital costs increase, real estate values may decrease. Capital costs are generally a function of the perceived risks associated with our assets, interest rates on debt and return expectations of equity investors. Interest rate volatility, including volatility due to the 2022 and 2023 interest rate increases implemented by the Board of Governors of the Federal Reserve System (the “Federal Reserve”), could reduce our access to capital markets or increase the cost of funding our debt requirements. Although the Federal Reserve reduced interest rates in 2024 and 2025, any future decisions to decrease, hold steady or increase interest rates and the timing of such decision is unknown. If the income generated by our hotels does not increase by amounts sufficient to cover such higher capital costs, the market value of our hotel real estate may decline.

Certain of our hotels have in the past become impaired and additional hotels may become impaired in the future.

We periodically review the fair value of each of our hotels for possible impairment. In the past, certain of our hotels were determined to be impaired. Such impairment may be the result of deteriorating profitability, physical damage, or when a sold hotel’s fair value, less hotel sale costs, is lower than the hotel’s carrying value. In the future, additional hotels may become impaired, which may adversely affect our financial condition and results of operations.

Laws and governmental regulations may restrict the ways in which we use our hotel properties and increase the cost of compliance with such regulations. Noncompliance with such regulations could subject us to penalties, loss of value of our properties or civil damages.

Our hotel properties are subject to various federal, state and local laws relating to the environment, fire and safety, and access and use by disabled persons. Under these laws, courts and government agencies have the authority to require us, if we are the owner of a contaminated property, to clean up the property, even if we did not know of or were not responsible for the contamination. These laws also apply to persons who owned a property at the time it became contaminated. In addition to the costs of cleanup, environmental contamination can affect the value of a property and, therefore, an owner’s ability to borrow funds using the property as collateral or to sell the property. Under such environmental laws, courts and government agencies also have the authority to require that a person who sent waste to a waste disposal facility, such as a landfill or an incinerator, pay for the clean-up of that facility if it becomes contaminated and threatens human health or the environment.

Furthermore, various court decisions have established that third parties may recover damages for injury caused by property contamination. For instance, a person exposed to asbestos while staying in or working at a hotel may seek to recover damages for injuries suffered. Additionally, some of these environmental laws restrict the use of a property or place conditions on various activities. For example, some laws require a business using chemicals (such as swimming pool chemicals at our hotels) to manage them carefully and to notify local officials that the chemicals are being used.

We could be responsible for the types of costs discussed above. The costs to clean up a contaminated property, to defend against a claim, or to comply with environmental laws could be material and could reduce the funds available for distribution to our stockholders. Future laws or regulations may impose material environmental liabilities on us, or the current environmental condition of our hotel properties may be affected by the condition of the properties in the vicinity of our hotels (such as the presence of leaking underground storage tanks) or by third parties unrelated to us.

Our hotel properties are also subject to the ADA. Under the ADA, all public accommodations must meet various federal requirements related to access and use by disabled persons. Compliance with the ADA’s requirements could require removal of access barriers and non-compliance could result in the U.S. government imposing fines or in private litigants winning damages. If we are required to make substantial modifications to our hotels, whether to comply with the ADA or other changes in governmental rules and regulations, our financial condition, results of operations and the ability to make distributions to our stockholders could be harmed. In addition, we are required to operate our hotel properties in compliance with fire and safety regulations, building codes and other land use regulations, as they may be adopted by governmental agencies and become applicable to our properties.

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Compliance with corporate responsibility initiatives and commitments, may impose additional costs and expose us to new risks that could adversely affect our results of operations, financial condition, and cash flows.

We incorporate corporate responsibility initiatives into our operating and investment strategies. Some investors may consider corporate responsibility factors when making their investment decisions, and potential and current employees, business partners and vendors may use these factors when considering relationships with us. In addition, potential hotel guests may consider these factors when deciding whether to stay at our hotels. Certain organizations that provide corporate governance and other corporate risk information to investors and stockholders have developed scores and ratings to evaluate companies based upon corporate responsibility or “sustainability” metrics. Investors may use these scores as a basis to engage with companies to require improved disclosure or performance. We may face reputational damage or additional costs in the event our corporate responsibility procedures or standards do not meet the standards set by various constituencies. In addition, the criteria by which companies are rated may change, which could cause us to receive lower scores than in previous years. A low sustainability score could result in a negative perception of the Company, or exclusion of our common stock from consideration by certain investors, or potential guests may choose to stay at other hotels. We could also incur additional costs and devote additional resources to monitor, report and implement various corporate responsibility practices. In addition, as part of our corporate responsibility, we have adopted certain  environmental  goals, including greenhouse gas emissions reduction targets and other sustainability initiatives. If we cannot meet these goals fully or on time, our reputation may be damaged.

In contrast, certain stakeholders and regulators have advanced opposing positions on certain corporate responsibility matters, including proposing or enacting legislation, policies, and initiatives. These actions may create uncertainty and expose us to additional legal, regulatory, or reputational risks in connection with our corporate responsibility goals and disclosures.

Our brand managers and franchisors may require us to make capital expenditures pursuant to property improvement plans (“PIPs”) or to comply with brand standards, and the failure to make the required expenditures could cause the hotel brands or franchisors to terminate the management, franchise, or operating lease agreements.

Our brand managers and franchisors may require that we make renovations to certain of our hotels in connection with revisions to our management, franchise, or operating lease agreements. In addition, upon regular inspection of our hotels, our hotel brands and franchisors may determine that additional renovations are required to bring the physical condition of our hotels into compliance with the specifications and standards each hotel brand or franchisor has developed. In connection with the acquisitions of hotels, hotel brands and franchisors may also require PIPs, which set forth their renovation requirements. If we do not satisfy the PIP renovation requirements, the hotel brand or franchisor may have the right to terminate the applicable agreement. In addition, in the event that we are in default under any franchise agreement as a result of our failure to comply with the PIP requirements, in general, we will be required to pay the franchisor liquidated damages. The renovation work and the cost of such expenditures required pursuant to PIPs or to comply with brand standards may negatively impact our results of operations while the work is performed and may not result in a positive economic return on the investment.

Because all but one of our hotels are brand managed or operated under a franchise agreement, termination of these management, franchise, or operating lease agreements could cause us to lose business at our hotels.

As of December 31, 2025, all of our hotels except the Oceans Edge Resort & Marina were operated under management, franchise, or operating lease agreements with the following hotel management or franchisor companies: Four Seasons, Hilton, Hyatt, Marriott, and Montage. In general, under these arrangements, the brand manager or franchisor provides marketing services, room reservations, and certain other operating assistance but requires us to pay significant fees to it and to maintain the hotel in a required condition. If we fail to maintain these required standards, then the hotel brand or franchisor may terminate its agreement with us and obtain damages for any liability we may have caused. Moreover, from time to time, we may receive notices from the hotel brands or franchisors regarding our alleged non-compliance with the brand standard or franchise agreements, and we may disagree with these claims that we are not in compliance. Any disputes arising under these agreements could also lead to a termination of a management, franchise, or operating lease agreement and a payment of liquidated damages. In addition, as our management, franchise, or operating lease agreements expire, we may not be able to renew them on favorable terms or at all. If we were to lose a hotel brand or franchise for a particular hotel, it could harm the operation, financing or value of that hotel due to the loss of the hotel brand or franchise name, marketing support and centralized reservation system. Any loss of revenue at a hotel could harm the ability of the TRS Lessee, to whom we have leased our hotels, to pay rent to the Operating Partnership and could harm our ability to pay dividends on our common stock or preferred stock.

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The growth of alternative reservation channels could adversely affect our business and profitability.

A significant percentage of hotel rooms for individual guests is booked through internet travel intermediaries. Many of our managers and franchisors contract with such intermediaries and pay them various commissions and transaction fees for sales of our rooms through their systems. If such bookings increase, these intermediaries may be able to obtain higher commissions, reduced room rates or other significant concessions from our managers and franchisors. Although our managers and franchisors may have established agreements with many of these intermediaries that limit transaction fees for hotels, there can be no assurance that our managers and franchisors will be able to renegotiate such agreements upon their expiration with terms as favorable as the provisions that exist today. Moreover, hospitality intermediaries generally employ aggressive marketing strategies, including expending significant resources for advertising campaigns to drive consumers to their websites. The rapid adoption of generative AI tools is also changing how consumers search for and book travel, which may further increase the influence of intermediaries and other technology-driven platforms. If our operators do not keep pace with these changes, consumers may develop brand loyalties to the intermediaries’ offered brands, websites, and reservations systems rather than to the brands of our managers and franchisors. If this happens, our business and profitability may be significantly negatively impacted.

In addition, in general, internet travel intermediaries have traditionally competed to attract individual consumers or “transient” business rather than group and convention business. However, some hospitality intermediaries have grown their business to include marketing to large group and convention business. If that growth continues, it could both divert group and convention business away from our hotels, and it could also increase our cost of sales for group and convention business.

In an effort to lure business away from internet travel intermediaries and to drive business on their own websites, our managers and franchisors may discount the room rates available on their websites even further, which may also significantly impact our business and profitability.

The failure of tenants in our hotels to make rent payments or comply with the material terms of our retail and restaurant leases may adversely affect our results of operations.

A portion of the space in many of our hotels is leased to third-party tenants for retail or restaurant purposes. At times, we hold security deposits in connection with each lease, which may be applied in the event that a tenant under a lease fails or is unable to make its rent payments. Should a tenant continually fail to make rent payments, we may be able to apply the tenant’s security deposit to recover a portion of the rents due; however, we may not be able to recover all rents due to us, and the tenant may fail to comply with other material terms of the lease, all of which may harm our operating results. Additionally, the time and cost associated with re-leasing our retail space could negatively impact our operating results.

We rely on our corporate and hotel senior management teams, the loss of whom may cause us to incur costs and harm our business.

Our continued success will depend to a significant extent on the efforts and abilities of our corporate and hotel senior management teams. These individuals are important to our business and strategy and to the extent that any of them departs, we could incur severance or other costs. The loss of any of our executives could also disrupt our business and cause us to incur additional costs to hire replacement personnel.

We could be harmed by inadvertent errors, misconduct or fraud that is difficult to detect.

We could be subject to financial losses or claims against us should any of our employees, the employees of our third-party managers, or any contractors we use make inadvertent errors or fall prey to increasingly sophisticated cyber threats, including social engineering attacks and fraud schemes that may leverage AI and machine learning to make such attacks more convincing and harder to detect. These types of errors could include, but are not limited to, mistakes in executing, recording, or reporting transactions or mistakes related to settling payment or funding obligations, including with respect to wire transfers.  Although we have policies and procedures in place that seek to mitigate these risks, including risks related to wire transfers, we have experienced fraudulent and erroneous activity in our business operations and have incurred financial losses related to such activity, which was substantially mitigated by recoveries under insurance policies. This type of misconduct can be difficult to detect and if not prevented or detected could result in financial losses or claims against us. Our controls may not be effective in preventing or detecting this type of activity.

If we fail to maintain effective internal control over financial reporting and disclosure controls and procedures, we may not be able to accurately report our financial results or identify and prevent fraud.

If our internal control over financial reporting and disclosure controls and procedures are not effective, we may not be able to provide reliable financial information or identify and prevent fraud. If we discover deficiencies in our internal controls, we will make

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efforts to remediate these deficiencies; however, there is no assurance that we will be successful either in identifying deficiencies or in their remediation. Any failure to maintain effective controls in the future could adversely affect our business or cause us to fail to meet our reporting obligations. Such non-compliance could also result in an adverse reaction in the financial marketplace due to a loss of investor confidence in the reliability of our financial statements. In addition, perceptions of our business among customers, suppliers, rating agencies, lenders, investors, securities analysts and others could be adversely affected.

Risks Related to Our Debt and Financing

As of December 31, 2025, we had $930.0 million of outstanding debt, and carrying such debt may restrict our financial flexibility or harm our business and financial results by imposing requirements on our business.

Our debt outstanding as of December 31, 2025 matures over the next six years, including extension options which we expect to exercise ($65.0 million in 2026, $0 in 2027, $105.0 million in 2028, and $760.0 million in 2031). We have no scheduled amortization payments currently due from 2026 through 2031; however, this may be subject to change if we refinance our existing debt or incur additional debt. Carrying our outstanding debt may adversely impact our business and financial results by:

requiring us to use a substantial portion of our funds from operations to make required payments on principal and interest, which will reduce the amount of cash available to us for our operations and capital expenditures, future business opportunities, and other purposes, including distributions to our stockholders;

making us more vulnerable to economic and industry downturns and reducing our flexibility in responding to changing business and economic conditions;

limiting our ability to undertake refinancings of debt or borrow more money for operations or capital expenditures or to finance acquisitions; and

compelling us to sell hotels, possibly on disadvantageous terms, in order to make required payments of interest and principal.

