INN Summit Hotel Properties, Inc. - 10-K

Item 1A.    Risk Factors.

Summary of Risk Factors

Risks Related to Our Business

• Risks related to achieving revenue and net income growth

• Risks related to financing, including the risk of leverage and the corresponding risk of default on our existing indebtedness and potential inability to refinance or extend the maturities of our existing indebtedness

• Risks related to acquisitions

• Risks of taxable gains as a result of lodging property dispositions

• Risks related to our third-party property management companies

• Risks related to lodging property management and franchise agreements

• Risks related to increased interest rates or continued high rates of interest, and our ability to hedge our interest rate exposure

• Risks related to retaining key personnel

• Risks related to organized labor

• Risks related to the effect on our business or guest confidence from a data breach or significant disruption of property operator information technology networks as a result of cyber-attacks that are greater than insurance coverages or indemnities from service providers

• Risks related to uninsured and underinsured losses

• Risks related to the management of our joint ventures

• Risks related to inflation

• Risks related to credit financing that we may provide to borrowers

• Risks related to global, national, regional and local economic and geopolitical conditions and events, including wars or potential hostilities, such as terrorist attacks that may affect travel

Risks Related to the Lodging Industry

• Risks related to infectious disease outbreaks or pandemics

• Risks related to adverse changes in economic conditions

• Risks related to competition from other lodging properties and alternative accommodations

• Risks inherent to the ownership of lodging properties and the markets in which we operate

• Risks related to lodging property development and other capital expenditures

• Risks related to changes in consumer trends and preferences

Risks Related to the Real Estate Industry and Real Estate-Related Investments

• Risks related to the illiquidity of real estate investments

• Risks related to compliance with the laws, regulations and covenants that apply to our lodging properties

• Risks related to right-of-use assets on which certain of our lodging properties are located

• Risks related to adverse changes in income and property tax rates or amendments to tax regimes that increase our state and local tax liabilities

Risks Related to Our Organization and Structure

• Risks related to our fiduciary duties as the general partner of our Operating Partnership

• Risks related to the provisions of our charter

• Risks related to the provisions of Maryland law

• Risks related to the limited rights of our stockholders

• Risks related to actions taken by our Board of Directors

• Risks related to being a holding company with no direct operations

• Risks related to maintaining an effective system of internal controls

Risks Related to Ownership of Our Securities

• Risks related to the continued listing of our securities on a nationally-recognized exchange

• Risks related to expected distributions

• Risks related to stock price volatility

• Risks related to the issuance of debt or equity securities

• Risks related to implementing our share repurchase program

Risks Related to Our Status as a REIT

• Risks related to compliance with REIT requirements

• Risks related to our TRS structure, including increased tax liabilities and operating costs

• Risks that transactions with our TRSs are not conducted on arm's-length terms

• Risks that the management companies of our lodging properties may not qualify as “eligible independent contractors,” or our lodging properties may not be considered “qualified lodging facilities”

• Risks that the 100% prohibited transactions tax may limit our ability to dispose of our properties

• Risks related to adverse legislative or regulatory tax changes

• Risks related to our REIT distribution requirements

• Risks that our Operating Partnership could be treated as a publicly traded partnership taxable as a corporation for federal income tax purposes

• Risks that stockholders may be restricted from acquiring or transferring certain amounts of our stock

• Risks that the IRS could determine that certain payments we have received in the nature of liquidated damages may not be ignored for purposes of the gross income tests applicable to REITs

Risks Related to Corporate Responsibility

• Risks related to our corporate responsibility matters

• Risks related to environmental uncertainties and natural disasters

The following risk factors address the material risks concerning our business. If any of the risks discussed in this report were to occur, our business, prospects, consolidated financial condition, consolidated results of operation and our ability to service our debt and make distributions to our stockholders could be materially and adversely affected and the market price per share of our stock could decline significantly. Some statements in this report, including statements in the following risk factors, constitute forward-looking statements. Please refer to the section entitled “Cautionary Statement About Forward-Looking Statements.” The discussion of the potential effect of the following risk factors on our financial results relates to our consolidated financial position, consolidated results of operations and cash flows.

Risks Related to Our Business

Our business strategy, future results of operations and growth prospects are dependent on achieving revenue and net income growth from anticipated increases in demand for lodging guestrooms and general economic conditions.

Our business strategy includes achieving continued revenue and cash flow growth from anticipated improvement in demand for lodging guestrooms driven by long-term economic growth. We, however, cannot provide any assurances that demand for lodging guestrooms will increase from current levels or continue to exceed the growth of new supply, or the time or extent of any demand growth that we do experience. If demand does not continue to increase as the economy grows, or if there is a slowdown in the general economy or a recession resulting in weakening demand, our operating results and growth prospects could be adversely affected. As a result, any slowdown in economic growth or an economic downturn could adversely affect our future results of operations and our growth prospects.

Our expenses may not decrease if our revenue decreases.

Many of the expenses associated with owning and operating lodging properties, such as debt service payments, property taxes, insurance, utilities, and certain employee compensation costs are relatively fixed. They do not necessarily decrease directly with a reduction in revenue at the lodging properties and may be subject to increases that are not related to the performance of our lodging properties or the increase in the rate of inflation. Also, as of December 31, 2025, six of our lodging properties are subject to third-party ground leases which generally require periodic increases in rent payments. Our ability to pay these rents could be adversely affected if our revenues for these lodging properties do not increase at the same or a greater rate than the increases in rental payments under the ground leases.

Additionally, certain costs, such as wages, benefits and insurance, may exceed the rate of inflation in any given period. In the event of a significant decrease in demand, the managers of our lodging properties may not be able to reduce the size of the property work forces in order to decrease compensation costs. Our managers also may be unable to offset any fixed or increased expenses with higher room rates. Any of our efforts to reduce operating costs also could adversely affect the future growth of our business and the value of our lodging properties.

Changes in federal or state regulations or policies may have a material adverse effect on labor markets and our business.

Changes in federal or state regulations or policies can have a significant effect on labor markets and our business. These potential changes in regulations or policies could adversely affect our consolidated financial position, results of operations, or the market price of our stock.

Actions by organized labor could have a material adverse effect on our business.

We believe that unions are generally becoming increasingly active about organizing workers at lodging properties in certain locations and in some cases are demanding changes to work rules or conditions that are potentially more costly to owners. Union activity in markets in which we own lodging properties can increase our operating costs even if our hotels are not unionized. If the workers at our lodging properties unionize in the future or if there is unionization activity in a market in which we own a lodging property, we could incur a significant increase in administrative, labor and legal expenses, which could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.

We may be unable to complete acquisitions that would grow our business.

Our growth strategy includes the disciplined acquisition of lodging properties as opportunities arise, which may be subject to restrictions related to our debt covenants. Our ability to acquire lodging properties on satisfactory terms or at all is subject to the following significant risks:

• we may be unable to acquire desired lodging properties because of competition from other real estate investors, including other real estate operating companies, REITs and investment funds;

• we may be unable to obtain the necessary debt or equity financing to consummate an acquisition or, if obtainable, financing may not be on satisfactory terms; and

• agreements for the acquisition of lodging properties are typically subject to customary conditions to closing, including satisfactory completion of due diligence investigations and the receipt of franchisor and lender consents, and we may spend significant time and incur significant transaction costs on potential acquisitions that we do not consummate.

Additionally, if the United States experiences a significant economic downturn, we would have to manage our costs and capital investments accordingly, which could adversely affect our near-term growth. Our inability to complete lodging property acquisitions on favorable terms or at all, could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.

The sale of certain properties could result in significant tax liabilities unless we are able to offset taxable gains through tax planning strategies under the IRC including the use of net operating loss carryforwards ( “ NOLs ” ) or like-kind exchanges under Section 1031 of the IRC ( “ 1031 Exchanges ” ).

If we generate capital gains on property sales, we may be subject to significant tax liabilities unless we have NOLs available to offset these capital gains (at December 31, 2025, our TRSs had federal net operating losses of $52.5 million which are not subject to expiration and state net operating losses of $35.3 million, which expire beginning in 2028). These NOLs may be available to offset capital gains from future property sales. However, there can be no assurance that we will continue to have NOLs or NOLs in sufficient amount in the future to offset capital gains on property sales, if and when they occur. We may also be able to defer capital gains on property sales with 1031 Exchanges. The ability to complete 1031 Exchanges depends on many factors, including, among others, identifying and acquiring suitable replacement property within limited time periods, and the ownership structure of the properties being sold and acquired. Therefore, we are not always able to sell an asset as part of a like-kind exchange. When successful, a like-kind exchange enables us to defer the taxable gain on the asset sold. Moreover, 1031 Exchanges now only apply to real property and do not apply to any related personal property transferred with the real property. As a result, any appreciated personal property that is transferred in connection with 1031 Exchanges of real property will cause gain to be recognized, and such gain is generally treated as non-qualifying income for the REIT 95% and 75% gross income tests. Any such non-qualifying income could have an adverse effect on our REIT status. Our inability to defer taxable gains from property sales using available tax planning strategies under the IRC could adversely affect our consolidated financial position, results of operations, and cash flows, or the market price of our stock.

We may fail to successfully integrate acquired lodging properties or achieve expected operating performance.

Our ability to successfully integrate newly acquired lodging properties or achieve expected operating performance is subject to the following risks:

• we may not possess the same level of familiarity with the dynamics and market conditions of any new markets that we may enter, which could result in overpaying for lodging properties in new markets or the lodging properties not achieving their maximum potential;

• market conditions may result in lower-than-expected occupancy and guestroom rates;

• we may acquire lodging properties without any recourse, or with only limited recourse, for liabilities, whether known or unknown, such as cleanup of environmental contamination, claims by tenants, vendors or other persons against the former owners of the lodging properties and claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the lodging properties;

• we may need to spend more than anticipated amounts to make necessary improvements or renovations to our newly acquired lodging properties;

• we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of lodging properties, into our existing operations; and

• the inability of our acquired lodging properties to meet our operating performance expectations could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.

We may assume liabilities in connection with the acquisition of lodging properties, including unknown liabilities.

We may assume existing liabilities in connection with the acquisition of lodging properties, some of which may be unknown or unquantifiable on the acquisition date. Unknown liabilities might include liabilities for cleanup or remediation of undisclosed environmental conditions, claims of lodging guests, vendors or other persons dealing with the seller of a particular lodging property, tax liabilities, employment-related issues and accrued but unpaid liabilities whether incurred in the ordinary course of business or otherwise. If the magnitude of such unknown liabilities is high, they could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.