We also may incur additional debt in connection with future acquisitions of real estate, which may include loans secured by some or all of the hotels we acquire or our existing 14 unencumbered hotels, all of which are held by subsidiaries whose interests are pledged to our credit facilities. Should we obtain secured financing on any of our unencumbered hotels, the amount of capital available through our credit facilities or future unsecured borrowings may be reduced.

Our debt agreements contain various covenants, restrictions, requirements, and other limitations, and should we default, we may be required to pay additional fees, provide additional security or repay the debt, all of which would negatively affect our financial conditions and results of operations. Defaulting on existing debt may limit our ability to access additional debt financing in the future.

We are subject to various covenants on our debt. Failure to satisfy certain covenants on our debt without receiving a covenant waiver from our lenders would adversely affect our financial conditions and results from operations and may raise doubt about our ability to continue as a going concern. Additionally, defaulting on indebtedness may damage our reputation as a borrower, and may limit our ability to secure financing in the future.

Our existing debt agreements and other potential financings that we may incur or assume in the future may contain restrictions, requirements, and other limitations on our ability to incur additional debt and make distributions to our stockholders, as well as financial covenants that could negatively impact our ability to operate, acquire or dispose of hotel properties. Our ability to borrow under these agreements is subject to compliance with these financial and other covenants. If we are unable to engage in activities that we believe would benefit our business or our hotel properties, or we are unable to incur debt to pursue those activities, our growth may be limited. Obtaining consents or waivers from compliance with these covenants may not be possible, or if possible, may cause us to incur additional costs or result in additional limitations.

Certain of our loans are subject to variable interest rates, which creates uncertainty in the amount of interest expense we will incur in the future and may negatively impact our operating results.

During 2022 and 2023, the Federal Reserve implemented its policy to address inflation by significantly raising its benchmark federal funds rate, which led to increased interest rates in the credit markets. Although the Federal Reserve began to lower its benchmark federal funds rate in 2024 and continued this trend in 2025, should inflation increase in the future, the Federal Reserve may resume its increases to the federal funds rate which will likely lead to higher interest rates in the credit markets. Such increases would adversely impact us due to our outstanding variable rate debt as well as result in higher interest rates on any new fixed rate debt. We have entered into interest rate swap agreements to limit our exposure to interest rate fluctuations related to a portion of our variable rate debt. However, in an increasing interest rate environment, the fixed rates we can obtain with such interest rate swap agreements or the fixed rate on new debt will also continue to increase.

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We need to refinance our indebtedness from time to time, and our inability to refinance on favorable terms, or at all, could impact our financial condition.

Because we anticipate that our internally generated cash will be adequate to repay only a portion of our indebtedness prior to maturity, we expect that we will be required to repay or refinance debt from time to time using proceeds from offerings of common equity, preferred equity or from incurring additional debt. The amount of our existing indebtedness may impede our ability to repay our debt through refinancings. If we are unable to refinance our indebtedness with secured debt or unsecured debt on acceptable terms, or at all, and are unable to negotiate an extension with the lender, we may be in default or forced to sell one or more of our properties on potentially disadvantageous terms, which might increase our borrowing costs, result in losses to us and reduce the amount of cash available to us for distributions to our stockholders. If prevailing interest rates or other factors at the time of any refinancing result in higher interest rates on new debt, our interest expense could increase, and potential proceeds we would be able to secure from future debt refinancings may decrease, which could harm our financial condition and operating results.

Our organizational documents contain no limitations on the amount of debt we can incur, so we may become too highly leveraged.

Our organizational documents do not limit the amount of indebtedness that we may incur. If we were to increase the level of our borrowings, then the resulting increase in cash flow that must be used for debt service would reduce cash available for capital investments or external growth and could harm our ability to make payments on our outstanding indebtedness and harm our financial condition.

Risks Related to Our Status as a REIT

If we fail to qualify as a REIT, our distributions will not be deductible by us and our income will be subject to federal and state taxation.

We are organized as a REIT under the Code, which affords us material tax advantages. The requirements for qualifying as a REIT, however, are complex. If we fail to meet these requirements and certain relief provisions do not apply, our distributions will not be deductible by us and we will have to pay a corporate federal and state level tax on our income. This would substantially reduce our cash available to pay distributions and the yield on your investment in our common stock. In addition, such a tax liability might cause us to borrow funds, liquidate some of our investments or take other steps which could negatively affect our results of operations. Moreover, if our REIT status is terminated because of our failure to meet a technical REIT requirement, we would generally be disqualified from electing treatment as a REIT for the four taxable years following the year in which REIT status is lost. At any time, new laws, interpretations or court decisions may change the federal tax laws or the federal income tax consequences of our qualification as a REIT. Moreover, our charter provides that our board of directors may revoke or otherwise terminate our REIT election, without the approval of our stockholders, if it determines that it is no longer in our best interest to continue to qualify as a REIT.

Even as a REIT, we may become subject to federal, state, or local taxes on our income or property.

Even as a REIT, we may become subject to federal income taxes and related state taxes. For example, if we have net income from a “prohibited transaction,” that income will be subject to a 100% tax. A “prohibited transaction” is, in general, the sale or other disposition of inventory or property, other than foreclosure property, held primarily for sale to customers in the ordinary course of business. To qualify as a REIT, we generally must distribute to our stockholders at least 90% of our REIT taxable income each year, determined without regard to the dividends paid deduction and excluding net capital gains, and we will be subject to regular corporate income tax to the extent that we distribute less than 100% of our REIT taxable income (determined without regard to the deduction for dividends paid) each year. In addition, we will be subject to a 4% nondeductible excise tax on the amount, if any, by which distributions paid by us in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from prior years. We may not be able to make sufficient distributions to avoid paying income tax or excise taxes applicable to REITs. We may also decide to retain income we earn from the sale or other disposition of our property and pay federal income tax directly on that income. In that event, our stockholders would be treated as if they earned that income and paid the tax on it directly. However, stockholders that are tax-exempt, such as charities or qualified pension plans, would have no benefit from their deemed payment of that tax liability.

The TRS Lessee is subject to tax as a regular corporation. In addition, we may also be subject to state and local taxes on our income or property at the level of the Operating Partnership or at the level of the other companies through which we indirectly own our assets. In the normal course of business, entities through which we own or operate real estate either have undergone or may undergo future tax audits. Should we receive a material tax deficiency notice in the future which requires us to incur additional expense, our earnings may be negatively impacted. There can be no assurance that future audits will not occur with increased

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frequency or that the ultimate result of such audits will not have a material adverse effect on our results of operations. We cannot assure you that we will be able to continue to satisfy the REIT requirements, or that it will be in our best interests to continue to do so.

Dividends payable by REITs generally do not qualify for the reduced tax rates available for some dividends.

The maximum tax rate applicable to “qualified dividend income” payable to U.S. stockholders that are individuals, trusts and estates is 20%. Dividends payable by REITs, however, generally are not eligible for these reduced rates. Under the Tax Cuts and Jobs Act of 2017 (the “TCJA”), however, U.S. stockholders that are individuals, trusts and estates generally may deduct up to 20% of the ordinary dividends (e.g., dividends not designated as capital gain dividends or qualified dividend income) received from a REIT for taxable years beginning after December 31, 2017. The deduction was set to expire on December 31, 2025, however, on July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted into law, which permanently extended certain provisions originally enacted under the TCJA. These extensions included the permanent allowance of the 20% deduction for “qualified REIT dividends” for individuals and other non-corporate taxpayers. Although this deduction reduces the effective tax rate applicable to certain dividends paid by REITs (generally to 29.6% assuming the stockholder is subject to the 37% maximum rate), such tax rate is still higher than the tax rate applicable to corporate dividends that constitute qualified dividend income. Accordingly, investors who are individuals, trusts and estates may perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs.

If the leases between our hotels and the TRS Lessee are not respected as true leases for federal income tax purposes, we would fail to qualify as a REIT.

To qualify as a REIT, we must satisfy two gross income tests annually, under which specified percentages of our gross income must be passive income. Passive income includes rent paid pursuant to our operating leases between the TRS Lessee and its subsidiaries and the Operating Partnership. These rents constitute substantially all of our gross income. For the rent to qualify for purposes of the gross income tests, the leases must be respected as true leases for federal income tax purposes and not be treated as service contracts, joint ventures or some other type of arrangement. If the leases are not respected as true leases for federal income tax purposes, we would fail to qualify as a REIT.

We may be subject to taxes in the event our operating leases are not held to be on an arm’s-length basis.

In the event that leases between us and the TRS Lessee are not held to have been made on an arm’s-length basis, we or the TRS Lessee could be subject to income taxes. In order for rents paid to us by the TRS Lessee to qualify as “rents from real property,” such rents may not be based on net income or profits. Our leases provide for a base rent plus a variable rent based on occupied rooms and departmental revenues rather than on net income or profits. If the IRS determines that the rents charged under our leases with the TRS Lessee are excessive, the deductibility thereof may be challenged, and to the extent rents exceed an arm’s-length amount, we could be subject to a 100% excise tax on “re-determined rent” or “re-determined deductions.” While we believe that our rents and other transactions with the TRS Lessee are based on arm’s-length amounts and reflect normal business practices, there can be no assurance that the IRS would agree.

The TRS Lessee is subject to special rules that may result in increased taxes.

Several Code provisions ensure that a TRS is subject to an appropriate level of federal income taxation. For example, the REIT must pay a 100% penalty tax on some payments that it receives if the economic arrangements between us and the TRS Lessee are not comparable to similar arrangements between unrelated parties. The IRS may successfully assert that the economic arrangements of any of our intercompany transactions, including the hotel leases, are not comparable to similar arrangements between unrelated parties.

Because we are a REIT, we depend on the TRS Lessee and its subsidiaries to make rent payments to us, and their inability to do so could harm our revenue and our ability to make distributions to our stockholders.

Due to certain federal income tax restrictions on hotel REITs, we cannot directly or indirectly operate our hotel properties. Therefore, we lease our hotel properties to the TRS Lessee or one of its subsidiaries, which contracts with third-party hotel managers to manage our hotels. Our revenue and our ability to make distributions to our stockholders will depend solely upon the ability of the TRS Lessee and its subsidiaries to make rent payments under these leases. In general, under the leases with the TRS Lessee and its subsidiaries, we will receive from the TRS Lessee or its subsidiaries both fixed rent and variable rent based upon a percentage of gross revenues and the number of occupied rooms. As a result, we participate in the operations of our hotels only through our share of rent paid pursuant to the leases.

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The ability of the TRS Lessee and its subsidiaries to pay rent may be affected by factors beyond its control, such as changes in general economic conditions, the level of demand for hotels and the related services of our hotels, competition in the lodging and hospitality industry, the ability to maintain and increase gross revenue at our hotels and other factors relating to the operations of our hotels.

Although failure on the part of the TRS Lessee or its subsidiaries to materially comply with the terms of a lease (including failure to pay rent when due) would give us the right to terminate the lease, repossess the hotel and enforce the payment obligations under the lease, such steps may not provide us with any substantive relief since the TRS Lessee is our subsidiary. If we were to terminate a lease, we would then be required to find another lessee to lease the hotel or enter into a new lease with the TRS Lessee or its subsidiaries because we cannot operate hotel properties directly or indirectly and remain qualified as a REIT. We cannot assure you that we would be able to find another lessee or that, if another lessee were found, we would be able to enter into a new lease on similar terms.

We may be required to pay a penalty tax upon the sale of a hotel.

The federal income tax provisions applicable to REITs provide that any gain realized by a REIT on the sale of property held as inventory or other property held primarily for sale to customers in the ordinary course of business is treated as income from a “prohibited transaction” that is subject to a 100% penalty tax. Under current law, unless a sale of real property qualifies for a safe harbor, the question of whether the sale of a hotel (or other property) constitutes the sale of property held primarily for sale to customers is generally a question of the facts and circumstances regarding a particular transaction. We may make sales that do not satisfy the requirements of the safe harbors or the IRS may successfully assert that one or more of our sales are prohibited transactions and, therefore, we may be required to pay a penalty tax.

We may be subject to corporate income tax on certain built-in gains.

We may acquire properties in the future from C corporations, in which we must adopt the C corporation’s tax basis in the acquired asset as our tax basis. If the asset’s fair market value at the time of the acquisition exceeds its tax basis (a “built-in gain”), and we sell that asset within five years of the date on which we acquire it, then we generally will have to pay tax on the built-in gain at the regular U.S. federal corporate income tax rate.

If a transaction intended to qualify as a Section 1031 Exchange is later determined to be taxable, we may face adverse consequences, and if the laws applicable to such transactions are amended or repealed, we may not be able to dispose of properties on a tax deferred basis .

From time to time we may dispose of properties in transactions that are intended to qualify as tax deferred exchanges under Section 1031 of the Code (a “Section 1031 Exchange”). If the qualification of a disposition as a valid Section 1031 Exchange is successfully challenged by the IRS, the disposition may be treated as a taxable exchange. In such case, our taxable income and earnings and profits would increase as would the amount of distributions we are required to make to satisfy the REIT distribution requirements. As a result, we may be required to make additional distributions or, in lieu of that, pay additional corporate income tax, including interest and penalties. To satisfy these obligations, we may be required to borrow funds. In addition, the payment of taxes could cause us to have less cash available to distribute to our stockholders. Moreover, legislation has been and could continue to be enacted that could modify or repeal the laws with respect to Section 1031 Exchanges, which could make it more difficult, or not possible, for us to dispose of properties on a tax deferred basis.

Legislative or other actions affecting REITs could have a negative effect on us.

The rules dealing with federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Department of the Treasury (the “Treasury Department”). Changes to the tax laws, with or without retroactive application, could adversely affect our investors or us. We cannot predict how changes in the tax laws might affect our investors or us. New legislation, Treasury Regulations, administrative interpretations, or court decisions could significantly and negatively affect our ability to qualify as a REIT or the federal income tax consequences of such qualification, or the federal income tax consequences of an investment in us. Also, the law relating to the tax treatment of other entities, or an investment in other entities, could change, making an investment in such other entities more attractive relative to an investment in a REIT.

The TCJA significantly changed the U.S. federal income taxation of U.S. businesses and their owners, including REITs and their stockholders. More recently, the OBBBA introduced several provisions that will affect us, including increasing the taxable REIT subsidiary limit to 25%, permanently reinstating 100% bonus depreciation, and expanding interest deduction limits, along with other changes to federal income tax law. The TCJA and OBBBA remain unclear in many respects and could be subject to potential amendments and technical corrections, as well as interpretations and implementing regulations by the Treasury

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Department and IRS, any of which could lessen or increase the impact of the legislation. In addition, it remains unclear how these U.S. federal income tax changes will affect state and local taxation, which often uses federal taxable income as a starting point for computing state and local tax liabilities.

Risks Related to Our Common Stock and Corporate Structure

The market price of our equity securities may vary substantially.

The trading prices of equity securities issued by REITs may be affected by changes in market interest rates and other factors. During 2025, our closing daily common stock price fluctuated from a low of $7.72 to a high of $12.10. One of the factors that may influence the price of our common stock or preferred stock in public trading markets is the annual yield from distributions on our common stock or preferred stock, if any, as compared to yields on other financial instruments. An increase in market interest rates, or a decrease in our distributions to stockholders, may lead prospective purchasers of our stock to demand a higher annual yield, which could reduce the market price of our equity securities.

In addition, other factors that could affect the market price of our equity securities include the following:

periods of economic difficulties, including those caused by disease-related outbreaks, which negatively impact our hotel operations and future earnings;

inflation causing our expenses to increase at higher rates than our revenue;

a U.S. recession impacting the market for common equity generally;

actual or anticipated variations in our quarterly or annual results of operations;

changes in market valuations or investment return requirements of companies in the hotel or real estate industries;

changes in expectations of our future financial performance, changes in our estimates by securities analysts, or failures to achieve those expectations or estimates;

the trading volumes of our stock;

additional issuances or repurchases of our common stock or other securities, including the issuance or repurchase of our preferred stock;

the addition or departure of board members or senior management;

disputes with any of our lenders, managers, or franchisors; and

announcements by us, our competitors, or other industry participants of acquisitions, investments, or strategic alliances.

Distributions to our common stockholders may vary, and distributions on our common stock may be made in the form of cash, stock, or a combination of both; however, the IRS may disallow our use of stock dividends to satisfy our distribution requirements.

During the past three years, we paid quarterly cash dividends on our common stock as follows:

January

April

July

October

Any future common stock dividends will be determined by our board of directors after considering our long-term operating projections, expected capital requirements, and risks affecting our business. Furthermore, our board of directors may elect to pay dividends on our common stock by any means allowed under the Code, including a combination of cash and shares of our common stock. We cannot assure you as to the timing or amount of future dividends on our common stock.

As a REIT, we are required to distribute at least 90% of our REIT taxable income to our stockholders. Typically, we generate cash for distributions through our operations, the disposition of assets, or the incurrence of additional debt. We have elected in the past, and may elect in the future, to pay dividends on our common stock in cash, shares of common stock, or a combination of cash and shares of common stock. Changes in our dividend policy could adversely affect the price of our stock.

We may elect to satisfy our REIT distribution requirements in the form of shares of our common stock along with cash. We have previously received private letter rulings from the IRS regarding the treatment of these distributions for purposes of satisfying our REIT distribution requirements. Since then, the IRS issued Revenue Procedure 2017-45, allowing REITs to limit the cash

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component of their dividends to not less than 20% if certain procedures are followed. More recently, the IRS issued Revenue Procedure 2021-53, temporarily reducing the cash component of a REIT’s dividends to not less than 10%. However, we have no assurance that the IRS will continue to provide such relief in the future; in which case, we may make cash/common stock distributions prior to receiving a private letter ruling. Should the IRS disallow our future use of cash/common stock dividends, the distribution would not qualify for purposes of meeting our distribution requirements, and we would need to make additional all cash distributions to satisfy the distribution requirement through the use of the deficiency dividend procedures outlined in the Code.

Shares of our common stock that are or become available for sale could affect the stock price.

We have in the past, and may in the future, issue additional shares of common stock to raise capital to finance hotel acquisitions, fund capital expenditures, redeem our preferred stock, repay indebtedness or for other corporate purposes. Sales of a substantial number of shares of our common stock, or the perception that sales could occur, could adversely affect prevailing market prices for our common stock. In addition, we have reserved 9.3 million shares of our common stock for issuance under the Company’s 2022 Incentive Award Plan, and 6,247,280 shares remained available for future issuance as of December 31, 2025.

Our earnings and cash distributions may affect the market price of our common stock.

We believe that the market value of a REIT’s equity securities is based primarily on the value of the REIT’s owned real estate, capital structure, debt levels and perception of the REIT’s growth potential and its current and potential future cash distributions, whether from operations, sales, acquisitions, development or refinancings. Because our market value is based on a combination of factors, shares of our common stock may trade at prices that are higher or lower than the value per share of our underlying net assets. To the extent we retain operating cash flow for investment purposes, working capital reserves or other purposes rather than distributing the cash flow to stockholders, these retained funds, while increasing the value of our underlying assets, may negatively impact the market price of our common stock. Our failure to meet our expectations or the market’s expectation with regard to future earnings and cash distributions would likely adversely affect the market price of our common stock.

Our stock repurchase program may not enhance long-term stockholder value, could cause volatility in the price of our common and preferred stock and could diminish our cash reserves.

Our board of directors has authorized a stock repurchase program up to an aggregate amount of $500 million of common and preferred stock. This authorization does not obligate us to repurchase any stock and the program may be limited, suspended, or discontinued at any time. The repurchasing of our stock pursuant to the program could affect our stock prices and increase volatility. The existence of our stock repurchase program could cause our stock price to be higher than it would be in the absence of such a program. Additionally, our stock repurchase program could diminish our cash reserves, which may impact our ability to fund future growth and to pursue other strategic opportunities. If we conduct repurchases, there can be no assurance that it will enhance stockholder value because the market price of our stock may decline below the levels at which the repurchases were completed.

Provisions of Maryland law and our organizational documents may limit the ability of a third party to acquire control of the Company and may serve to limit our stock price.

Provisions of Maryland law and our charter and bylaws could have the effect of discouraging, delaying or preventing transactions that involve an actual or threatened change in control of us, and may have the effect of entrenching our management and members of our board of directors, regardless of performance. These provisions include the following:

Aggregate Stock and Common Stock Ownership Limits. In order for us to qualify as a REIT, no more than 50% of the value of outstanding shares of our stock may be owned, actually or constructively, by five or fewer individuals at any time during the last half of each taxable year. To assure that we will not fail to qualify as a REIT under this test, subject to some exceptions, our charter prohibits any stockholder from owning beneficially or constructively more than 9.8% (in number or value, whichever is more restrictive) of the outstanding shares of our common stock or more than 9.8% of the value of the outstanding shares of our capital stock. Any attempt to own or transfer shares of our capital stock in excess of the ownership limit without the consent of our board of directors will be void and could result in the shares (and all dividends thereon) being automatically transferred to a charitable trust. The board of directors has granted waivers of the aggregate stock and common stock ownership limits to certain “look through entities” such as mutual or investment funds. This ownership limitation may prevent a third party from acquiring control of us if our board of directors does not grant an exemption from the ownership limitation, even if our stockholders believe the change in control is in their best interests. These restrictions will not apply if our board of directors determines that it no longer is in our best interests to continue to qualify as a REIT, or that compliance with the restrictions on transfer and ownership no longer is required for us to qualify as a REIT.

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Authority to Issue Stock. Our charter authorizes our board of directors to cause us to issue up to 500,000,000 shares of common stock and up to 100,000,000 shares of preferred stock. Our charter authorizes our board of directors to amend our charter without stockholder approval to increase or decrease the aggregate number of shares of stock or the number of shares of any class or series of our stock that it has authority to issue, to classify or reclassify any unissued shares of our common stock or preferred stock and to set the preferences, rights and other terms of the classified or reclassified shares. Issuances of additional shares of stock may have the effect of delaying or preventing a change in control of our company, including change of control transactions offering a premium over the market price of shares of our common stock, even if our stockholders believe that a change of control is in their interest.

Number of Directors, Board Vacancies, Term of Office. Under our charter and bylaws, we have elected to be subject to certain provisions of Maryland law which vest in the board of directors the exclusive right to determine the number of directors and the exclusive right, by the affirmative vote of a majority of the remaining directors, to fill vacancies on the board even if the remaining directors do not constitute a quorum. Any director elected to fill a vacancy will hold office until the next annual meeting of stockholders, and until his or her successor is elected and qualifies. As a result, stockholder influence over these matters is limited. Notwithstanding the foregoing, we amended our corporate governance guidelines in 2017 to provide that the board shall be required to accept any resignation tendered by a nominee who is already serving as a director if such nominee shall have received more votes “against” or “withheld” than “for” his or her election at each of two consecutive annual meetings of stockholders for the election of directors at which a quorum was present and the number of director nominees equaled the number of directors to be elected at each such annual meeting of stockholders.

Limitation on Stockholder Requested Special Meetings. Our bylaws provide that our stockholders have the right to call a special meeting only upon the written request of the stockholders entitled to cast not less than a majority of all the votes entitled to be cast by the stockholders at such meeting. This provision makes it more difficult for stockholders to call special meetings.

Advance Notice Provisions for Stockholder Nominations and Proposals. Our bylaws require advance written notice for stockholders to nominate persons for election as directors at, or to bring other business before, any meeting of our stockholders. This bylaw provision limits the ability of our stockholders to make nominations of persons for election as directors or to introduce other proposals unless we are notified and provided certain required information in a timely manner prior to the meeting.

Authority of our Board to Amend our Bylaws. Our bylaws may be amended, altered, repealed or rescinded (a) by our board of directors or (b) by the stockholders, by the affirmative vote of a majority of all the votes entitled to be cast generally in the election of directors, except with respect to amendments to the provision of our bylaws regarding our opt out of the Maryland Business Combination and Control Share Acquisition Acts, which must be approved by the affirmative vote of a majority of votes cast by stockholders entitled to vote generally in the election of directors.