We may not be able to cause our management companies to operate any of our lodging properties in a manner that is satisfactory to us, and termination of our management agreements may be costly and disruptive.

To qualify as a REIT, we cannot operate or manage our lodging properties. Accordingly, all of our lodging properties are leased to TRS Lessees of our TRSs. All of our lodging properties are operated pursuant to management agreements with independent management companies, each of which must qualify as an “eligible independent contractor” to operate our lodging properties. As a result, our consolidated financial position, results of operations and our ability to service debt and make distributions to stockholders are dependent on the ability of our management companies to operate our lodging properties successfully. Any failure of our management companies to provide quality services and amenities or maintain a quality brand name and reputation could have a negative effect on their ability to operate our lodging properties and could have a material adverse effect on our consolidated financial position, results of operations and cash flows.

Even if we believe a lodging property is being operated inefficiently or in a manner that does not result in satisfactory operating results, we will have limited ability to require the management company to change its method of operation. We generally attempt to resolve issues with our management companies through discussions and negotiations, but otherwise will only be able to seek redress if a management company violates the terms of the applicable management agreement, and then only to the extent of the remedies provided for under the terms of the management agreement. If we replace the management company of any of our lodging properties, we may be required to pay a substantial termination fee and we may experience significant disruptions at the affected lodging property.

Furthermore, we have certain indemnifications from our property managers that generally protect us from financial losses due to the gross negligence or willful misconduct of our property managers. However, the indemnifications may be insufficient, or the property manager may not have the financial wherewithal to support their indemnification obligation to us. As such, the indemnification may not provide us with sufficient protection against third-party claims resulting from the gross negligence or willful misconduct of our property managers in the operation of our lodging properties.

Our property managers or their affiliates manage, and in some cases own, have invested in, or provided credit support or operating guarantees to lodging properties that compete with our lodging properties, all of which may result in conflicts of interest. As a result, our managers may in the future make decisions regarding competing lodging facilities that are not or would not be in our best interest.

Certain of our lodging properties are managed by affiliates of the franchisors for such lodging properties. In these situations, the management agreement and the franchise agreement are typically combined into one document. Thus, the termination of the management agreement due to poor performance or breach of the management agreement by the management company could also terminate our franchise license. Thus, we may have very limited options to remedy poor management performance if we desire to retain the franchise license.

These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.

The management of a large number of lodging properties in our portfolio is currently concentrated with one property management company.

As of December 31, 2025, Aimbridge Hospitality or its affiliates (“Aimbridge”) managed 49 of our 95 lodging properties. Thus, a substantial portion of our revenues is generated by lodging properties managed by Aimbridge. This significant concentration of operational risk in one management company makes us more vulnerable economically than if our management was more diversified among several management companies. Any adverse developments in Aimbridge's business, financial strength or ability to operate our lodging properties efficiently and effectively could have a material adverse effect on our results of operations. We cannot provide assurance that Aimbridge will satisfy its obligations to us or effectively and efficiently operate our lodging properties. The failure or inability of Aimbridge to satisfy its obligations to us or effectively and efficiently operate our lodging properties could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.

Our lodging properties may be clustered geographically increasing business risks based on adverse market conditions.

Our lodging properties are primarily located in the top 50 MSAs and 91% are located within the top 100 MSAs. In certain regions, we have lodging properties that are concentrated geographically, which may increase business risks based on adverse market conditions. Adverse market developments in a particular region could adversely affect lodging demand and rates. Also, adverse market developments caused by increased capacity in a region in which we are located could adversely affect rates or demand for our lodging properties due to increased competition. These conditions could have a material adverse effect on our profitability and cash generation.

Restrictive covenants and other provisions in management and franchise agreements could preclude us from taking actions with respect to the sale, refinancing or rebranding of a lodging property that would otherwise be in our best interest.

Certain management agreements and substantially all franchise agreements generally contain restrictive covenants and other provisions that do not provide us with flexibility to sell, refinance or rebrand a lodging property without the consent of the manager or franchisor. For example, the terms of some of these agreements may restrict our ability to sell a lodging property unless the purchaser is not a competitor of the management company or franchisor, assumes the related agreement and meets specified other conditions. In addition, our franchise agreements restrict our ability to rebrand particular lodging properties without the consent of the franchisor, which could result in significant operational disruptions and litigation if we do not obtain the consent. We could be forced to pay consent or termination fees to property managers or franchisors under these agreements as a condition to changing management or franchise brands of our lodging properties, and these fees could deter us from taking actions that would otherwise be in our best interest or could cause us to incur substantial expense.

These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.

We are required to expend funds to maintain franchisor operating standards and we may experience a loss of a franchise license or a decline in the value of a franchise brand.

Our lodging properties operate under franchise agreements, and the maintenance of franchise licenses for our lodging properties is subject to our franchisors’ operating standards and other terms and conditions. We expect that franchisors will periodically inspect our lodging properties to ensure that we, our TRS Lessees and our property management companies maintain our franchisors’ standards. Failure by us, our TRS Lessees or our management companies to maintain these standards or other terms and conditions could result in a franchise license being terminated. If a franchise license terminates due to our failure to make required improvements or to otherwise comply with its terms, we could also be liable to the franchisor for a termination payment, which varies by franchisor and by lodging property. As a condition of our continued holding of a franchise license, a franchisor could also require us to make capital improvements to our lodging properties, even if we do not believe the improvements are necessary or desirable or would result in an acceptable return on our investment.

The loss of a franchise license could materially and adversely affect the operations or the underlying value of the lodging property because of the loss of associated name recognition, marketing support and centralized reservation systems provided by the franchisor. Because our lodging properties are concentrated with a limited number of franchise brands, a loss of all of the licenses for a particular franchise could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.

Negative publicity related to one of the franchise brands or the general decline of a brand also may adversely affect the underlying value of our lodging properties or result in a reduction in business.

We rely on external sources of capital to fund future capital needs, and if we encounter difficulty in obtaining such capital, we may not be able to make future acquisitions necessary to grow our business or meet maturing obligations.

To qualify as a REIT under the IRC, we are required, among other things, to distribute each year to our stockholders at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain. Because of this distribution requirement, we may not be able to fund, from cash retained from operations, all of our future capital needs, including capital needed to make investments and to satisfy or refinance maturing obligations.

We expect to continue to rely on external sources of capital, including debt, convertible debt and equity financing, and contributions from joint venture partners related to joint venture activities, to fund future capital needs. Part of our strategy involves the use of debt financing to supplement our equity capital which may include our revolving credit and term loan facilities, mortgage financing and other unsecured financing. Our ability to effectively implement and accomplish our business strategy will be affected by our ability to obtain and use additional leverage in sufficient amounts and on favorable terms. However, the capital environment is often characterized by extended periods of limited availability of both debt and equity financing, increasing financing costs, stringent credit terms and significant volatility. We may not be able to secure first mortgage financing or increase the availability under, extend the maturity of or refinance our revolving credit and term loan facilities. If we are unable to obtain the needed capital on satisfactory terms or at all, we may not be able to make the investments needed to expand our business, or to meet our obligations and commitments as they mature. Our access to capital will depend upon a number of factors over which we have little or no control, including general market conditions, the market’s perception of our current and potential future earnings and cash distributions and the market price of the shares of our common stock.

Additionally, certain factors may have an adverse effect on our ability to access certain capital sources, including our financial performance, degree of leverage, the value of our unencumbered lodging properties, borrowing restrictions imposed by lenders, volatility in the equity and debt capital markets and other market conditions. We may not be in a position to take advantage of attractive investment opportunities for growth if we are unable to access the capital markets on a timely basis or on favorable terms.

We have a significant amount of debt, and our organizational documents have no limitation on the amount of additional indebtedness that we may incur in the future.

We have a significant amount of debt. In the future, we may incur additional indebtedness to finance future lodging property acquisitions, capital improvements and development activities and other general corporate purposes. In addition, there are no restrictions in our charter or bylaws that limit the amount or percentage of indebtedness that we may incur or restrict the form in which our indebtedness will be incurred (including recourse or non-recourse debt or cross-collateralized debt).

A substantial level of indebtedness could have adverse consequences for our business, consolidated financial position and results of operations because it could, among other things:

• require us to dedicate a substantial portion of our cash flow from operations to make principal and interest payments on our indebtedness, thereby reducing our cash flow available to fund working capital, capital expenditures and other general corporate purposes, including to pay dividends on our common stock and our preferred stock as currently contemplated or necessary to satisfy the requirements for qualification as a REIT;

• increase our vulnerability to general adverse economic and industry conditions and limit our flexibility in planning for, or reacting to, changes in our business and our industry;

• limit our ability to borrow additional funds or refinance indebtedness on favorable terms or at all to expand our business or ease liquidity constraints; and

• place us at a competitive disadvantage relative to competitors that have less indebtedness.

Generally, our mortgage debt carries maturity dates or call dates such that the loans become due prior to their full amortization. It may be difficult to refinance or extend the maturity of such loans on terms acceptable to us, or at all. We believe that we will be able to refinance or extend the maturity of these loans or will have the capacity to repay them, if necessary, using draws under our 2023 Senior Credit Facility. However, there can be no assurance that our 2023 Senior Credit Facility will be available to repay such maturing debt as draws under our 2023 Senior Credit Facility are subject to certain use restrictions and limitations based upon our unencumbered assets and certain financial covenants.

These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.

The agreements governing our indebtedness place restrictions on us and our subsidiaries, reducing operational flexibility and creating default risks.

The agreements governing our indebtedness contain covenants that place restrictions on us and our subsidiaries. These covenants may restrict, among other activities, our and our subsidiaries’ ability to:

• merge, consolidate or transfer all or substantially all of our or our subsidiaries’ assets;

• sell, transfer, pledge or encumber our stock or the ownership interests of our subsidiaries;

• incur additional debt or place mortgages on our unencumbered hotels;

• make certain investments in lodging properties or other assets;

• enter into, terminate or modify leases for our lodging properties and property management and franchise agreements;

• make certain expenditures, including capital expenditures;

• undertake construction of certain development assets if aggregate budgeted costs for such assets exceed a specified percentage of total asset value;

• pay dividends on or repurchase our capital stock; and

• enter into certain transactions with affiliates.