Duties of Directors. Maryland law requires that a director perform his or her duties as follows: in good faith; in a manner he or she reasonably believes to be in the best interests of the corporation; and with the care that an ordinary prudent person in a like position would use under similar circumstances. The duty of the directors of a Maryland corporation does not require them to: accept, recommend or respond on behalf of the corporation to any proposal by a person seeking to acquire control of the corporation; authorize the corporation to redeem any rights under, or modify or render inapplicable, a stockholders’ rights plan; elect on behalf of the corporation to be subject to or refrain from electing on behalf of the corporation to be subject to the unsolicited takeover provisions of Maryland law; make a determination under the Maryland Business Combination Act or the Maryland Control Share Acquisition Act; or act or fail to act solely because of the effect the act or failure to act may have on an acquisition or potential acquisition of control of the corporation or the amount or type of consideration that may be offered or paid to the stockholders in an acquisition. Moreover, under Maryland law the act of the directors of a Maryland corporation relating to or affecting an acquisition or potential acquisition of control is not subject to any higher duty or greater scrutiny than is applied to any other act of a director. Maryland law also contains a statutory presumption that an act of a director of a Maryland corporation satisfies the applicable standards of conduct for directors under Maryland law. These provisions increase the ability of our directors to respond to a takeover and may make it more difficult for a third party to effect an unsolicited takeover.

Unsolicited Takeover Provisions. Provisions of Maryland law permit the board of a corporation with a class of equity securities registered under the Exchange Act and at least three independent directors, without stockholder approval, to implement possible takeover defenses, such as a classified board or a two-thirds vote requirement for removal of a director. These provisions, if implemented, may make it more difficult for a third party to effect a takeover. In April 2013, however, we amended our charter to prohibit us from dividing directors into classes unless such action is first approved by the affirmative vote of a majority of the votes cast on the matter by stockholders entitled to vote generally in the election of directors.

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Our board of directors may change our significant corporate policies without the consent of our stockholders.

Our board of directors determines our significant corporate policies, including those related to acquisitions, financing, borrowing, qualification as a REIT, and distributions to our stockholders. These policies may be amended or revised at any time at the discretion of our board of directors without the consent of our stockholders. Any policy changes could have an adverse effect on our financial condition, results of operations, the trading price of our common stock, and our ability to make distributions to our common and preferred stockholders.

We may be subject to actions or proposals from stockholders that do not align with our business strategies.

We value constructive input from investors and regularly engage in dialogue with our stockholders regarding strategy and performance. While our board of directors and management team welcome stockholder perspectives with the goal of enhancing long-term value, we may be subject to actions or proposals from stockholders that do not align with our business strategies. Responding to such actions or proposals could divert the attention of management and our board of directors from our business operations, consume company resources, and result in increased volatility in the market price of our common stock.

Item 1 B.

Unresolved Staff Comments

None.

Item 1 C.

Cybersecurity

Cybersecurity Risk Management and Strategy

Due to our structure as a REIT, the cybersecurity program, processes, and strategy described in this section are limited to the corporate systems, service providers, and information services belonging to or supporting the REIT. In order to maintain REIT status, the Company does not operate or manage its hotels. We lease each of our hotels to the TRS Lessee or one of its subsidiaries, which engages with third-party eligible management companies to operate and manage all aspects of the properties; and those third-party managers, in turn, rely on systems that they manage directly or indirectly (through their own service providers), including but not limited to reservation systems, billing, building and property management systems, point-of-sale systems, and financial transactions and records that store and process proprietary or personal information. In light of this structure, we do not have actual or contractual access to the systems or information maintained by the third-party managers, and we must instead rely on such managers’ programs and processes to protect the properties in which we invest from risks associated with cybersecurity threats.

We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information. Our cybersecurity risk management program includes a cybersecurity incident response plan designed to restore business operations as quickly and as orderly as possible in the event of a cybersecurity incident.

Our program is informed by the International Standards Organization (“ISO”) 27000, ISO 27001, and National Institute of Standards and Technology Cybersecurity Framework (“NIST CSF”). This does not imply that we meet any particular technical standards, specifications, or requirements, only that we use the ISO 27000, ISO 27001 and NIST CSF as guides to help us identify, assess, and manage cybersecurity risks relevant to our business.

Key elements of our cybersecurity risk management program are integrated into our overall enterprise risk management program, and share common methodologies, reporting channels and governance processes that apply across the enterprise risk management program to other legal, compliance, strategic, operational, and financial risk areas.

Our cybersecurity risk management program includes:

risk assessments designed to help identify material cybersecurity risks to our critical systems and information;

an information technology department principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents;

the use of external service providers, where appropriate, to assess, test, or otherwise assist with aspects of our security controls ;

cybersecurity awareness training of our employees and senior management; and

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business continuity, contingency, and recovery plans, including a cybersecurity incident response plan with procedures for responding to cybersecurity incidents.

We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected us, including our operations, business strategy, results of operations, or financial condition. We face risks from cybersecurity threats that, if realized and material, are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition. There can be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with, or effective in protecting our systems and information.

Cybersecurity Governance

Our board of directors (the “board”) considers cybersecurity risk as part of its risk oversight function and has delegated to the audit committee (the “committee”) oversight of cybersecurity and other information technology risks. The committee oversees management’s implementation of our cybersecurity risk management program .

The committee receives quarterly reports from management on our cybersecurity risks. In addition, management updates the committee, as necessary, regarding any significant cybersecurity incidents.

The committee reports to the board regarding its activities, including those related to cybersecurity. The board also receives briefings from management on our cybersecurity risk management program . Board members receive presentations on cybersecurity topics from management as part of the board’s continuing education on topics that impact public companies.

Our management team, including our chief financial officer , is responsible for assessing and managing our material risks from cybersecurity threats. The team has primary responsibility for our overall cybersecurity risk management program and supervises both our internal cybersecurity personnel, our external information technology support, and our retained external cybersecurity consultants. Our information technology department has over 20 years of experience developing and implementing computer infrastructure, including cybersecurity and audit compliance. We seek to use the latest security technologies from leading vendors to help secure our network and to regularly monitor and assess alerts and threat levels. The information technology department possesses various industry certifications and continuously refreshes skills through relevant training.

Our management team supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from IT security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in the IT environment .

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Item  7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read together with the consolidated financial statements and related notes included elsewhere in this report. This discussion focuses on our financial condition and results of operations for the year ended December 31, 2025 as compared to the year ended December 31, 2024. A discussion and analysis of the year ended December 31, 2024 as compared to the year ended December 31, 2023 is included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 21, 2025, under the caption “ Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations .”

Overview

Sunstone Hotel Investors, Inc. is a Maryland corporation. We operate as a self-managed and self-administered real estate investment trust (“REIT”). A REIT is a corporation that directly or indirectly owns real estate assets and has elected to be taxable as a real estate investment trust for federal income tax purposes. To qualify for taxation as a REIT, the REIT must meet certain requirements, including regarding the composition of its assets and the sources of its income. REITs generally are not subject to federal income taxes at the corporate level as long as they pay stockholder dividends equivalent to 100% of their taxable income. REITs are required to distribute to stockholders at least 90% of their REIT taxable income. We own, directly or indirectly, 100% of the interests of Sunstone Hotel Partnership, LLC, (the “Operating Partnership”), which is the entity that directly or indirectly owns our hotels. We also own 100% of the interests of our taxable REIT subsidiary, Sunstone Hotel TRS Lessee, Inc. (the “TRS Lessee”), which, directly or indirectly, leases all of our hotels from the Operating Partnership, and engages independent third parties to manage our hotels.

We own hotels in convention, urban, and resort destinations that benefit from significant barriers to entry by competitors and diverse economic drivers. As of December 31, 2025, we owned 14 hotels. All of our hotels are operated under nationally recognized brands, except the Oceans Edge Resort & Marina, which operates independently.

The following tables summarize our total portfolio and room data from January 1, 2024 through December 31, 2025:

Portfolio Data—Hotels

Number of hotels—beginning of year

Add: Acquisitions

Less: Dispositions

Number of hotels—end of year

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Portfolio Data—Rooms

Number of rooms—beginning of year

Add: Acquisitions

Less: Dispositions

Less: Renovation adjustments, net (1)

Number of rooms—end of year

Average rooms per hotel—end of year

Concurrent with our renovations, we removed two rooms at the Wailea Beach Resort to form two residential-style suites in 2025. Similarly, in 2024, we removed fifty-two rooms at The Confidante Miami Beach in conjunction with its transition to Andaz Miami Beach to increase the number of suites and premium room types. In addition, in 2024 we removed two rooms at Wailea Beach Resort to form two residential-style suites and added two rooms at Marriott Long Beach Downtown.

2025 Summary

Demand . Excluding The Confidante Miami Beach and Renaissance Long Beach (the “Two Renovation Hotels”) due to their significant renovations as they transitioned to Andaz Miami Beach and Marriott Long Beach Downtown, respectively, occupancy at the 11 hotels we owned during the entirety of 2024 and 2025 (the “Comparable Portfolio”) improved as follows:

Quarters Ended

Year Ended

March 31

June 30

September 30

December 31

December 31

During 2025, we saw continued strength in group demand, primarily at Hyatt Regency San Francisco, Wailea Beach Resort, The Bidwell Marriott Portland, Montage Healdsburg, and Hilton San Diego Bayfront. In addition, we saw strong corporate demand at The Bidwell Marriott Portland, The Westin Washington, DC Downtown, Marriott Boston Long Wharf, and Hyatt Regency San Francisco driven in part by airline crew contracts. These positive impacts were partially offset by the slower recovery of leisure demand in Maui and by displacement associated with the completion of a rooms renovation at the Wailea Beach Resort, both of which negatively affected transient demand, as well as by lower leisure demand at Oceans Edge Resort & Marina. In addition, Hilton San Diego Bayfront, Marriott Boston Long Wharf, and The Westin Washington, DC Downtown were negatively impacted by a reduction in government-related travel, including organizations whose conferences are partially funded by the government and the effect of the government shut down in the fourth quarter of 2025.

Disposition. In June 2025, we sold the Hilton New Orleans St. Charles, located in Louisiana for a gross sale price of $47.0 million and recorded a loss of $8.8 million.

Significant Renovations . During 2025, our significant renovations primarily consisted of the completion of the Andaz Miami Beach transformation, resulting in the resort reopening in May 2025, a rooms renovation at Wailea Beach Resort, and renovations of the meeting spaces at Hyatt Regency San Antonio Riverwalk and Hilton San Diego Bayfront.

Debt Transactions . In April 2025, we exercised our option to extend the maturity date of the previous Term Loan 3 from May 2025 to May 2026.

In September 2025, we entered into the Third Amended and Restated Credit Agreement (the “Amended Credit Agreement”), which expanded our unsecured debt borrowing capacity and extended the maturity of our term loans. The Amended Credit Agreement continues to provide for a $500.0 million revolving credit facility and increases the aggregate amount of our term loan facilities from $675.0 million (on four existing term loans) to $850.0 million (on three new term loans). Inclusive of extension options, the revolving credit facility and new term loan facilities under the Amended Credit Agreement mature at various points in 2030 and 2031, respectively, but are freely prepayable at any time. The revolving credit facility and the new term loan facilities bear interest pursuant to a leverage-based pricing grid ranging from 1.40% to 2.25% and 1.35% to 2.20%, respectively, over the applicable term SOFR. In connection with the new term loan facilities, we entered into a series of interest rate swaps to lower our borrowing cost and better manage interest rate risk.

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For more details on our debt transactions, see disclosures under the Debt caption included in “ Liquidity and Capital Resources ” below.

Capital Transactions . During 2025, we repurchased the following shares under our stock repurchase program:

Common stock : 11,589,722 shares at an average purchase price per share of $8.83;

Series H Cumulative Redeemable Preferred Stock (“Series H preferred stock”) : 54,097 shares at an average purchase price per share of $20.28; and

Series I Cumulative Redeemable Preferred Stock (“Series I preferred stock”) : 9,027 shares at an average purchase price per share of $19.25.

As of December 31, 2025, approximately $323.9 million of authorized capacity remained under our stock repurchase program.