These covenants could impair our ability to grow our business, take advantage of attractive business opportunities or successfully compete. Our ability to comply with financial and other covenants may be affected by events beyond our control, including prevailing economic, financial and industry conditions. A breach of any of these covenants or covenants under any other agreements governing our indebtedness could result in an event of default. Cross-default provisions in our debt agreements could cause an event of default under one debt agreement to trigger an event of default under our other debt agreements. Upon the occurrence of an event of default under any of our debt agreements, the lenders could exercise their remedies available under the terms of the loan agreements, which could include accelerating outstanding debt to be immediately due and payable. If we were unable to repay or refinance the accelerated debt, the lenders could proceed against any assets pledged to secure that debt, including foreclosing on equity pledges or foreclosing on or requiring the sale of our lodging properties, and the proceeds from the sale of these assets may not be sufficient to repay such debt in full.

These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.

Secured debt obligations expose us to the possibility of foreclosure, which could result in the loss of our investment in any lodging property subject to mortgage debt or equity pledges.

A portion of our long-term debt existing as of December 31, 2025 is secured by mortgages on our lodging properties. Incurring mortgages, equity pledges and other secured debt obligations increases our risk of property losses because defaults on secured indebtedness may result in foreclosure actions initiated by lenders and ultimately our loss of the lodging property securing such loans or the entities whose equity is pledged to secure such loans, which would include a loss of all of such entity's assets. For tax purposes, a foreclosure of any of our lodging properties would be treated as a sale of the lodging property for a purchase price equal to the outstanding balance of the debt secured by the mortgage. If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the lodging property, we would recognize taxable income on foreclosure, but would not receive any cash proceeds, which could hinder our ability to meet the REIT distribution requirements imposed by the IRC. We may assume or incur new mortgage or other secured indebtedness on the lodging properties and entities in our portfolio or lodging properties and entities that we acquire in the future. Any default under any one of our secured debt obligations may increase the risk of our default on our other indebtedness.

These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.

An increase in interest rates would increase our interest costs on our variable rate debt and continued high rates of interest on our variable rate debt could have broader effects on the cost of capital for real estate companies and real estate asset values.

With respect to our existing and future variable-rate debt, an increase in interest rates would increase our interest payments and reduce our cash flow available for other general corporate purposes, including funding of working capital, capital improvements to our lodging properties, acquisitions of additional lodging properties, or dividends, among other things. In addition, rising interest rates could limit our ability to refinance existing debt when it matures and increase interest costs on any debt that is refinanced. Further, an increase in interest rates could increase the cost of capital for real estate assets which, in turn, could have a negative effect on real estate asset values generally, and our lodging properties specifically. Continued high rates of interest on our variable debt could also result in an elevated cost of capital for an extended period which, in turn, could have a negative effect on real estate asset values generally, and our lodging properties specifically.

See “Part II — Item 7A . — Quantitative and Qualitative Disclosures about Market Risk .”

These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.

We hedge our interest rate exposure to manage our exposure to interest rate volatility, however, such arrangements may adversely affect us.

We have entered into nine interest rate swaps having an aggregate notional amount of $983.0 million at December 31, 2025, to hedge against interest rate increases on certain of our outstanding variable-rate indebtedness. In the future, we may manage our exposure to interest rate volatility by using hedging arrangements, such as interest rate swaps, caps, and collars. Hedging arrangements involve the risk that the arrangement may fail to protect or adversely affect us because, among other things:

• interest rate hedging can be expensive, particularly during periods of volatile interest rates;

• available interest rate hedges may not correspond directly with the interest rate risk for which protection is sought;

• the duration of the hedge may not match the duration of the related liability;

• the credit quality of the hedging counterparty owing money on the hedge may be downgraded to such an extent that it impairs our ability to collect, sell, or assign our side of the hedging transaction; and

• the hedging counterparty owing money in the hedging transaction may default on its obligation to pay.

As a result of any of the foregoing, our hedging transactions, which are intended to limit losses and exposure to interest rate volatility, could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. At December 31, 2025, our interest rate swaps were in a net asset position totaling $2.5 million (see “Part II – Item 8. – Financial Statements and Supplementary Data – Note 8 – Derivative Financial Instruments and Hedging ”).

Our success depends on key personnel whose continued service is not guaranteed.

We depend on the efforts and expertise of our management team to manage our day-to-day operations and strategic business activities. The loss of services from any of the members of our management team, and our inability to find suitable replacements on a timely basis, could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.

We could incur uninsured and underinsured losses.

We intend to maintain comprehensive insurance on our lodging properties, including liability, fire and extended coverage, of the type and amount we believe are customarily obtained for or by owners of properties similar to our lodging properties. Various types of catastrophic losses, such as hurricanes, floods and droughts, which can be exacerbated by climate change, or other losses caused by earthquakes, acts of terrorism, data breaches, losses related to business disruption from disputes with franchisors, losses related to business disruption caused by infectious disease outbreaks or pandemics, or losses from customer litigation, may not be insurable or may not be economically insurable. In the event of a substantial loss, our insurance coverage may not be sufficient to cover the operating loss or the full market value or replacement cost of our lost investment. Also, insurance costs could increase or be limited, or insurance coverage may not be available at all in the future for our lodging properties. 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 lodging property, as well as the anticipated future revenue from the lodging property. In that event, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to the asset. Loan covenants, inflation, changes in building codes and ordinances, environmental considerations and other factors might also keep us from using insurance proceeds to replace or renovate an asset 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 lodging properties.

These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.

Cybersecurity risks and breaches could materially disrupt our internal operations or services provided to guests at our lodging properties or compromise sensitive information, which could affect our reputation and adversely affect our financial condition and stock price.

We rely on computer systems, hardware, software, technology infrastructure and online sites and networks (collectively, "IT Systems") for both internal and external operations that are critical to our business. We own and manage some of these IT Systems but also rely on third parties for a range of IT Systems and related products and services, including but not limited to commercially available systems, software and tools, such as cloud computing services. Our third-party managers and franchisors also rely on IT Systems to process, transmit and store electronic customer information. These systems require the collection and retention of large volumes of the personally identifiable information of the employees and guests of our lodging properties, such as credit card numbers. Although we and our third-party managers and franchisors have taken steps to protect our IT Systems and the data maintained in those systems, no security measures can guarantee protection against improper functioning or damage, or the improper access or disclosure of personally identifiable information such as in the event of cyber-attacks. Cyber-attacks are expected to accelerate on a global basis in both frequency and magnitude as threat actors are becoming increasingly sophisticated in using techniques that circumvent controls, evade detection, and remove or obfuscate forensic evidence, which means that we and our critical third-parties may be unable to detect, investigate, contain or recover from future attacks or incidents in a timely or effective manner.

Like many companies, we and certain of our third-party managers and franchisors have experienced cyberattacks and other security incidents, such as phishing attacks and unauthorized access to information stored in IT Systems. While to date no incidents have materially affected our operations or financial results, we cannot guarantee that material incidents will not occur in the future. We and our critical third parties remain vulnerable to viruses, “worms” and other malicious software programs (e.g., ransomware) that are designed to attack our IT Systems or the systems operated by our third-party property managers and franchisors, or otherwise exploit any security vulnerabilities of our respective networks. In addition, sophisticated hardware and operating system software and applications that we and our third-party property managers or franchisors procured may contain defects in design or manufacture, including “bugs” and other problems that could unexpectedly interfere with our internal operations or the operations at our lodging properties.

The costs to eliminate or alleviate cyber or other security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and 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 lodging properties. Many of the IT Systems used to operate our lodging properties are managed and protected by our third-party property managers or franchisors. Any compromise of the function, security and availability of the information networks managed by our third-party property managers or franchisors, which we do not control, could result in disruptions to operations, delayed sales or bookings, lost guest reservations, increased costs and lower margins that could, in turn, affect our consolidated financial position. Any of these events could materially affect our consolidated financial results, stock price and reputation, result in misstated financial reports and subject us to potential litigation and liability.

Portions of our IT Systems or that of the information technology infrastructure of our third-party property managers and franchisors also may experience interruptions, delays or cessations of service or produce errors in connection with systems integration or migration work that take place from time to time. We or our third-party property managers and franchisors may not be successful in implementing new systems and transitioning data, which could cause business disruptions and be expensive, time consuming, disruptive and resource-intensive. Such disruptions could adversely affect the ability of our third-party property managers and franchisors to fulfill reservations for guestrooms and other services offered at our lodging properties.

We and our franchisors and third-party property managers have cyber insurance to mitigate the cost of remediating cyber incidents. We also have limited indemnifications from our franchisors, third-party property managers, and other IT System service providers. However, there can be no assurance that our insurance or indemnifications will be sufficient to fully cover the costs of a cyber incident.

Any of these conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.

A ny actual or perceived failure to comply with new or existing laws, regulations and other requirements relating to the privacy, security and processing of Personal Information could adversely affect our business, results of operations, or financial condition.

In connection with running our business, we receive, store, use and otherwise process information that relates to individuals’ and constitutes “personal data,” “personal information,” “personally identifiable information,” or similar terms under applicable data privacy laws (collectively, “Personal Information”), including from our employees and business contacts. We are therefore subject to laws, regulations and other requirements relating to the privacy, security and processing of Personal Information. Further, there has been a substantial increase in legislative activity and regulatory focus on data privacy and security in the United States, including in relation to cybersecurity incidents. Any failure or perceived failure by us to comply with laws, regulations and other requirements relating to the privacy, security and processing of information could result in legal claims or proceedings (including class actions), regulatory investigations or enforcement actions. If any of these events were to occur, our business, consolidated results of operations, and financial condition could be materially adversely affected.

We may not be able to manage rapidly advancing artificial intelligence in our business, which could adversely affect our competitive position.

The evolution of artificial intelligence is occurring at a rapid pace. Artificial intelligence (“AI”) may present an opportunity to create meaningful efficiencies and improve our business performance. Our business could suffer if our franchisors or third-party property management companies cannot quickly or effectively adopt AI at a sufficient pace, which could result, among other things, in loss of market share by us or higher operating costs related to the operation of our business relative to our competitors. If we or our property managers and brand franchisors are unable to address artificial intelligence in our business, we could experience a material adverse effect on our consolidated financial position, results of operations, or the market price of our stock.

Furthermore, the introduction of AI may result in new or expanded risks and liabilities, including due to enhanced governmental or regulatory scrutiny, litigation, copyright infringement, compliance issues, ethical concerns, security risks relating to private or confidential information, as well as other factors that could adversely affect our business, reputation, and consolidated financial results. If we experience an actual or perceived breach or a privacy or security incident because of the use of AI, we may lose valuable confidential information, and our reputation and the public perception of the effectiveness of our security measures may be negatively affected. The use of AI can also lead to unintended consequences, including generating content that appears correct but is factually inaccurate, misleading or otherwise flawed, or that results in unintended biases and discriminatory outcomes, which could harm our reputation and business and expose us to risks related to inaccuracies or errors in the output of such technologies. Any of these conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.