Operating Activities

Revenues. Substantially all of our revenues are derived from the operation of our hotels. Specifically, our revenues consist of the following:

Room revenue , which is comprised of revenue realized from the sale of rooms at our hotels;

Food and beverage revenue , which is comprised of revenue realized in the hotel food and beverage outlets as well as banquet and catering events; and

Other operating revenue , which includes ancillary hotel revenue and other items primarily driven by occupancy such as telephone/internet, parking, spa, destination and resort fees, entertainment, and other guest services. Additionally, this category includes, among other things, attrition and cancellation revenue, tenant revenue derived from hotel space and marina slips leased by third parties, winery revenue, any business interruption proceeds and any performance guarantee or reimbursements to offset net losses.

Expenses. Our expenses consist of the following:

Room expense , which is primarily driven by occupancy and, therefore, has a significant correlation with room revenue;

Food and beverage expense , which is primarily driven by hotel food and beverage sales and banquet and catering bookings and, therefore, has a significant correlation with food and beverage revenue;

Other operating expense , which includes the corresponding expense of other operating revenue, advertising and promotion, repairs and maintenance, utilities, and franchise costs;

Property tax, ground lease and insurance expense , which includes the expenses associated with property tax, ground lease and insurance payments, each of which is primarily a fixed expense, however property tax is subject to regular revaluations based on the specific tax regulations and practices of each municipality, along with our cash and noncash operating lease expenses, general excise tax assessed by Hawaii and taxes assessed on commercial rents by San Francisco and Texas;

Other property-level expenses , which includes our property-level general and administrative expenses, such as payroll, benefits, and other employee-related expenses, contract and professional fees, credit and collection expenses, employee recruitment, relocation and training expenses, labor dispute expenses, consulting fees, management fees, and other expenses;

Corporate overhead expense, which includes our corporate-level expenses, such as payroll, benefits, and other employee-related expenses, amortization of deferred stock compensation, business acquisition and due diligence expenses, legal expenses, contract and professional fees, board of director expenses, entity-level state franchise and minimum taxes, travel expenses, office rent, and other customary expenses; and

Depreciation and amortization expense , which includes depreciation on our hotel buildings, improvements, and FF&E, along with amortization on our franchise fees and certain intangibles. Additionally, this category includes depreciation and amortization related to FF&E for our corporate office.

Other Revenue and Expense. Other revenue and expense consists of the following:

Interest and other income, which includes interest we have earned on our restricted and unrestricted cash accounts, as well as any energy or other rebates, net property insurance proceeds we have received, miscellaneous income, and any gains or losses we have recognized on sales or redemptions of assets other than real estate investments;

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Interest expense, which includes interest expense incurred on our outstanding fixed and variable rate debt, gains or losses on interest rate derivatives, amortization of deferred financing costs, and any loan fees incurred on our debt, net of any capitalized interest;

Gain (loss) on sale of assets, net, which includes the gains or losses we recognized on our hotel sales, including the net gains related to the resolution of contingencies, that do not qualify as discontinued operations;

Gain (loss) on extinguishment of debt, which includes gains related to the resolution of contingencies on extinguished debt and losses recognized on amendments or early repayments of mortgages or other debt obligations from the accelerated amortization of deferred financing costs, along with any other costs;

Income tax (provision) benefit , net, which includes federal and state income taxes charged to us net of any refundable credits or refunds received, any adjustments to deferred tax assets, liabilities or valuation allowances, and any adjustments to unrecognized tax positions, along with any related interest and penalties incurred; and

Preferred stock dividends, net of gain on repurchases, which includes dividends accrued on our Series G Cumulative Redeemable Preferred Stock (“Series G preferred stock”), Series H preferred stock, and Series I preferred stock, net of any preferred stock repurchased at a discount to its carrying value, along with the related write-off of any original issuance costs previously included in additional paid in capital.

Operating Performance Indicators . The following performance indicators are commonly used in the hotel industry:

Occupancy , which is the quotient of total rooms sold divided by total rooms available ;

Average daily room rate , or ADR, which is the quotient of room revenue divided by total rooms sold;

Revenue per available room , or RevPAR, which is the product of occupancy and ADR, and does not include food and beverage revenue, or other operating revenue;

RevPAR index, which is the quotient of a hotel’s RevPAR divided by the average RevPAR of its competitors, multiplied by 100. A RevPAR index in excess of 100 indicates a hotel is achieving higher RevPAR than the average of its competitors. In addition to absolute RevPAR index, we monitor changes in RevPAR index;

EBITDAre , which is net income excluding: interest expense; benefit or provision for income taxes, including any changes to deferred tax assets, liabilities or valuation allowances and income taxes applicable to the sale of assets; depreciation and amortization; gains or losses on disposition of depreciated property (including gains or losses on change in control); and any impairment write-downs of depreciated property;

Adjusted EBITDAre , which is EBITDA re adjusted to exclude: amortization of deferred stock compensation; amortization of contract intangibles; amortization of right-of-use assets and obligations; the impact of any gain or loss from undepreciated asset sales or property damage from natural disasters; any lawsuit settlement costs; the write-off of development costs associated with abandoned projects; property-level restructuring, severance, and management transition costs; pre-opening costs associated with extensive renovation projects; debt resolution costs; and any other nonrecurring identified adjustments;

Funds from operations (“FFO”) attributable to common stockholders , which is net income and preferred stock dividends, including any gains or losses on the redemptions or repurchases of preferred stock, excluding: gains and losses from sales of property; real estate-related depreciation and amortization (excluding amortization of deferred financing costs and right-of-use assets and obligations); and any real estate-related impairment losses; and

Adjusted FFO attributable to common stockholders , which is FFO attributable to common stockholders adjusted to exclude: amortization of deferred stock compensation; amortization of contract intangibles; real estate-related amortization of right-of-use assets and obligations; noncash interest on our derivatives; income tax benefits or provisions associated with any changes to deferred tax assets, liabilities or valuation allowances, the application of net operating loss carryforwards, uncertain tax positions or with the sale of assets; gains or losses due to property damage from natural disasters; any lawsuit settlement costs; the write-off of development costs associated with abandoned projects; non-real estate-related impairment losses; property-level restructuring, severance, and management transition costs; pre-opening costs associated with extensive renovation projects; debt resolution costs; gains or losses on the redemptions or repurchases of preferred stock; and any other nonrecurring identified adjustments.

Factors Affecting Our Operating Results. The primary factors affecting our operating results include overall demand for hotel rooms, the pace of new hotel development, or supply, and the relative performance of our operators in increasing revenue and controlling hotel operating expenses.

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Demand. The demand for lodging has traditionally been closely linked with the performance of the general economy. Our hotels are classified as either upper upscale or luxury hotels. In periods of economic difficulties, including those caused by inflation or recession, these types of hotels may be more susceptible to a decrease in revenue, as compared to hotels in other categories that have lower room rates in part because upper upscale and luxury hotels generally target business and leisure travelers at higher price points, and these groups may seek to curtail spending in periods of economic decline. In addition, changes in the value of the U.S. dollar relative to other currencies may impact the demand for our hotels by making international travel more or less affordable. Also, operating results at our hotels may be negatively affected by uncertainty surrounding certain international economic and political relationships, including political disputes and unfavorable perceptions of travel to the U.S., which could further reduce international travel demand. Also, volatility in transportation fuel costs, increases in air and ground travel costs, decreases in airline capacity, government shutdowns, the imposition of tariffs, and prolonged periods of inclement weather in our markets may reduce the demand for our hotels.

Supply . The addition of new competitive hotels affects the ability of existing hotels to attract demand for lodging and, therefore, impacts the ability to generate growth in RevPAR and profits. The development of new hotels is largely driven by construction costs, the cost and availability of financing, and the expected performance of existing hotels. We believe that both new hotel construction and new hotel openings were delayed or even cancelled over the past several years due to construction supply constraints, the cost and availability of financing, and inflationary pressures on the cost of building materials, which made new hotel development less financially feasible. We believe that many of these same factors combined with the recent imposition of tariffs will continue to discourage new hotel supply in many markets, although some markets may experience new hotel openings at or greater than historical levels. Separate from the development of new hotels, an increase in the supply of vacation rental or sharing services such as Airbnb may negatively affect the ability of existing hotels to generate growth in RevPAR and profits.

Revenues and expenses . We believe that marginal improvements in RevPAR index, even in the face of declining revenues, are a good indicator of the relative quality and appeal of our hotels, and our operators’ effectiveness in maximizing revenues. Similarly, we also evaluate our operators’ effectiveness in minimizing incremental operating expenses in the context of increasing revenues or, conversely, in reducing operating expenses in the context of declining revenues. Inflationary pressures could increase operating costs, which could limit our operators’ effectiveness in minimizing expenses.

Operating Results . The following table presents our operating results for the years ended December 31, 2025 and 2024, including the amount and percentage change in the results between the two periods.

Change $

Change %

(in thousands, except statistical data)

REVENUES

Room

Food and beverage

Other operating

Total revenues

OPERATING EXPENSES

Hotel operating

Other property-level expenses

Corporate overhead

Depreciation and amortization

Total operating expenses

Interest and other income

Interest expense

(Loss) gain on sale of assets, net

(Loss) gain on extinguishment of debt

Income before income taxes

Income tax (provision) benefit, net

NET INCOME

Preferred stock dividends, net of gain on repurchases

INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS

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Summary of Operating Results . The following items significantly impact the year-over-year comparability of our operations:

Hotel Acquisition : In April 2024, we acquired the Hyatt Regency San Antonio Riverwalk. As a result, our 2025 revenues, operating expenses, and depreciation expense are not comparable to 2024.

Hotel Renovations : Due to the significant renovations at the Two Renovation Hotels, our 2025 revenues and operating expenses are not comparable to 2024.

Hotel Disposition : In June 2025, we sold the Hilton New Orleans St. Charles. As a result, our 2025 revenues, operating expenses, and depreciation expense are not comparable to 2024.

Room Revenue . Room revenue increased $23.6 million, or 4.2%, in 2025 as compared to 2024 as follows:

The Two Renovation Hotels caused room revenue to increase by $15.6 million. Occupancy increased 2,000 basis points and the average daily room rate increased 15.7%, resulting in an 80.1% increase in RevPAR.

Change

Occ%

ADR

RevPAR

Occ%

ADR

RevPAR

Occ%

ADR

RevPAR

Two Renovation Hotels

bps

The acquisition of the Hyatt Regency San Antonio Riverwalk caused room revenue to increase $7.5 million. Occupancy was 66.1% and the average daily room rate was $192.92, resulting in RevPAR of $127.52.

Room Revenue at the Comparable Portfolio increased $6.2 million. Occupancy increased 100 basis points and the average daily room rate remained relatively constant, resulting in a 1.4% increase in RevPAR. The Comparable Portfolio’s room revenue benefited from continued strength in group activity primarily at Hyatt Regency San Francisco due to increased demand in the market and additional citywide meetings and conferences, and at Hilton San Diego Bayfront due to labor activity during the third and fourth quarters of 2024, which resulted in the cancellation of certain group events and reduced overall business volume at the hotel during 2024. We also saw moderate increases in group revenues during 2025 at Wailea Beach Resort, The Bidwell Marriott Portland, and Montage Healdsburg. In addition, room revenue at The Bidwell Marriott Portland, The Westin Washington, DC Downtown, Marriott Boston Long Wharf, and Hyatt Regency San Francisco benefited from additional corporate and contract revenue. These positive impacts were partially offset by lower leisure demand at Wailea Beach Resort due to slower demand recovery and to displacement from the completion of a rooms renovation and at Oceans Edge Resort & Marina due to a weak Key West market. In addition, Hilton San Diego Bayfront, Marriott Boston Long Wharf, and The Westin Washington, DC Downtown were negatively impacted due to a decline in government-related travel. We expect government-related travel may continue to decline or remain subdued in 2026 as a result of, among other factors, the government’s cost control initiatives and ongoing uncertainty in government operations.

Change

Occ%

ADR

RevPAR

Occ%

ADR

RevPAR

Occ%

ADR

RevPAR

Comparable Portfolio

bps

The sale of the Hilton New Orleans St. Charles caused room revenue to decrease by $5.7 million.