A failure to keep pace with developments in technology could impair our operations or competitive position.

The lodging industry continues to demand the use of sophisticated technology and systems, including those used by the third-party hotel management companies that operate our lodging properties for reservation, customer relationship management, analytics, revenue management, property management, human resources and payroll systems, and technologies made available to guests and for associates. These and other technologies and systems must be refined, updated, or replaced with more advanced systems on a regular basis. Our business could suffer if the third-party property management companies that operate our lodging properties cannot refine, update, or replace technologies and systems as quickly or effectively as their competitors, sufficiently in advance of obsolescence or performance failure or degradation, or within budgeted costs and time frames. Our lodging properties also may not achieve the benefits that we anticipate from any new or upgraded technology or system by the third-party property managers to operate our lodging properties, and a failure to do so could result in higher than anticipated costs or lower guest satisfaction or could impair our consolidated operating results. The development and deployment of new systems by third-party property managers to operate our lodging properties could involve delays, system interruptions, compromises of data security, or other negative operational effects.

Joint venture investments could be adversely affected by a lack of sole decision-making authority with respect to such investments, disputes with joint venture partners, and the financial condition of joint venture partners.

We have in the past and may in the future enter into strategic joint ventures with unaffiliated investors to acquire, develop, improve or dispose of lodging properties, thereby reducing the amount of capital required by us to make investments and diversifying our capital sources for growth. We may not have sole decision-making authority with respect to these investments, and as a result we may not be able to take actions which are in the best interest of our stockholders. Further, disputes between us and our joint venture partners may result in litigation or arbitration which could increase our expenses and prevent our officers and directors from focusing their time and effort on our business and could result in subjecting the lodging properties owned by the applicable joint venture to additional risks.

If a joint venture partner becomes bankrupt or otherwise defaults on its obligations under a joint venture agreement, we and any other remaining joint venture partners of that joint venture would generally remain liable for the joint venture liabilities. Furthermore, if a joint venture partner becomes bankrupt or otherwise defaults on its obligations under a joint venture agreement, we may be unable to continue the joint venture other than by purchasing such joint venture partner’s interests or the underlying assets at a premium to the market price. If any of the above risks are realized, it could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.

Inflation may affect consumer confidence which could reduce consumer demand for lodging, and may increase our operating costs, resulting in a material adverse effect on our business, consolidated financial position, results of operations and cash flows.

Our business is generally correlated to certain macroeconomic trends. During the year ended December 31, 2022 and thereafter, the U.S. economy has experienced a high rate of inflation, which has moderated during the year ended December 31, 2025. The effects of high inflation or a potential recessionary environment could adversely affect our costs, liquidity, consumer confidence, and demand for travel and lodging and could disrupt our supply chain, which would adversely affect the operation of our lodging properties. A high rate of inflation or disruption of our supply chain will cause our operating and renovation costs to increase. These conditions could have a material adverse effect on our business, consolidated financial position, results of operations and cash flows.

We may provide mezzanine financing to developers or seller financing in connection with the disposition of a lodging property which exposes us to credit financing risk in the case of a borrower default, resulting in a material adverse effect on our business, consolidated financial position, results of operations and cash flows.

We selectively provide mezzanine financing to developers, where we also have the opportunity to acquire the lodging property at or after the completion of the development project, and we also provide seller financing in connection with the disposition of a lodging property under limited circumstances. As such, we are subject to credit financing risk in the case of a borrower default. These conditions could have a material adverse effect on our business, consolidated financial position, results of operations and cash flows.

Risks Related to the Lodging Industry

The outbreak of any highly infectious or contagious diseases could adversely affect the number of guests visiting our lodging properties and disrupt our operations, resulting in a material adverse effect on our business, consolidated financial position, results of operations and cash flows.

Our business is sensitive to the willingness and ability of our customers to travel. The outbreak of any highly infectious or contagious diseases or a pandemic may result in decreases in travel to and from, and economic activity in, areas in which we operate, and may adversely affect the number of guests that visit our lodging properties. The spread of highly infectious or contagious diseases could cause severe disruptions in air and other forms of travel that reduce the number of guests visiting our lodging properties. This could disrupt our operations, and we could experience a material adverse effect on our business, consolidated financial position, results of operations and cash flows. Management cannot predict the extent to which disruptions in travel as a result of infectious disease outbreaks will have a material adverse effect on our business, consolidated financial position, results of operations and cash flows.

Economic conditions may adversely affect the lodging industry.

The performance of the lodging industry is most often directly correlated to the performance of the general economy and, specifically, growth in U.S. gross domestic product (“GDP”). The lodging industry is also sensitive to business and personal discretionary spending levels. Declines in corporate budgets and consumer demand due to adverse general economic conditions, risks affecting or reducing travel patterns, lower consumer confidence or adverse political conditions can lower the revenue and profitability of our assets and therefore the net operating profits of our investments. Economic weakness could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.

We experience a high level of competition from other hotels and alternative accommodations in the markets in which we operate.

The lodging industry is highly competitive. Our lodging properties compete with other properties for guests in each market in which our lodging properties operate based on a number of factors, including location, convenience, brand affiliation, guestroom rates, range of services and guest amenities or accommodations offered and quality of customer service. We also compete with owners and operators of vacation ownership resorts, as well as companies that offer alternative accommodations, such as Airbnb and similar organizations. These organizations operate websites that market available furnished, privately-owned residential properties, including homes and condominiums, that can be rented on a nightly, weekly or monthly basis. Competition will often be specific to the individual markets in which our lodging properties are located and includes competition from existing and new lodging properties, including alternative accommodations. The price transparency of the lodging industry could lead to difficulty in increasing ADR as our competitors may offer guestrooms at lower rates than we can, which could result in our competitors increasing their occupancy at our expense. Competition could adversely affect our occupancy, ADR and RevPAR, and may require us to provide additional amenities or make capital improvements that we otherwise would not have to make.

These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.

Our operating results and ability to make distributions to our stockholders may be adversely affected by the risks inherent to the ownership of lodging properties and the markets in which we operate.

Lodging properties have different economic characteristics than other real estate assets with long-term leases. Our lodging properties are subject to various operating risks common to the lodging industry, many of which are beyond our control, including the following:

• relatively short-duration occupancies;

• dependence on business and commercial travelers and tourism;

• over-building of lodging properties in our markets, which could adversely affect occupancy and revenue at the lodging properties we acquire;

• increases in energy costs and other expenses affecting travel, which may affect travel patterns and reduce the number of business and commercial travelers and tourists;

• increases in operating costs, including increased real estate and personal property taxes and insurance costs due to inflation and other factors that may not be offset by increased guestroom rates;

• potential increases in labor costs at our lodging properties, including as a result of unionization of the labor force, and increasing health care insurance expense;

• changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance with laws and regulations, fiscal policies and ordinances;

• adverse effects of international, national, regional and local economic and market conditions; and

• unforeseen events beyond our control, such as instability in the national, European or global economy, terrorist attacks, travel-related health concerns including pandemics and epidemics, travel-related environmental concerns including water contamination and air pollution, political instability, regional hostilities, increases in fuel prices, imposition of taxes or surcharges by regulatory authorities and travel-related accidents and unusual weather patterns, including natural disasters such as hurricanes.

These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.

We have significant ongoing needs to make capital expenditures at our lodging properties, which require us to devote funds to these purposes.

Our lodging properties have an ongoing need for renovations and other capital improvements, including replacements, from time to time, of furniture, fixtures and equipment. Our franchisors also require periodic capital improvements as a condition of keeping the franchise licenses. In addition, our lenders and property management companies may require that we set aside annual amounts for capital improvements to our assets. These capital improvements and replacements may give rise to the following risks:

• possible environmental problems;

• construction cost overruns and delays, including the effect of supply-chain disruptions;

• defects in design or construction;

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

• uncertainties as to market demand or a loss of market demand after capital improvements and replacements have begun.

These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.

Development of lodging properties is subject to timing, budgeting and other risks.

We have in the past and may in the future develop lodging properties or acquire lodging properties that are under development as suitable opportunities arise, taking into consideration general economic conditions. The development of lodging properties involves a number of risks, including the following:

• possible environmental problems;

• construction cost overruns and delays;

• receipt of and expense related to zoning, occupancy and other required governmental permits and authorizations;

• development costs incurred for projects that are not pursued to completion;

• acts of God such as earthquakes, hurricanes, floods or fires that could adversely affect a project;

• inability to raise capital; and

• governmental restrictions on the nature or size of a project;

To the extent we develop lodging properties or acquire lodging properties under development, we cannot provide assurance that any development project will be completed on time or within budget. Our inability to complete a project on time or within budget could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.

Customers may increasingly use Internet travel intermediaries.

Guestrooms for our lodging properties can be booked through Internet travel intermediaries, including, but not limited to Expedia.com and Booking.com, and their portfolio of companies (commonly referred to as “online travel agents” or “OTA's”). As these Internet bookings increase, these OTA's may be able to obtain higher commissions, reduced guestroom rates or other significant contract concessions from our property management companies. Moreover, some of these OTA's are attempting to offer lodging property guestrooms as a commodity, by increasing the importance of price and general indicators of quality (such as “three-star downtown property”) at the expense of brand identification. These OTA's hope that consumers will eventually develop brand loyalties to their reservations system rather than to the brands under which our lodging properties are franchised. If the amount of sales made through OTA's increases significantly, guestroom revenue may be negatively affected, which could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.

Consumer trends and preferences, particularly with respect to younger generations, could change away from select-service lodging properties.

Consumer trends and preferences continuously change, especially within younger generations. Many new lodging property brands have been introduced over recent years to specifically address the perceived unique needs and preferences of younger travelers. As our portfolio is concentrated in select-service hotels, significant consumer shifts in preferences could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.

Risks Related to the Real Estate Industry and Real Estate-Related Investments

Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our lodging properties or to adjust our portfolio in response to changes in economic and other conditions.

Our ability to promptly sell one or more lodging properties in our portfolio in response to changing economic, financial and investment conditions may be limited. We cannot predict whether we will be able to sell any lodging properties for the price or on the terms set by us, or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We also cannot predict the length of time needed to find a willing purchaser and to close the sale of an asset. As such, the composition of our portfolio may be difficult to vary in response to changing economic, financial and investment conditions. The real estate market is also affected by many factors that are beyond our control, including:

• adverse changes in international, national, regional and local economic and market conditions;

• changes in interest rates and in the availability, cost and terms of debt financing;

• governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance with laws and regulations, fiscal policies and ordinances and any changes thereto;

• the ongoing need for capital improvements, particularly in older structures, that may require us to periodically close or partially close our assets for renovation and expend funds to correct defects or to make improvements before an asset can be sold;

• changes in operating expenses;

• adverse political conditions or uncertainty; and

• civil unrest, acts of God, including earthquakes, floods and other natural disasters, which may result in uninsured losses, and acts of war or terrorism, environmental uncertainties, or outbreaks of highly infectious diseases or pandemics.

These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.

We could incur significant costs related to government regulation and litigation over environmental, health and safety matters.

Our lodging properties and development land parcels are subject to various federal, state and local environmental laws that impose liability for contamination. Under these laws, governmental entities have the authority to require us, as the current or former owner of the property, to perform or pay for the cleanup of contamination (including hazardous substances, waste or petroleum products) at or emanating from the property and to pay for natural resource damage arising from contamination. These laws often impose liability without regard to whether the owner or operator knew of or caused the contamination. We can also be liable to private parties for costs of remediation, personal injury and death or property damage resulting from contamination at or emanating from our properties. Moreover, 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 on favorable terms or at all. Furthermore, persons who sent waste to a waste disposal facility, such as a landfill or an incinerator, may be liable for costs associated with cleanup of that facility.

In addition, our lodging properties (including our real property, operations and equipment) are subject to various federal, state and local environmental, health and safety regulatory requirements that address a wide variety of issues, including, but not limited to the registration, maintenance and operation of our boilers and storage tanks, air emissions from emergency generators, storm water and wastewater discharges, asbestos, lead-based paint, mold and mildew, and waste management. Some of our lodging properties also routinely handle or use hazardous or regulated substances and waste in their operations (for example, swimming pool chemicals or biological waste). Our lodging properties incur costs to comply with these environmental, health and safety laws and regulations and if these regulatory requirements are not met or unforeseen events result in the discharge of dangerous or toxic substances at our lodging properties, we could be subject to fines and penalties for non-compliance with applicable laws and material liability from third parties for harm to the environment, damage to real property or personal injury and death.

Certain lodging properties we currently own or those we acquire in the future contain, may contain, or may have contained, asbestos-containing material (“ACM”). Environmental, health and safety laws require that ACM be properly managed and maintained, and include requirements to undertake special precautions, such as removal or abatement, if ACM would be disturbed during maintenance, renovation, or demolition of a building. These laws regarding ACM may impose fines and penalties on building owners, employers and operators for failure to comply with these requirements or expose us to third-party liability.

These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.

Compliance with the laws, regulations and covenants that apply to our lodging properties, including permit, license and zoning requirements, may adversely affect our ability to make future acquisitions or renovations, result in significant costs or delays and adversely affect our growth strategy.

Our lodging properties are subject to various covenants and local laws and regulatory requirements, including permitting and licensing requirements which can restrict the use of our properties and increase the cost of acquisition, development and operation of our lodging properties. Our lodging properties are also subject to regulations intended to address the risk of highly infectious diseases which can restrict certain activities of our lodging properties and result in increased costs. In addition, federal and state laws and regulations, including laws such as the ADA, impose further restrictions on our operations. Under the ADA, all public accommodations must meet federal requirements related to access and use by disabled persons. We have not conducted a comprehensive audit or investigation of all of our properties to determine our compliance. As such, some of our lodging properties currently may be in noncompliance with the ADA. If one or more of the lodging properties in our portfolio are not in compliance with the ADA or any other regulatory requirements, we may be required to incur additional costs to bring the property into compliance and we might incur damages or governmental fines. In addition, existing requirements may change, and future requirements may require us to make significant unanticipated expenditures. These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.

We have fixed obligations related to right-of-use assets on which certain of our lodging properties are located.

If we default on the terms of any of our right-of-use assets, such as ground leases, air rights or other intangible assets, and are unable to cure the default in a timely manner, we may be liable for damages and could lose our leasehold interest in the applicable property and interest in the lodging property on the ground lease property. An event of default that is not timely cured could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.

The states and localities in which we own material amounts of property or conduct material business operations could raise their income and property tax rates or amend their tax regimes in a manner that increases our state and local tax liabilities.

We and our subsidiaries are subject to income tax and other taxes by states and localities in which we conduct business. Additionally, we are and will continue to be subject to property taxes in states and localities in which we own property, and our TRS Lessees are and will continue to be subject to state and local corporate income tax. As these states and localities seek additional sources of revenue, they may, among other steps, raise income and property tax rates or amend their tax regimes to eliminate for state income tax purposes the favorable tax treatment REITs enjoy for federal income tax purposes. We cannot predict when or if any states or localities would make any such changes, or what form those changes would take. If states and localities in which we own material amounts of property or conduct material amounts of business make changes to their tax rates or tax regimes that increase our state and local tax liabilities, such increases could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.

Risks Related to Our Organization and Structure

Our fiduciary duties as the general partner of our Operating Partnership could create conflicts of interest.

We, through our wholly owned subsidiary that serves as the sole general partner of our Operating Partnership, have fiduciary duties to our Operating Partnership’s limited partners, the discharge of which may conflict with the interests of our stockholders. The limited partners of our Operating Partnership have agreed for so long as we own a controlling interest in our Operating Partnership that, in the event of a conflict between the duties owed by our directors to our Company and the duties that we owe, in our capacity as the sole general partner of our Operating Partnership, to the limited partners, our directors must give priority to the interests of our stockholders. In addition, those persons holding Common Units have the right to vote on certain amendments to the limited partnership agreement (which require approval by a majority interest of the limited partners, including us) and individually to approve certain amendments that would adversely affect their rights, as well as the right to vote on mergers and consolidations of the general partner or us in certain limited circumstances. These voting rights may be exercised in a manner that conflicts with the interests of our stockholders. For example, we cannot adversely affect the limited partners’ rights to receive distributions, as set forth in the limited partnership agreement, without their consent, even though modifying such rights might be in the best interest of our stockholders generally.

Provisions of our charter may limit the ability of a third-party to acquire control of us by authorizing our Board of Directors to issue additional securities.

Our Board of Directors may, without stockholder approval, amend our charter to increase or decrease the aggregate number of our shares or the number of shares of any class or series that we have the authority to issue and to classify or reclassify any unissued shares of common stock or preferred stock, and set the preferences, rights and other terms of the classified or reclassified shares. As a result, our Board of Directors may authorize the issuance of additional shares or establish a series of common or preferred stock that may have the effect of delaying or preventing a change in control of our Company, including transactions at a premium over the market price of our shares, even if stockholders believe that a change in control is in their interest. These provisions, along with the restrictions on ownership and transfer contained in our charter and certain provisions of Maryland law described below, could discourage unsolicited acquisition proposals or make it more difficult for a third-party to gain control of us, which could adversely affect the market price of our securities.

Provisions of Maryland law may limit the ability of a third-party to acquire control of us by requiring our Board of Directors or stockholders to approve proposals to acquire our Company or effect a change in control.

Certain provisions of the Maryland General Corporation Law (the “MGCL”) applicable to Maryland corporations may have the effect of inhibiting a third-party from making a proposal to acquire us or of impeding a change in control under circumstances that otherwise could provide our stockholders with the opportunity to realize a premium over the then-prevailing market price of such shares, including “business combination” and “control share” provisions.

By resolution of our Board of Directors, we have opted out of the business combination provisions of the MGCL and provided that any business combination between us and any other person is exempt from the business combination provisions of the MGCL, provided that the business combination is first approved by our Board of Directors (including a majority of directors who are not affiliates or associates of such persons). In addition, pursuant to a provision in our bylaws, we have opted out of the control share provisions of the MGCL. However, our Board of Directors may by resolution elect to opt into the business combination provisions of the MGCL and we may, by amendment to our bylaws, opt into the control share provisions of the MGCL in the future.

Our rights and the rights of our stockholders to take action against our directors and officers are limited.

Under Maryland law, generally, a director will not be liable if he or she performs his or her duties in good faith, in a manner he or she reasonably believes to be in our best interests and with the care that an ordinarily prudent person in a like position would use under similar circumstances. In addition, our charter limits the liability of our directors and officers to us and our stockholders for money damages, except for liability resulting from:

• actual receipt of an improper benefit or profit in money, property or services; or

• active and deliberate dishonesty by the director or officer that was established by a final judgment as being material to the cause of action adjudicated.

Our charter authorizes us to indemnify our directors and officers for actions taken by them in those capacities to the maximum extent permitted by Maryland law. Our bylaws require us to indemnify each director and officer, to the maximum extent permitted by Maryland law, in the defense of any proceeding to which he or she is made, or threatened to be made, a party by reason of his or her service to us. In addition, we may be obligated to advance the defense costs incurred by our directors and officers. As a result, we and our stockholders may have more limited rights against our directors and officers than might otherwise exist absent the current provisions in our charter and bylaws or that might exist with other companies.

Our stockholders have limited voting rights and our charter contains provisions that make removal of our directors difficult.

Our shares of common stock are the only class of our securities that carry full voting rights. Voting rights for holders of our preferred stock exist primarily with respect to the ability to elect two additional directors to our Board of Directors in the event that six quarterly dividends (whether or not consecutive) payable on the preferred stock are in arrears, and with respect to voting on amendments to our charter or articles supplementary relating to the preferred stock that materially and adversely affect the rights of the holders of preferred stock or create additional classes or series of senior equity securities. However, NewcrestImage has the right to designate one person for election to our Board of Directors in connection with the Director Nomination Agreement entered into as part of the NCI Transaction, subject to certain conditions.

Our charter provides that a director may be removed only for cause (as defined in our charter) and then only by the affirmative vote of holders of shares entitled to cast at least two-thirds of the votes entitled to be cast generally in the election of directors. Our charter also provides that vacancies on our Board of Directors may be filled only by a majority of the remaining directors in office, even if less than a quorum. These requirements prevent stockholders from removing directors except for cause and with a substantial affirmative vote and from replacing directors with their own nominees and may prevent a change in control of our Company or effect other management changes that are in the best interests of our stockholders.

The ability of our Board of Directors to change our major policies without the consent of stockholders may not be in our stockholders’ interest.

Our Board of Directors determines our major policies, including policies and guidelines relating to our acquisitions, leverage, financing, growth, operations and distributions to stockholders. Our Board of Directors may amend or revise these and other policies and guidelines from time to time without the vote or consent of our stockholders. Accordingly, our stockholders will have limited control over changes in our policies and those changes could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.