Food and Beverage Revenue . Food and beverage revenue increased $22.5 million, or 8.8%, in 2025 as compared to 2024 as follows:

Food and beverage revenue at the Comparable Portfolio increased $13.2 million driven by increased banquet and outlet revenues. Banquet revenue increased due to increases in the number of groups and spend per group, along with increases in audio-visual equipment and banquet room rental fees, primarily at Hilton San Diego Bayfront, Hyatt Regency San Francisco, Montage Healdsburg, and The Westin Washington, DC Downtown. In addition, banquet revenue increased at JW Marriott New Orleans due to the Super Bowl in February 2025. These increases in banquet revenue were partially offset by decreased banquet revenue at Four Seasons Resort Napa Valley due to lower group occupancy and a wildfire near the resort which led to group cancellations in the third quarter of 2025. The increase in outlet revenue was primarily due to increases in transient occupancy at Four Seasons Resort Napa Valley and at Renaissance Orlando at SeaWorld®, and due to groups buying out the restaurant at Montage Healdsburg for some of their events. These increases were partially offset by decreased outlet revenue at Marriott Boston Long Wharf due to the conversion of a hotel-operated restaurant to a leased outlet. Both banquet and outlet revenues increased at Hilton San Diego Bayfront due to labor activity during the third and fourth quarters of 2024, which led to the cancellation of certain group events and overall lower business volume at the hotel during the prior year.

The Two Renovation Hotels caused food and beverage revenue to increase by $7.4 million.

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The acquisition of the Hyatt Regency San Antonio Riverwalk caused food and beverage to increase by $1.9 million.

The sale of the Hilton New Orleans St. Charles caused a nominal decrease in food and beverage revenue.

Other Operating Revenue . Other operating revenue increased $8.3 million, or 9.1%, in 2025 as compared to 2024 as follows:

Other operating revenue at the Comparable Portfolio increased $4.4 million, primarily due to increased destination and resort fees, cancellation and attrition fees, recreation and pool revenues, residential-related revenues at Montage Healdsburg, spa revenues, and retail revenues. These increases were partially offset by decreased parking revenues.

The Two Renovation Hotels caused other operating revenue to increase by $2.5 million.

The acquisition of the Hyatt Regency San Antonio Riverwalk caused other operating revenue to increase by $2.3 million.

The sale of the Hilton New Orleans St. Charles caused other operating revenue to decrease by $0.9 million.

Hotel Operating Expenses . Hotel operating expenses, which are comprised of room, food and beverage, advertising and promotion, repairs and maintenance, utilities, franchise costs, property tax, ground lease and insurance, and other hotel operating expenses increased $38.1 million, or 6.8%, in 2025 as compared to 2024 as follows:

The Two Renovation Hotels caused hotel operating expenses to increase by $20.5 million.

Hotel operating expenses at the Comparable Portfolio increased $14.3 million, primarily corresponding to the increases in revenues and occupancy rates, as well as increases in repairs and maintenance, utilities, and liability insurance. In addition, payroll and related expenses increased at Hilton San Diego Bayfront due to reduced labor required at the hotel during the labor activity in the third and fourth quarters of 2024 and at Hyatt Regency San Francisco due to the impact of new union contracts finalized in August this year. These increases were partially offset by decreased property taxes due to favorable appeals and reassessments at several hotels, as well as decreased property insurance resulting from successful policy renewals in the third quarters of both 2025 and 2024.

The acquisition of the Hyatt Regency San Antonio Riverwalk caused hotel operating expenses to increase by $7.9 million.

The sale of the Hilton New Orleans St. Charles caused hotel operating expenses to decrease by $4.5 million.

Other Property-Level Expenses . Other property-level expenses increased $6.5 million, or 5.9%, in 2025 as compared to 2024 as follows:

The Two Renovation Hotels caused other property-level expenses to increase by $2.9 million.

Other property-level expenses at the Comparable Portfolio increased $2.4 million, primarily due to increases in payroll and related expenses, management fees, and credit card commissions. The increase in payroll and related expenses was primarily due to a $1.3 million COVID-19 relief grant received in the first quarter of 2024 at Marriott Boston Long Wharf with no corresponding grant received in 2025. These increased expenses were partially offset by decreased contract and professional fees.

The acquisition of the Hyatt Regency San Antonio Riverwalk caused other property-level expenses to increase by $2.0 million.

The sale of the Hilton New Orleans St. Charles caused other property-level expenses to decrease by $0.8 million.

Corporate Overhead Expense . Corporate overhead expense increased $2.5 million, or 8.7%, in 2025 as compared to 2024, primarily due to increased payroll and related expenses and deferred stock amortization expense in the first quarter of 2025 in connection with the restructuring of our executive team. The increase in corporate overhead expense was also due to increased professional fees, due diligence fees, board of director expenses, and entity-level state franchise and minimum taxes. These increased expenses were partially offset by decreased deferred stock amortization expense.

Depreciation and Amortization Expense . Depreciation and amortization expense increased $10.0 million, or 8.0%, in 2025 as compared to 2024 as follows:

The Two Renovation Hotels caused depreciation and amortization expense to increase by $7.1 million.

The acquisition of the Hyatt Regency San Antonio Riverwalk resulted in an increase to depreciation and amortization expense of $2.5 million.

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Depreciation and amortization expense related to the Comparable Portfolio increased $1.8 million due to increased expense at our newly renovated hotels, partially offset by decreased expense due to fully depreciated assets.

The sale of the Hilton New Orleans St. Charles caused depreciation and amortization expense to decrease by $1.4 million.

Interest and Other Income . Interest and other income totaled $11.0 million and $13.2 million in 2025 and 2024, respectively. During 2025 and 2024, we recognized interest income of $5.8 million and $12.6 million, respectively. Interest income decreased in 2025 as compared to 2024 due to decreases in our cash balances following our acquisition of Hyatt Regency San Antonio Riverwalk in April 2024, as well as decreased interest rates. In addition, during 2025, we recognized settlement proceeds of $3.9 million for certain construction-related claims at Oceans Edge Resort & Marina, net property insurance recoveries of $1.1 million related to 2023 fire damage at Hilton San Diego Bayfront and 2025 water damage at The Westin Washington, DC Downtown, and other miscellaneous income of $0.2 million. During 2024, we recognized $0.4 million in property insurance recoveries related to 2023 fire damage at Hilton San Diego Bayfront and wind-driven rain damage at Wailea Beach Resort and $0.1 million in other miscellaneous income.

Interest Expense . We incurred interest expense as follows (in thousands):

Interest expense on debt

Noncash interest on derivatives, net

Amortization of deferred financing costs

Capitalized interest

Total interest expense

Interest expense increased $2.8 million, or 5.7%, in 2025 as compared to 2024 as follows:

The increase in interest expense in 2025 as compared to 2024 was primarily due to a noncash change of $1.4 million in the fair market value of our derivatives. In addition, interest expense increased $0.8 million in 2025 as compared to 2024 due to increased amortization of deferred financing costs related to costs associated with the execution of the Amended Credit Agreement in September 2025, the extension of the maturity of Term Loan 3 in April 2025, and the issuance of Term Loan 4 in December 2024. Interest expense also increased in 2025 as compared to 2024 due to a $0.7 million increase in interest on our debt primarily due to higher average debt balances, partially offset by lower average interest rates on our term loans. Our debt balances increased due to the net effect of the Amended Credit Agreement, the $50.0 million in total draws on our credit facility in April 2025 and July 2025, and our draw of the $100.0 million available under Term Loan 4 in December 2024. These increases of our debt balances were partially offset by our December 2024 repayment of the $72.1 million loan secured by the JW Marriott New Orleans.

Our weighted average interest rate per annum, including our variable rate debt obligations and excluding capitalized interest, was approximately 5.0% and 5.6% at December 31, 2025 and 2024, respectively. Approximately 70.4% and 40.8% of our outstanding notes payable had fixed interest rates or had been swapped to fixed interest rates at December 31, 2025 and 2024, respectively.

(Loss) Gain on Sale of Assets, Net . (Loss) gain on sale of assets, net totaled a loss of $8.8 million and a net gain of $0.5 million in 2025 and 2024, respectively. In 2025, we recognized an $8.8 million loss on our sale of the Hilton New Orleans St. Charles. In 2024, we recognized an additional $0.5 million net gain related to a contingency resolution at a hotel sold in a prior year.

(Loss) Gain on Extinguishment of Debt . (Loss) gain on extinguishment of debt totaled a loss of $0.2 million and a gain of $0.1 million in 2025 and 2024, respectively. In 2025, we recorded a loss of $0.2 million related to the write-off of unamortized deferred financing costs in connection with the recast of our credit facilities. In 2024, we recorded a $0.1 million gain associated with reassessments of the remaining potential employee-related obligations held in escrow associated with our assignment of a hotel to the hotel’s mortgage holder in 2020.

Income Tax (Provision) Benefit, Net . We lease our hotels to the TRS Lessee and its subsidiaries, which are subject to federal and state income taxes. In addition, we and the Operating Partnership may also be subject to various state and local income taxes.

We recognized a net current income tax provision of $0.2 million in 2025 and a net current income tax benefit of $1.1 million in 2024, resulting from current state and federal income tax expenses, net of any refunds.

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Preferred Stock Dividends, Net of Gain on Repurchases . Preferred stock dividends, net of gain on repurchases were incurred as follows (in thousands):

Series G preferred stock

Series H preferred stock

Series I preferred stock

Includes net gains of $0.2 million and $0.1 million on the repurchases of the Series H preferred stock and the Series I preferred stock, respectively, repurchased at a discount to their carrying values, along with the related write-off of the original issuance costs previously included in additional paid in capital on our consolidated balance sheets.

The dividend rate on the Series G preferred stock increased to the greater of the rate equal to the Montage Healdsburg’s annual net operating income yield on our total investment in the resort or 3.0%, 4.5%, and 6.5% in January 2024, July 2024, and July 2025, respectively, resulting in annual dividend rates of 5.5% and 3.75% for 2025 and 2024, respectively. Beginning in the third quarter of 2026, the annual dividend rate will increase to the greater of 7.5% or the rate equal to the Montage Healdsburg’s annual net operating income yield on our total investment in the resort.

Non-GAAP Financial Measures . We use the following “non-GAAP financial measures” that we believe are useful to investors as key supplemental measures of our operating performance: EBITDA re ; Adjusted EBITDA re ; FFO attributable to common stockholders; and Adjusted FFO attributable to common stockholders. These measures should not be considered in isolation or as a substitute for measures of performance in accordance with accounting principles generally accepted in the United States (“GAAP”). In addition, our calculation of these measures may not be comparable to other companies that do not define such terms exactly the same as us. These non-GAAP measures are used in addition to and in conjunction with results presented in accordance with GAAP. They should not be considered as alternatives to net income (loss), cash flow from operations, or any other operating performance measure prescribed by GAAP. These non-GAAP financial measures reflect additional ways of viewing our operations that we believe, when viewed with our GAAP results and the reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. We strongly encourage investors to review our financial information in its entirety and not to rely on a single financial measure.

We present EBITDA re in accordance with guidelines established by the National Association of Real Estate Investment Trusts (“Nareit”), as defined in its September 2017 white paper “Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate.” We believe EBITDA re is a useful performance measure to help investors evaluate and compare the results of our operations from period to period in comparison to our peers. Nareit defines EBITDA re as net income (calculated in accordance with GAAP) plus interest expense, income tax expense, depreciation and amortization, gains or losses on the disposition of depreciated property (including gains or losses on change in control), impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in the value of depreciated property in the affiliate, and adjustments to reflect the entity’s share of EBITDA re of unconsolidated affiliates.

We make additional adjustments to EBITDA re when evaluating our performance because we believe that the exclusion of certain additional items described below provides useful information to investors regarding our operating performance, and that the presentation of Adjusted EBITDA re , when combined with the primary GAAP presentation of net income, is beneficial to an investor’s complete understanding of our operating performance. In addition, we use both EBITDA re and Adjusted EBITDA re as measures in determining the value of hotel acquisitions and dispositions.

We adjust EBITDA re for the following items, which may occur in any period, and refer to this measure as Adjusted EBITDA re :

Amortization of deferred stock compensation : we exclude the noncash expense incurred with the amortization of deferred stock compensation as this expense is based on historical stock prices at the date of grant to our corporate employees and does not reflect the underlying performance of our hotels.

Amortization of contract intangibles : we exclude the noncash amortization of any favorable or unfavorable contract intangibles recorded in conjunction with our hotel acquisitions. We exclude the noncash amortization of contract intangibles because it is based on historical cost accounting and is of lesser significance in evaluating our actual performance for the current period.

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Amortization of right-of-use assets and obligations : we exclude the amortization of our right-of-use assets and related lease obligations, as these expenses are based on historical cost accounting and do not reflect the actual rent amounts due to the respective lessors or the underlying performance of our hotels.