Our Board of Directors has the ability to revoke our REIT qualification without stockholder approval.

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. If we cease to be a REIT, we would become subject to federal income tax on our taxable income and would no longer be required to distribute most of our taxable income to our stockholders, which may have adverse consequences on the total return to our stockholders.

We are a holding company with no direct operations. As a result, we rely on funds received from our Operating Partnership to pay liabilities and dividends, our stockholders’ claims will be structurally subordinated to all liabilities of our Operating Partnership and our stockholders will not have any voting rights with respect to our Operating Partnership activities, including the issuance of additional Common Units or Preferred Units.

We are a holding company and conduct all of our operations through our Operating Partnership. We do not have, apart from our ownership of our Operating Partnership, any independent operations. As a result, we rely on distributions from our Operating Partnership to pay any dividends we might declare on shares of our common or preferred stock. We also rely on distributions from our Operating Partnership to meet any of our obligations, including tax liabilities on taxable income allocated to us from our Operating Partnership (which might make distributions to us that do not equal the tax on such allocated taxable income).

In addition, because we are a holding company, stockholders’ claims will be structurally subordinated to all existing and future liabilities and obligations (whether or not for borrowed money) of our Operating Partnership and its subsidiaries, including the Convertible Notes (as defined under “Part II - Item 8. – Financial Statements and Supplementary Data – Note 6 - Debt ”). Therefore, in the event of our bankruptcy, liquidation or reorganization, claims of our stockholders will be satisfied only after all of our and our Operating Partnership’s and its subsidiaries’ liabilities and obligations have been paid in full.

We own approximately 89% of the Common Units in the Operating Partnership, all of the issued and outstanding 6.25% Series E Cumulative Redeemable Preferred Units of the Operating Partnership (“Series E Preferred Units”), and all of the issued and outstanding 5.875% Series F Cumulative Redeemable Preferred Units of the Operating Partnership (“Series F Preferred Units”). An unrelated third-party owns all of the issued and outstanding Series Z Preferred Units that were issued in January 2022 as part of the NCI Transaction. Any future issuances by our Operating Partnership of additional Common Units or Preferred Units could reduce our ownership percentage in our Operating Partnership. Because our common stockholders do not directly own any Common Units or Preferred Units, they will not have any voting rights with respect to any such issuances or other partnership-level activities of the Operating Partnership.

If we are unable to maintain an effective system of internal controls, we may not be able to produce and report accurate financial information on a timely basis or prevent fraud.

A system of internal controls that is well designed and properly functioning is critical for us to produce and report accurate and reliable financial information and effectively prevent fraud. We must also rely on the quality of the internal control environments of our third-party property managers who provide us with financial information related to our lodging properties. At times, we may identify areas of internal controls that are not properly functioning as designed, that need improvement or that must be developed to ensure that we have an adequate system of internal controls. Section 404 of the Sarbanes-Oxley Act of 2002 requires us to evaluate and report on our internal controls over financial reporting and have our independent auditors annually issue their own opinion on our internal controls over financial reporting. We cannot be certain that we will be successful in maintaining adequate internal controls over our financial reporting and processes. Additionally, as we grow our business, our internal controls will become more complex, and we will require significantly more resources to ensure that our internal controls remain effective. If we or our independent auditors discover a material weakness, the disclosure of that fact, even if promptly remedied, could cause our stockholders to lose confidence in our financial results, which could reduce the market value of our common shares. Additionally, the existence of any material weakness or significant deficiency could require management to devote substantial time and incur significant expense to remediate any such conditions. There can be no assurance that management will be able to remediate any material weaknesses in a timely manner.

Risks Related to Ownership of Our Securities

The New York Stock Exchange (“NYSE”) or another nationally-recognized exchange may not continue to list our securities.

Our common stock trades on the NYSE under the symbol “INN,” our 6.25% Series E Cumulative Redeemable Preferred Stock trades on the NYSE under the symbol “INN-PE,” and our 5.875% Series F Cumulative Redeemable Preferred Stock trades on the NYSE under the symbol “INN-PF.” In order for our securities to remain listed, we are required to meet the continued listing requirements of the NYSE or, in the alternative, any other nationally-recognized exchange to which we apply. We may be unable to satisfy those listing requirements, and there is no guarantee our securities will remain listed on a nationally-recognized exchange. If our securities are delisted from the NYSE or another nationally-recognized exchange, we could face significant material adverse consequences, including:

• a limited availability of market quotations for our securities;

• a limited ability of our stockholders to make transactions in our securities;

• additional trading restrictions being placed on us;

• reduced liquidity with respect to our securities;

• a determination that our common stock is “penny stock,” which will require brokers trading in our common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for the common stock;

• a limited amount of news and analyst coverage; and

• a decreased ability to issue additional securities or obtain additional financing in the future.

The cash available for distribution may not be sufficient to make distributions at expected levels and we may use borrowed funds or funds from other sources to make distributions.

Distributions declared by us will be authorized by our Board of Directors in its sole discretion out of funds legally available for distribution and will depend upon a number of factors, including limitations imposed by our credit facilities, restrictions under applicable law and the capital requirements of our Company. All distributions will be made at the discretion of our Board of Directors and will depend on our earnings, our financial condition, the requirements for qualification as a REIT, restrictions under applicable law and other factors as our Board of Directors may deem relevant from time to time. We may be required to fund distributions from working capital, borrowings under our 2023 Senior Credit Facility, proceeds of future stock offerings or a sale of assets to the extent distributions exceed earnings or cash flows from operations. Funding distributions from working capital would restrict our operations. If we borrow from our 2023 Senior Credit Facility to pay distributions, we would be more limited in our ability to execute our strategy of using our 2023 Senior Credit Facility to fund acquisitions or capital expenditures. Finally, selling assets may require us to dispose of assets at a time or in a manner that is not consistent with our disposition strategy. If we borrow to fund distributions, our leverage ratios and future interest costs would increase, thereby reducing our earnings and cash available for distribution from what they otherwise would have been. We may not be able to make distributions in the future. In addition, some of our distributions may be considered a return of capital for income tax purposes. If we decide to make distributions in excess of our current and accumulated earnings and profits, such distributions would generally be considered a return of capital for federal income tax purposes to the extent of the holder’s adjusted tax basis in their shares. A return of capital is not taxable, but it has the effect of reducing the holder’s adjusted tax basis in its investment. If distributions exceed the adjusted tax basis of a holder’s shares, they will be treated as gain from the sale or exchange of such stock.

The market price of our stock may be volatile due to numerous circumstances beyond our control.

The trading prices of equity securities issued by REITs and other real estate companies historically have been affected by changes in market interest rates. One of the factors that may influence the market price of our common or preferred stock is the annual yield from distributions on our common or preferred stock, respectively, 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 common or preferred stock to demand a higher annual yield, which could reduce the market price of our common or preferred stock, respectively.

Other factors that could affect the market price of our stock include the following:

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

• increases in interest rates;

• debt levels;

• changes in market valuations of companies in the lodging industry;

• changes in expectations of future financial performance or changes in estimates of securities analysts;

• fluctuations in stock market prices and volumes;

• our issuances of common stock, preferred stock, convertible notes or other securities in the future;

• the inclusion of our common stock and preferred stock in equity indices, which could induce additional purchases;

• the exclusion of our common stock and preferred stock from equity indices;

• the addition or departure of key personnel;

• announcements by us or our competitors of acquisitions, investments or strategic alliances;

• unforeseen events beyond our control, such as instability in the national, European or global economy, terrorist attacks, travel-related health concerns including pandemics and epidemics, political instability, regional hostilities, increases in fuel prices, imposition of taxes or surcharges by regulatory authorities and travel-related accidents and unusual weather patterns, including natural disasters; and

• changes in the tax laws or regulations to which we are subject.

The market’s perception of our growth potential and our current and potential future cash distributions, whether from operations, sales or refinancings, as well as the real estate market value of the underlying assets, may cause our common and preferred stock to trade at prices that differ from our net asset value per share. If we retain operating cash flow for investment purposes, working capital reserves or other purposes, these retained funds, while increasing the value of our underlying assets, may not correspondingly increase the market price of our common and preferred stock. Our failure to meet the market’s expectations with regard to future earnings and distributions likely would adversely affect the market price of our common and preferred stock.

The trading market for our stock may rely in part on the research and reports that industry or financial analysts publish about us or our business. We do not control these analysts. Furthermore, if one or more of the analysts who do cover us downgrades our stock or our industry, or the stock of any of our competitors, the price of our stock could decline. If one or more of these analysts cease coverage of our Company, we could lose attention in the market, which in turn could cause the price of our stock to decline.

The number of shares of our common stock and preferred stock available for future sale could adversely affect the market price per share of our common stock and preferred stock, respectively, and future sales by us of shares of our common stock, preferred stock, or issuances by our Operating Partnership of Common Units may be dilutive to existing stockholders.

Sales of substantial amounts of shares of our common stock or preferred stock in the public market, or upon exchange of Common Units or exercise of any equity awards, or the perception that such sales might occur, could adversely affect the market price of our common stock and preferred stock. As of February 12, 2026, all 13,009,276 of the Common Units are redeemable and may in the future be converted into shares of our common stock on a one-for-one basis and sold into the public market. The exchange of Common Units for common stock, the vesting of any equity-based awards granted to certain directors, executive officers and other employees under the 2024 Equity Incentive Plan, which was restated effective May 22, 2024 (as amended and restated, the “Equity Plan”), the issuance of our common stock or Common Units in connection with lodging property, portfolio or business acquisitions and other issuances of our common stock or Common Units could have an adverse effect on the market price of the shares of our common stock.

We may execute future offerings of debt securities, which would be senior to our common and preferred stock upon liquidation, and issuances of equity securities (including Common Units).

In the future we may offer debt securities and issue equity securities, including convertible notes, Common Units, preferred stock or other preferred shares that may be senior to our common stock for purposes of dividend distributions or upon liquidation. Upon liquidation, holders of our debt securities and our preferred shares will receive distributions of our available assets prior to the holders of our common stock. Holders of our common stock are not entitled to preemptive rights or other protections against us offering senior debt or equity securities. Therefore, additional common share issuances, directly or through convertible or exchangeable securities (including Common Units), warrants or options, will dilute the holdings of our existing common stockholders and such issuances or the perception of such issuances may reduce the market price of our common stock. In addition, new issues of preferred stock could have a preference on liquidating distributions and a preference on dividend payments that could limit our ability to pay a dividend or make another distribution to the holders of our common stock. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of future issuances. Thus, our stockholders bear the risk of our future offerings reducing the market price of our common stock and diluting their interest in us.