Undepreciated asset transactions : we exclude the effect of gains and losses on the disposition of undepreciated assets because we believe that including them in Adjusted EBITDA re is not consistent with reflecting the ongoing performance of our assets.

Gains or losses from debt transactions : we exclude the effect of finance charges and premiums associated with the extinguishment of debt, including the acceleration of deferred financing costs from the original issuance of the debt being redeemed or retired because, like interest expense, their removal helps investors evaluate and compare the results of our operations from period to period by removing the impact of our capital structure.

Cumulative effect of a change in accounting principle : from time to time, the Financial Accounting Standards Board (“FASB”) promulgates new accounting standards that require the consolidated statement of operations to reflect the cumulative effect of a change in accounting principle. We exclude these one-time adjustments, which include the accounting impact from prior periods, because they do not reflect our actual performance for that period.

Other adjustments : we exclude other adjustments that we believe are outside the ordinary course of business because we do not believe these costs reflect our actual performance for the period and/or the ongoing operations of our hotels. Such items may include: lawsuit settlement costs; the write-off of development costs associated with abandoned projects; property-level restructuring, severance, and management transition costs; pre-opening costs associated with extensive renovation projects; debt resolution costs; lease terminations; property insurance restoration proceeds or uninsured losses; and other nonrecurring identified adjustments.

The following table reconciles our net income to EBITDA re and Adjusted EBITDA re for the years ended December 31, 2025 and 2024 (in thousands):

Net income

Depreciation and amortization

Interest expense

Income tax provision (benefit), net

Loss (gain) on sale of assets, net

EBITDA re

Amortization of deferred stock compensation

Amortization of right-of-use assets and obligations

Loss (gain) on extinguishment of debt

Gain on insurance recoveries, net

Pre-opening costs

Property-level legal settlement costs

Management transition costs

Adjustments to EBITDA re , net

Adjusted EBITDA re

Adjusted EBITDA re increased $6.9 million, or 3.0%, in 2025 as compared to 2024 primarily due to the following:

Adjusted EBITDA re at the Comparable Portfolio increased $7.5 million, or 3.5%, in 2025 as compared to 2024, primarily due to the changes in the Comparable Portfolio’s revenues and expenses included in the discussion above regarding the operating results for 2025.

Adjusted EBITDA re at the Two Renovation Hotels increased $6.0 million, or 299.4%, in 2025 as compared to 2024 primarily due to the changes in the Two Renovation Hotels’ revenues and expenses included in the discussion above regarding the operating results for 2025.

The Hyatt Regency San Antonio Riverwalk recorded Adjusted EBITDA re of $16.7 million and $14.8 million in 2025 and 2024, respectively.

The Hilton New Orleans St. Charles recorded Adjusted EBITDA re of $3.0 million and $4.6 million in 2025 and 2024, respectively.

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Corporate-level Adjusted EBITDA re decreased $6.9 million in 2025 as compared to 2024 primarily due to a $6.9 million decrease in interest income and a $2.5 million increase in corporate overhead expense, partially offset by a $3.9 million settlement related to certain construction-related claims at Oceans Edge Resort & Marina.

We believe that the presentation of FFO attributable to common stockholders provides useful information to investors regarding our operating performance because it is a measure of our operations without regard to specified noncash items such as real estate depreciation and amortization, any real estate impairment loss and any gain or loss on sale of real estate assets, all of which are based on historical cost accounting and may be of lesser significance in evaluating our current performance. Our presentation of FFO attributable to common stockholders conforms to the Nareit definition of “FFO applicable to common shares.” Our presentation may not be comparable to FFO reported by other REITs that do not define the terms in accordance with the current Nareit definition, or that interpret the current Nareit definition differently than we do.

We also present Adjusted FFO attributable to common stockholders when evaluating our operating performance because we believe that the exclusion of certain additional items described below provides useful supplemental information to investors regarding our ongoing operating performance and may facilitate comparisons of operating performance between periods and our peer companies.

We adjust FFO attributable to common stockholders for the following items, which may occur in any period, and refer to this measure as Adjusted FFO attributable to common stockholders:

Amortization of deferred stock compensation : we exclude the noncash expense incurred with the amortization of deferred stock compensation as this expense is based on historical stock prices at the date of grant to our corporate employees and does not reflect the underlying performance of our hotels.

Amortization of contract intangibles : we exclude the noncash amortization of any favorable or unfavorable contract intangibles recorded in conjunction with our hotel acquisitions. We exclude the noncash amortization of contract intangibles because it is based on historical cost accounting and is of lesser significance in evaluating our actual performance for the current period.

Real estate amortization of right-of-use assets and obligations : we exclude the amortization of our real estate right-of-use assets and related lease obligations (with the exception of our corporate operating lease) as these expenses are based on historical cost accounting and do not reflect the actual rent amounts due to the respective lessors or the underlying performance of our hotels.

Gains or losses from debt transactions : we exclude the effect of finance charges and premiums associated with the extinguishment of debt, including the acceleration of deferred financing costs from the original issuance of the debt being redeemed or retired, as well as the noncash interest on our derivatives. We believe that these items are not reflective of our ongoing finance costs.

Cumulative effect of a change in accounting principle : from time to time, the FASB promulgates new accounting standards that require the consolidated statement of operations to reflect the cumulative effect of a change in accounting principle. We exclude these one-time adjustments, which include the accounting impact from prior periods, because they do not reflect our actual performance for that period.

Other adjustments : we exclude other adjustments that we believe are outside the ordinary course of business because we do not believe these costs reflect our actual performance for that period and/or the ongoing operations of our hotels. Such items may include: lawsuit settlement costs; the write-off of development costs associated with abandoned projects; changes to deferred tax assets, liabilities or valuation allowances; property-level restructuring, severance, and management transition costs; pre-opening costs associated with extensive renovation projects; debt resolution costs; gains or losses on the redemptions or repurchases of preferred stock; lease terminations; property insurance restoration proceeds or uninsured losses; income tax benefits or provisions associated with the application of net operating loss carryforwards, uncertain tax positions or with the sale of assets; and other nonrecurring identified adjustments.

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The following table reconciles our net income to FFO attributable to common stockholders and Adjusted FFO attributable to common stockholders for the years ended December 31, 2025 and 2024 (in thousands):

Net income

Preferred stock dividends, net of gain on repurchases

Real estate depreciation and amortization

Loss (gain) on sale of assets, net

FFO attributable to common stockholders

Amortization of deferred stock compensation

Real estate amortization of right-of-use assets and obligations

Amortization of contract intangibles, net

Noncash interest on derivatives, net

Loss (gain) on extinguishment of debt

Gain on insurance recoveries, net

Pre-opening costs

Property-level legal settlement costs

Management transition costs

Gain on preferred stock repurchases, net

Prior year income tax benefit, net

Adjustments to FFO attributable to common stockholders, net

Adjusted FFO attributable to common stockholders

Adjusted FFO attributable to common stockholders increased $4.8 million, or 3.0%, in 2025 as compared to 2024 primarily due to the same reasons noted in the discussion above regarding Adjusted EBITDA re .

Liquidity and Capital Resources

During the periods presented, our sources of cash included our operating activities and working capital, as well as proceeds from a hotel disposition, our credit facility and term loans, key money, and property insurance. Our primary uses of cash were for capital expenditures for hotels and other assets, the acquisition of a hotel and land adjacent to one of our hotels, operating expenses, repurchases of our preferred and common stock, repayments of our credit facility and notes payable, payments of deferred financing costs, and dividends and distributions on our preferred and common stock. We cannot be certain that the sources of funds we have relied on in the past will be available in the future.

Operating activities. Our net cash provided by or used in operating activities fluctuates primarily as a result of changes in the net cash generated by our hotels, offset by the cash paid for corporate expenses. Our net cash provided by or used in operating activities may also be affected by changes in our portfolio resulting from hotel acquisitions, dispositions or renovations. Net cash provided by operating activities was $181.8 million in 2025 as compared to $170.4 million in 2024. The net increase in cash provided by operating activities in 2025 as compared to 2024 was primarily due to additional operating cash provided by the increase in travel demand benefiting our hotels, the acquisition of the Hyatt Regency San Antonio Riverwalk, and the post-renovation ramp-ups of Marriott Long Beach Downtown and Andaz Miami Beach. These increases were partially offset by decreases in interest income resulting from our lower cash balances and lower interest rates, along with increases in corporate-level expenses.

Investing activities . Our net cash provided by or used in investing activities fluctuates primarily as a result of acquisitions, dispositions, and renovations of hotels and other assets. Net cash used in investing activities in 2025 and 2024 was as follows (in thousands):

Proceeds from sales of assets

Acquisitions of hotel properties and other assets

Acquisition-related key money proceeds

Proceeds from property insurance

Renovations and additions to hotel properties and other assets

Net cash used in investing activities

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In 2025, we invested $103.0 million for renovations and additions to our portfolio and other assets, and we purchased land adjacent to the Oceans Edge Resort & Marina for $1.3 million. These cash outflows were partially offset by $46.3 million of proceeds received from the sale of the Hilton New Orleans St. Charles, $8.0 million in key money received from the manager of two of our hotels pursuant to the hotels’ management agreements, and $1.2 million in property insurance proceeds received related to claims at Hyatt Regency San Francisco, The Westin Washington, DC Downtown, and Hilton San Diego Bayfront.

In 2024, we paid $229.3 million to acquire the Hyatt Regency San Antonio Riverwalk, including closing costs and prorations, and we invested $157.4 million for renovations and additions to our portfolio and other assets. These cash outflows were slightly offset by $0.4 million in property insurance proceeds received related to claims at the Hilton San Diego Bayfront and at Wailea Beach Resort.

Financing activities . Our net cash provided by or used in financing activities fluctuates primarily as a result of our dividends and distributions paid, the issuance and repurchase of common and restricted stock, the issuance and repayment of debt, including draws on our credit facility and term loans, and the issuance, repurchase, and redemption of other forms of capital, including preferred equity. Net cash used in financing activities in 2025 and 2024 was as follows (in thousands):

Repurchases of common stock

Repurchases of common stock for employee tax obligations

Repurchases of preferred stock

Proceeds from credit facility

Payments on credit facility

Proceeds from notes payable

Payments on notes payable

Payments of deferred financing costs

Dividends and distributions paid

Net cash used in financing activities

During 2025, we paid $102.6 million to repurchase 11,589,722 shares of our common stock and $1.3 million to repurchase 54,097 shares and 9,027 shares of our Series H preferred stock and Series I preferred stock, respectively. We also paid $4.3 million to repurchase common stock to satisfy the tax obligations in connection with the vesting of restricted common stock issued to employees, and $86.4 million in dividends and distributions to our preferred and common stockholders. In September 2025, we entered into the Amended Credit Agreement and received $149.6 million from additional borrowing on our term loans and repaid $64.6 million to lenders as a result of modifications to their commitment levels under the Amended Credit Agreement. We used a portion of the proceeds received to repay the $50.0 million we drew down on our revolving credit facility in April 2025 and July 2025. During 2025, we also paid $18.0 million in deferred financing costs related to the extension of the maturity of our previous Term Loan 3 and the execution of the Amended Credit Agreement.

During 2024, we paid $27.2 million to repurchase 2,764,837 shares of our common stock, $4.2 million to repurchase common stock to satisfy the tax obligations in connection with the vesting of restricted common stock issued to employees, $74.1 million in principal payments on our loan secured by the JW Marriott New Orleans, including $2.0 million in scheduled principal payments and $72.1 million to repay the loan, and $91.0 million in dividends and distributions to our preferred and common stockholders. We also entered into Term Loan 4, receiving $100.0 million in proceeds and paying $1.1 million in related deferred financing costs. We utilized the proceeds received from Term Loan 4 to repay the loan secured by the JW Marriott New Orleans.

Future. We expect our primary sources of cash will continue to be our operating activities, working capital, borrowing under our credit facility, additional issuances of debt, dispositions of hotel properties, and proceeds from offerings of common and preferred stock. However, there can be no assurance that our future asset sales, debt issuances or equity offerings will be successfully completed. As a result of potential increases in inflation rates and interest rates, as well as possible recessionary periods in the future, certain sources of capital may not be as readily available to us as they have in the past or may only be available at higher costs.