There can be no assurance that we will repurchase shares pursuant to our share repurchase program.

In April 2025, our Board of Directors authorized a share repurchase program that allows us to repurchase up to $50.0 million of our outstanding common stock. Our share repurchase program may change from time to time, and we may not repurchase shares in any particular amounts, in amounts consistent with historical practice, or at all. Our repurchase program does not obligate the Company to repurchase any specific dollar amount or to acquire any specific number of shares and the timing and amount of repurchases, if any, will depend on several factors, including market and business conditions, applicable debt covenants, the timing and amount of cash proceeds from asset dispositions, the timing and amount of any like-kind exchange transactions and other tax-planning matters, the trading price of our common stock, the nature of other investment opportunities, and other factors as our Board of Directors may deem relevant from time to time. Repurchase activity could have a negative effect on our stock price, increase volatility, or fail to enhance stockholder value.

Risks Related to Our Status as a REIT

Failure to remain qualified as a REIT would cause us to be taxed as a regular corporation.

The REIT rules and regulations are highly technical and complex. We believe that our organization and method of operation have enabled us to meet the requirements for qualification and taxation as a REIT commencing with our short taxable year ended December 31, 2011. However, we cannot provide assurance that we will remain qualified as a REIT.

Failure to qualify as a REIT could result from a number of situations, including, without limitation:

• if the leases of our lodging properties to our TRS Lessees are not respected as true leases for federal income tax purposes;

• if our Operating Partnership is treated as a publicly traded partnership taxable as a corporation for federal income tax purposes;

• if our existing or future property management companies do not qualify as “eligible independent contractors” or if our lodging properties are not “qualified lodging facilities,” as required by federal income tax law; or

• if we, or any of our subsidiary REITs, fail to meet any of the required REIT qualifications.

If we fail to qualify as a REIT in any taxable year, we will face serious tax consequences that will substantially reduce the funds available for distributions to our stockholders because:

• we would not be allowed a deduction for dividends paid to stockholders in computing our taxable income and would be subject to federal income tax at regular corporate rates;

• we could be subject to increased state and local taxes; and

• unless we are entitled to relief under certain federal income tax laws, we could not re-elect REIT status until the fifth calendar year after the year in which we failed to qualify as a REIT.

In addition, if we fail to qualify as a REIT, we will no longer be required to make distributions. As a result of all these factors, our failure to qualify as a REIT could impair our ability to expand our business and raise capital, and it could adversely affect the value of our stock.

Even if we continue to qualify as a REIT, we may face other tax liabilities.

Even if we continue to qualify for taxation as a REIT, we may be subject to certain federal, state and local taxes on our income and assets including, but not limited to taxes on any undistributed income, tax on income from some activities conducted as a result of a foreclosure, and state or local income, property and transfer taxes. In addition, our TRSs are subject to regular corporate federal, state and local taxes. Any of these taxes would decrease cash available for distributions to stockholders.

Failure to make required distributions would subject us to federal corporate income tax.

We intend to operate in a manner so as to qualify as a REIT for federal income tax purposes. To qualify as a REIT, we generally are required to distribute at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain, each year to our stockholders. To the extent that we satisfy this distribution requirement but distribute less than 100% of our REIT taxable income, we will be subject to federal corporate income tax on our undistributed taxable income. In addition, we will be subject to a 4% non-deductible excise tax if the actual amount that we pay out to our stockholders in a calendar year is less than a minimum amount specified under the IRC.

The REIT distribution requirements may adversely affect our operations.

To satisfy the requirements for qualification as a REIT and to meet the REIT distribution requirements, we may need to borrow funds on a short-term basis or sell assets, even if the then-prevailing market conditions are not favorable for these borrowings or sales. Our cash flows from operations may be insufficient to fund required distributions as a result of differences in timing between the actual receipt of income and the recognition of income for federal income tax purposes, limits on our ability or the ability of certain of our subsidiaries to deduct interest expense from borrowings under Section 163(j) of the IRC, the effect of non-deductible capital expenditures, the creation of reserves, required debt service or amortization payments. Our REIT distribution requirements could adversely affect our liquidity and may force us to borrow funds or sell assets during unfavorable market conditions or pay taxable stock dividends. The insufficiency of our cash flows to cover our distribution requirements could have an adverse effect on our ability to raise short- and long-term debt or sell equity securities to fund distributions required to maintain our qualification as a REIT.

The formation of our TRSs increases our overall tax liability.

Our TRSs are subject to federal, state and local income tax on their taxable income, which typically consists of the revenue from the lodging properties leased by our TRS Lessees, net of the operating expenses for such lodging properties and rent payments to us. In certain circumstances, the ability of our TRSs to deduct interest expense or utilize net operating loss carryforwards for federal income tax purposes may be limited. Accordingly, although our ownership of our TRSs allows us to participate in the operating income from our lodging properties in addition to receiving rent, that operating income will be fully subject to income tax. The after-tax net income of our TRSs is available for distribution to us.

Our TRS Lessee structure subjects us to the risk of increased lodging property operating expenses.

Our leases with our TRS Lessees require our TRS Lessees to pay us rent based in part on revenue from our lodging properties. Our operating risks include decreases in lodging revenues and increases in lodging operating expenses, including but not limited to increases in wage and benefit costs, repair and maintenance expenses, energy costs and other operating expenses, which would adversely affect our TRSs’ ability to pay us rent due under the leases. Increases in these operating expenses could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.

Our Operating Partnership could be treated as a publicly traded partnership taxable as a corporation for federal income tax purposes.

Although we believe that our Operating Partnership will be treated as a partnership for federal income tax purposes, no assurance can be given that the IRS will not successfully challenge that position. If the IRS were to successfully contend that our Operating Partnership should be treated as a publicly traded partnership that is taxable as a corporation, we would fail to meet the 75% gross income test and certain of the asset tests applicable to REITs and, unless we qualified for certain statutory relief provisions, we would cease to qualify as a REIT. Also, our Operating Partnership would become subject to federal, state and local income tax, which would significantly reduce the amount of cash available for debt service and for distribution to us.

Our current property management companies, or any other property management companies that we may engage in the future may not qualify as “eligible independent contractors,” or our lodging properties may not be considered “qualified lodging facilities.”

Rent paid by a lessee that is a “related party tenant” of ours will not be qualifying income for purposes of the two gross income tests applicable to REITs. An exception is provided, however, for leases of “qualified lodging facilities” to a TRS so long as the lodging properties are managed by an “eligible independent contractor” and certain other requirements are satisfied. We lease all of our lodging properties to our TRS Lessees. All of our lodging properties are operated pursuant to property management agreements with property management companies that we believe qualify as an “eligible independent contractor.” Among other requirements, to qualify as an eligible independent contractor, the property manager must not own, directly or through its stockholders, more than 35% of our outstanding shares, and no person or group of persons can own more than 35% of our outstanding shares and the shares (or ownership interest) of the lodging property manager, taking into account certain ownership attribution rules. The ownership attribution rules that apply for purposes of these 35% thresholds are complex and monitoring actual and constructive ownership of our shares by our lodging property managers and their owners may not be practical. Accordingly, there can be no assurance that these ownership levels will not be exceeded.

In addition, for a property management company to qualify as an eligible independent contractor, such company or a related person must be actively engaged in the trade or business of operating “qualified lodging facilities” (as defined below) for one or more persons not related to the REIT or its TRS at each time that such company enters into a property management contract with a TRS or its TRS Lessee. As of the date hereof, we believe each of our property management companies operates qualified lodging facilities for certain persons who are not related to us or our TRSs. However, no assurances can be provided that our property management companies or any other property managers that we may engage in the future will in fact comply with this requirement. Failure to comply with this requirement would require us to find other managers for future contracts and if we hired a management company without knowledge of the failure, it could jeopardize our status as a REIT.

Finally, each property with respect to which our TRS Lessees pay rent must be a “qualified lodging facility.” A “qualified lodging facility” is a hotel, motel or other establishment more than one-half of the dwelling units in which are used on a transient basis, including customary amenities and facilities, provided that no wagering activities are conducted at or in connection with such facility by any person who is engaged in the business of accepting wagers and who is legally authorized to engage in such business at or in connection with such facility. As of the date hereof, we believe that the properties that are leased to our TRS Lessees are qualified lodging facilities. Although we intend to monitor future acquisitions and improvements of properties, REIT provisions of the IRC provide only limited guidance for making determinations under the requirements for qualified lodging facilities, and there can be no assurance that these requirements will be satisfied. If any of our properties are not deemed to be a “qualified lodging facility,” we may fail to qualify as a REIT.

Our ownership of our TRSs is subject to limitations and our transactions with our TRSs could cause us to be subject to a 100% penalty tax on certain income or deductions if those transactions are not conducted on arm’s-length terms.

Overall, no more than 20% (25% for taxable years beginning after December 31, 2025) of the value of a REIT’s assets may consist of stock or securities of one or more TRSs. In addition, the IRC limits the deductibility of interest paid or accrued by a TRS to its parent REIT to provide assurance that the TRS is subject to an appropriate level of corporate taxation. The IRC also imposes a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s-length basis. We monitor the value of our investment in our TRSs for the purpose of ensuring compliance with TRS ownership limitations and structure our transactions with our TRSs on terms that we believe are arm’s-length to avoid incurring the 100% excise tax described above. There can be no assurance, however, that we will be able to comply with the 20% (25% for taxable years beginning after December 31, 2025) TRS limitations or to avoid application of the 100% excise tax.

If any subsidiary REIT failed to qualify as a REIT, we could be subject to higher taxes and could fail to remain qualified as a REIT.

We own and may in the future own interests in entities that have elected to be taxed as a REIT under the U.S. federal income tax laws (each, a “subsidiary REIT”). A subsidiary REIT is subject to the various REIT qualification requirements and other limitations described herein that are applicable to us. If any of our subsidiary REITs were to fail to qualify as a REIT, then (i) such subsidiary REIT would become subject to U.S. federal income tax and (ii) our ownership of shares in such subsidiary REIT would cease to be a qualifying asset for purposes of the asset tests applicable to REITs. If any subsidiary REIT were to fail to qualify as a REIT, it is possible that we would fail certain of the asset tests applicable to REITs, in which event we would fail to qualify as a REIT unless we could avail ourselves of certain relief provisions. We may make “protective” TRS elections with respect to our subsidiary REITs and may implement other protective arrangements intended to avoid such an outcome if a subsidiary REIT were not to qualify as a REIT, but there can be no assurance that such “protective” election and other arrangements will be effective to avoid the resulting adverse consequences to us. Moreover, even if the “protective” TRS election was to be effective in the event of the failure of our subsidiary REIT to maintain its qualification as a REIT, such subsidiary REIT would be subject to federal income tax and we cannot assure you that we would not fail to satisfy the requirement that not more than 20% (25% for taxable years beginning after December 31, 2025) of the value of our total assets may be represented by the securities of one or more TRSs. In this event, we would fail to qualify as a REIT unless we or such subsidiary REIT could avail ourselves of certain relief provisions.