We expect our primary uses of cash to be for operating expenses, capital investments in our hotels, repayment of principal on our debt and credit facility, interest expense, repurchases of our common and preferred stock, distributions on our common stock, dividends on our preferred stock, and acquisitions of hotels or interests in hotels.

While inflation began to decrease in 2024 and remained relatively stable through 2025, the uncertainty surrounding certain international economic and political relationships, including political disputes and unfavorable perceptions of travel to the U.S., volatility in transportation fuel costs, increases in air and ground travel costs, decreases in airline capacity, government shutdowns,

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and the imposition of tariffs affecting commodity costs, has had a negative effect on our operations. Prior to the tariffs announced in 2025, we experienced increases in wages, employee-related benefits, food costs, commodity costs, including those used to renovate or reposition our hotels, property taxes, liability insurance, utilities, and borrowing costs. The imposition of tariffs could exacerbate existing cost pressures and create additional inflationary pressures that could further impact our results of operations. The ability of our hotel operators to adjust rates has historically mitigated the impact of increased operating costs on our financial position and results of operations.

Cash Balance . As of December 31, 2025, our unrestricted cash balance was $109.2 million. We believe that our current unrestricted cash balance and our ability to draw the $500.0 million capacity available for borrowing under the unsecured revolving credit facility will enable us to successfully manage our Company.

Debt. As of December 31, 2025, we had $930.0 million of debt, $185.7 million of cash and cash equivalents, including restricted cash, and total assets of $3.0 billion. We believe that by maintaining appropriate debt levels, staggering maturity dates, and maintaining a highly flexible structure, we will have lower capital costs than more highly leveraged companies, or companies with limited flexibility due to restrictive covenants.

In January 2025, we entered into an interest rate swap on Term Loan 4, which was effective January 31, 2025, expires November 7, 2026, and fixes the SOFR rate at 4.02%.

In April 2025, we exercised our option to extend the maturity date of the previous Term Loan 3 from May 2025 to May 2026. In addition, in April 2025, we drew down $27.0 million on our credit facility and used the proceeds for general corporate purposes.

In July 2025, we drew down $23.0 million on our credit facility and used the proceeds for general corporate purposes.

In September 2025, we entered into the Amended Credit Agreement, which expanded our unsecured debt borrowing capacity and extended the maturity of our term loans. The Amended Credit Agreement continues to provide for a $500.0 million revolving credit facility and increases the aggregate amount of our term loan facilities from $675.0 million (on four existing term loans) to $850.0 million (on three new term loans). The following includes the details of the Amended Credit Agreement:

The maturity of the revolving credit facility was extended from July 2026, with two six-month options to extend, to September 2029, with two six-month options to extend;

The new term loan facilities include a $275.0 million term loan, of which $185.0 million was funded in September 2025 and the remaining $90.0 million was available as a one-time delayed draw at any time through February 2026 (“New Term Loan 1”), a $275.0 million term loan funded in September 2025 (“New Term Loan 2”), and a $300.0 million term loan funded in September 2025 ("New Term Loan 3”) (together the “New Term Loans”);

We utilized the $760.0 million in proceeds received from the New Term Loans to consolidate our previous four term loans into the three New Term Loans and to repay the $50.0 million outstanding on our revolving credit facility;

The revolving credit facility and the New Term Loans bear interest pursuant to a leverage-based pricing grid ranging from 1.40% to 2.25% and 1.35% to 2.20%, respectively, over the applicable term SOFR;

New Term Loan 1 has an initial maturity of January 2029, with two twelve-month extension options (subject to customary fees), which would result in an extended maturity of January 2031;

New Term Loan 2 has an initial maturity of January 2030, with one twelve-month extension option (subject to customary fees), which would result in an extended maturity of January 2031;

New Term Loan 3 has a maturity of January 2031, with no available extension options; and

The New Term Loans are available to be prepaid at any time with no prepayment penalty.

In August 2025, we entered into an interest rate swap with a notional amount of $65.0 million and an effective date of January 10, 2026, which we will use to fix a portion of the interest rate on the New Term Loan 1 delayed draw. The swap agreement expires January 10, 2028 and fixes the SOFR rate at 3.206%. In addition, in September 2025, we entered into an interest rate swap with a notional amount of $210.0 million and an effective date of September 9, 2025, which fixes the SOFR rate at 3.226% on the current $185.0 million balance of New Term Loan 1 and $25.0 million of New Term Loan 3. The swap agreement expires on September 9, 2028.

In January 2026, we drew down the $90.0 million available under the New Term Loan 1 delayed draw and used the proceeds to repay the $65.0 million Series A Senior Notes at their scheduled maturity in January 2026 and for general corporate purposes.

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As of December 31, 2025, 70.4% of our outstanding debt had fixed interest rates or had been swapped to fixed interest rates, including our unsecured corporate-level New Term Loan 1, New Term Loan 2, and $25.0 million of New Term Loan 3, which totaled $485.0 million, and our two unsecured corporate-level senior notes, which total $170.0 million.

Our floating rate debt as of December 31, 2025 included $275.0 million of our unsecured corporate-level New Term Loan 3.

We may in the future seek to obtain mortgages on one or more of our 14 unencumbered hotels (subject to certain stipulations under our unsecured term loans and senior notes), all of which were held by subsidiaries whose interests were pledged to our credit facilities as of December 31, 2025. Should we obtain secured financing on any or all of our unencumbered hotels, the amount of capital available through our credit facilities or future unsecured borrowings may be reduced.

Contractual Obligations

The following table summarizes our payment obligations and commitments (in thousands):

Payment due by period

Less Than

More than

Total

1 year

years

years

5 years

Debt (1)

Interest obligations on debt (1) (2)

Operating lease obligations, including imputed interest (3)

Construction commitments

Total

Debt and interest obligations on debt assume we will exercise all available extension options on our revolving credit facility and New Term Loans, upon payment of applicable fees and the satisfaction of certain customary conditions. Debt and interest obligations on debt include the $90.0 million we received in January 2026 from the New Term Loan 1 delayed draw and the $65.0 million repayment of the Series A Senior Notes.

Interest is calculated based on the January 2026 loan balances and variable rates, as applicable, and includes the effect of our interest rate derivatives.

Operating lease obligations include the lease on our current corporate headquarters and the sublease on our former corporate headquarters. In addition, operating lease obligations include a ground lease that expires in 2071 and requires a reassessment of rent payments due after 2025, agreed upon by both us and the lessor. The reassessment was not finalized as of December 31, 2025; therefore, no amounts are included in the above table for this ground lease.

Capital Expenditures and Reserve Funds

We believe we maintain each of our hotels in good repair and condition and in general conformity with applicable franchise and management agreements, ground lease, laws, and regulations. Our capital expenditures primarily relate to the ongoing maintenance of our hotels and are budgeted in the reserve accounts described in the following paragraph. We also incur capital expenditures for cyclical renovations, hotel repositionings, and development. We invested $103.0 million in our portfolio and other assets during 2025 and $157.4 million in 2024. As of December 31, 2025, we have contractual construction commitments totaling $38.9 million for ongoing renovations. If we renovate additional hotels in the future, our capital expenditures will likely increase.

With respect to our hotels that are operated under management or franchise agreements with certain hotel brands, we are obligated to maintain an FF&E reserve account for future planned and emergency-related capital expenditures at these hotels. The amount funded into each of these reserve accounts is determined pursuant to the management and franchise agreements for each of the respective hotels, ranging between 3.0% and 5.5% of the respective hotel’s applicable annual revenue. As of December 31, 2025, our balance sheet includes restricted cash of $76.4 million, which was held in FF&E reserve accounts for future capital expenditures at the majority of our hotels. According to certain management agreements, reserve funds are to be held by the managers in restricted cash accounts, and we are not required to spend the entire amount in such reserve accounts each year.

Inflation

Inflation affects our expenses, including, without limitation, by increasing such costs as wages, employee-related benefits, food costs, commodity costs, including those used to renovate or reposition our hotels, property taxes, property and liability insurance, utilities, and borrowing costs. We rely on our hotel operators to adjust room rates and pricing for hotel services to reflect the effects of

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inflation. However, previously contracted rates, competitive pressures or other factors may limit the ability of our operators to respond to inflation. As a result, our expenses may increase at higher rates than our revenue and our expenses may not decrease if revenue decreases.

Seasonality and Volatility

As is typical of the lodging industry, we experience seasonality in our business. Demand at certain of our hotels is affected by seasonal business patterns that can cause quarterly fluctuations in our revenues.

Quarterly revenue also may be adversely affected by renovations and repositionings, our managers’ effectiveness in generating business and by events beyond our control, such as economic and business conditions, including a U.S. recession or increased inflation, trade conflicts and tariffs, changes impacting global travel, regional or global economic slowdowns, any flu or disease-related outbreak that impacts travel or the ability to travel, weather patterns, the adverse effects of climate change, the threat of terrorism, terrorist events, civil unrest, government shutdowns, events that reduce the capacity or availability of air travel, increased competition from other hotels in our markets, new hotel supply or alternative lodging options, and unexpected changes in commercial or leisure travel.

Critical Accounting Estimates

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, and expenses and related disclosure of contingent assets and liabilities.

We evaluate our estimates on an ongoing basis. We base our estimates on historical experience, information that is currently available to us, and on various other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect the most significant judgments and estimates used in the preparation of our consolidated financial statements.

Impairment of investments in hotel properties . Impairment losses are recorded on investments in hotel properties to be held and used by us whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Factors we consider when assessing whether impairment indicators exist include, but are not limited to, hotel disposition strategy and hold period, a significant decline in operating results not related to renovations or repositionings, significant changes in the manner in which the Company uses the asset, physical damage to the property due to unforeseen events such as natural disasters, and other market and economic conditions.

Recoverability of assets that will continue to be used is measured by comparing the carrying amount of the asset to the related total future undiscounted net cash flows. If an asset’s carrying value is not recoverable through those cash flows, the asset is considered to be impaired. The impairment is measured by the difference between the asset’s carrying amount and its fair value. We perform a fair value assessment using valuation techniques such as discounted cash flows and comparable sales transactions in the market to estimate the fair value of the hotel and, if appropriate and available, current estimated net sales proceeds from pending offers. The recoverability assessment includes subjective assumptions such as determining the discount rate, terminal capitalization rate, the estimated growth of revenues and expenses, revenue per available room and margins, specific market and economic conditions, the estimated holding period, as well as the probability assigned to each future cash flow scenario.

Income taxes . To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we currently distribute at least 90% of our REIT taxable income (determined without regard to the deduction for dividends paid and excluding net capital gains) to our stockholders. As a REIT, we generally will not be subject to federal corporate income tax on that portion of our taxable income that is currently distributed to stockholders. We are subject to certain state and local taxes on our income and property, and to federal income and excise taxes on our undistributed taxable income. In addition, our wholly owned TRS, which leases our hotels from the Operating Partnership, is subject to federal and state income taxes. We account for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases, and for net operating loss, capital loss and tax credit carryforwards. The deferred tax assets and liabilities are measured using the enacted income tax rates in effect for the year in which those temporary differences are expected to be realized or settled. The effect on the deferred tax assets and liabilities from a change in tax rates is recognized in earnings in the period when the new rate is enacted. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of all available evidence,

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including the future reversals of existing taxable temporary differences, future projected taxable income and tax planning strategies. Valuation allowances are provided if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

We review any uncertain tax positions and, if necessary, we will record the expected future tax consequences of uncertain tax positions in the consolidated financial statements. Tax positions not deemed to meet the “more-likely-than-not” threshold are recorded as a tax benefit or expense in the current year. We are required to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions, which includes federal and certain states.

New Accounting Standards and Accounting Changes

See Note 2 to the accompanying consolidated financial statements for additional information related to recently issued accounting pronouncements.

Item 7 A.

Quantitative and Qualitative Disclosures About Market Risk

To the extent that we incur debt with variable interest rates, our future income, cash flows and fair values relevant to financial instruments are dependent upon prevailing market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates. We use interest rate derivatives to manage our exposure to the interest rate risks related to our floating rate debt. We have no derivative financial instruments held for trading purposes.

As of December 31, 2025, 70.4% of our debt obligations were fixed in nature or were subject to interest rate swap derivatives, which mitigates the effect of changes in interest rates on our cash interest payments. If the market rate of interest on our variable rate debt increases or decreases by 50 basis points, interest expense on an annualized basis would increase or decrease, respectively, by approximately $1.4 million based on the variable rates at December 31, 2025.