We may be subject to adverse legislative or regulatory tax changes.

At any time, the federal income tax laws governing REITs, or the administrative interpretations of those laws, may be amended. We cannot predict when or if any new federal income tax law, regulation, or administrative interpretation, or any amendment to any existing federal income tax law, regulation or administrative interpretation, will be adopted, promulgated or become effective and any such law, regulation, or interpretation may take effect retroactively. We and our stockholders could be adversely affected by any such change in, or any new, federal income tax law, regulation or administrative interpretation and we could experience a reduction in the price of our stock. We cannot predict the long-term effect of any recent changes or any future law changes on REITs and their stockholders. In addition, several proposals have been made that would make substantial changes to the federal income tax laws generally. We cannot predict whether any of these proposed changes will become law.

Stockholders may be restricted from acquiring or transferring certain amounts of our stock.

The stock ownership restrictions of the IRC for REITs and the 9.8% stock ownership limit in our charter may inhibit market activity in our capital stock and restrict our business combination opportunities.

To qualify as a REIT for each taxable year, five or fewer individuals, as defined in the IRC, may not own, beneficially or constructively, more than 50% in value of our issued and outstanding stock at any time during the last half of a taxable year. Attribution rules in the IRC determine if any individual or entity beneficially or constructively owns our capital stock under this requirement. Additionally, at least 100 persons must beneficially own our capital stock during at least 335 days of a taxable year for each taxable year. To help ensure that we meet these tests, our charter restricts the acquisition and ownership of shares of our capital stock.

Our charter, with certain exceptions, authorizes our directors to take such actions as are necessary and desirable to preserve our qualification as a REIT. Unless exempted by our Board of Directors, our charter prohibits any person from beneficially or constructively owning more than 9.8% in value or number of shares, whichever is more restrictive, of the outstanding shares of any class or series of our capital stock. Our Board of Directors may not grant an exemption from these restrictions to any proposed transferee whose ownership in excess of 9.8% of the value of our outstanding shares would result in our failing to qualify as a REIT. These restrictions on transferability and ownership will not apply, however, if our Board of Directors determines that it is no longer in our best interest to continue to qualify as a REIT.

We may pay taxable dividends in our common stock and cash, in which case stockholders may sell shares of our common stock to pay taxes on such dividends.

We may distribute taxable dividends that are payable in cash and common stock at the election of each stockholder. Under IRS Revenue Procedure 2017-45, as a publicly offered REIT, as long as at least 20% of the total dividend is eligible to be paid in cash and certain other requirements are satisfied, the IRS will treat the stock distribution as a dividend (to the extent applicable rules treat such distribution as being made out of our earnings and profits). If we made a taxable dividend payable in cash and common stock, taxable stockholders receiving such dividends will be required to include the full amount of the dividend as ordinary income to the extent of our current and accumulated earnings and profits, as determined for U.S. federal income tax purposes. As a result, stockholders may be required to pay income taxes with respect to such dividends in excess of the cash dividends received. If a U.S. stockholder sells the common stock that it receives as a dividend to pay these taxes, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our common stock at the time of the sale. Furthermore, with respect to certain non-U.S. stockholders, we may be required to withhold federal income tax with respect to such dividends, including with respect of all or a portion of such dividend that is payable in common stock. If we made a taxable dividend payable in cash and our common stock and a significant number of our stockholders decide to sell shares of our common stock to pay taxes owed on dividends, it may put downward pressure on the trading price of our common stock. We do not currently intend to pay a taxable dividend of our common stock and cash.

The 100% prohibited transactions tax may limit our ability to dispose of our properties, and we could incur a material tax liability if the IRS successfully asserts that the 100% prohibited transaction tax applies to some or all of our past or future dispositions.

A REIT’s net income from prohibited transactions is subject to a 100% tax. In general, prohibited transactions are sales or other dispositions of property, other than foreclosure property, held primarily for sale to customers in the ordinary course of business. We have selectively disposed of certain of our properties in the past and intend to make additional dispositions in the future. Although a safe harbor to the characterization of the sale of property by a REIT as a prohibited transaction is available, some of our past dispositions may not have qualified for that safe harbor and some or all of our future dispositions may not qualify for that safe harbor. We believe that our past dispositions will not be treated as prohibited transactions, and we may avoid disposing of property that may be characterized as held primarily for sale to customers in the ordinary course of business. Consequently, we may choose not to engage in certain sales of our properties or may conduct such sales through our TRSs, which would be subject to federal and state income taxation as a corporation. Moreover, no assurance can be provided that the IRS will not assert that some or all of our past or future dispositions are subject to the 100% prohibited transactions tax. If the IRS successfully imposes the 100% prohibited transactions tax on some or all of our dispositions, the resulting tax liability could be material.

The IRS could determine that certain payments we have received in the nature of liquidated damages may not be ignored for purposes of the gross income tests applicable to REITs.

In connection with our purchases and sales of properties, we have received payments in the nature of liquidated damages. The IRC does not specify the treatment of litigation settlements and liquidated damages for purposes of the gross income tests applicable to REITs. The IRS has issued private letter rulings to other taxpayers ruling that such payments will be ignored for purposes of the gross income tests. A private letter ruling can be relied upon only by the taxpayer to whom it was issued. Based on the IRS’s private letter rulings and the advice of our tax advisors, we believe these payments should be ignored for purposes of the gross income tests. No assurance can be provided that the IRS will not successfully challenge that position. In the event of a successful challenge, we believe that we would be able to maintain our REIT status if we qualified to use a REIT “savings clause” and paid the required penalty.

Risks Related to Certain Corporate Responsibility Matters

Increasing attention to and evolving expectations for corporate responsibility matters may increase our costs, harm our reputation, or otherwise adversely affect our business.

Our reputation could be harmed if we fail, or are perceived to fail, to comply with various regulatory requirements or if we are unable to meet expectations in a number of areas such as health, safety and security; sustainability; environmental stewardship; climate change; human rights; human capital and corporate governance. We manage a broad range of corporate responsibility matters, taking into consideration their expected effect on the sustainability of our business over time, and the potential effect of our business on society and the environment. In addition, such efforts can be costly and complex; both guest and shareholder expectations regarding such matters are evolving, and navigating these issues will require us to successfully manage differing views on these matters. Adverse incidents with respect to our corporate responsibility efforts could negatively affect our reputation, the cost of our operations, and relationships with guests and investors, all of which could adversely affect our business, consolidated results of operations, and the price of our stock.

Our business is subject to risks that may arise from climate change.

There are inherent climate-related risks wherever businesses operate. We are subject to risks associated with natural disasters, including but not limited to storms, flooding, droughts, wildfires, and extreme temperature events. Such disasters may become more frequent or intense as a result of climate change. Climate change may also result in negative physical effects, including rising sea levels and changes in temperature and precipitation patterns. As a result of the foregoing, we may experience increased costs or decreased availability of certain products which are important to our or our lessees’ operations, including but not limited to insurance, water, and energy. Separately, we have incurred, and in future may continue to incur, costs associated with structural enhancements to our lodging properties to mitigate climate-related effects. While such costs to-date have not been material, we cannot guarantee that we will not be subject to material costs in future. Even in situations where we have engaged in mitigation efforts, we may incur significant losses or repair costs or business interruptions that may not be fully covered by insurance.

Additionally, our business is exposed to risks associated with efforts to mitigate or respond to climate change, including but not limited to regulatory developments and changes in market demand. For example, some state and local governments have adopted, or considered adopting, restrictions on water use or GHG emissions. Separately, various policymakers such as in the State of California have adopted or are considering adopting requirements for the disclosure of certain climate-related information, which may require us to incur substantial monitoring and compliance costs. Changes in consumer preferences, whether due to physical climate conditions or environmentally-minded travel considerations, may also result in decreased demand for lodging in certain markets where we operate. These and other risks may reduce demand for our properties or otherwise result in adverse effects on our business, consolidated financial position, and results of operations.

Item 7.        Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Industry Trends and Outlook

Room-night demand in the U.S. lodging industry is generally correlated to certain macroeconomic trends. Key drivers of demand, and therefore lodging revenues, include changes in gross domestic product, corporate profits, capital investments, employment, government policy, inbound international travel, and consumer and corporate sentiment. From a cost perspective, elevated inflation increased the cost of salaries, wages, supplies, material, freight, insurance, and energy in recent years. A portion of these costs were partially offset by increases in average guestroom rates for lodging properties. Expense growth has moderated to a pace consistent with historical long-term inflation rates; however, certain costs remain above historical levels and could be further affected by changes in tariff policies and agreements.

During 2025, we experienced a modest same-store revenue decline resulting primarily from a reduction in government-related and inbound international travel. Ongoing macroeconomic uncertainty has had a negative effect on consumer and corporate sentiment and spending, and resulted in modest near-term pricing pressure in certain lodging demand segments. This uncertainty has been driven by various factors, including the current political environment, recent policy changes, such as tariff policies, and ongoing concerns related to inflationary pressures. The medium- and long-term outlook for the industry remain favorable as forecasted room night demand growth and increases in average daily rate, coupled with minimal supply growth, are expected to drive industry RevPAR growth over the next several years.

Operating Performance Metrics

We use a variety of performance indicators and other information to evaluate the financial condition and operating performance of our business. These key indicators include financial information that is prepared in accordance with GAAP, as well as other financial information that is not prepared in accordance with GAAP. In addition, we use other information that may not be financial in nature, including statistical information and comparative data. We use this information to measure the performance of individual lodging properties, groups of lodging properties or our business as a whole. We periodically compare historical information to our internal budgets as well as industry-wide information. These key indicators include:

• Hotel EBITDA — Hotel EBITDA is a measure of the operating performance of our lodging properties after excluding the effects of financing decisions, tax systems, and non-cash expenses such as depreciation and amortization.

• Hotel Gross Operating Profit — Hotel Gross Operating Profit (“GOP”) is a measure of the profitability of our lodging properties from core operations and represents Hotel EBITDA exclusive of property taxes, insurance, and management fees.

• Occupancy — Occupancy represents the total number of guestrooms occupied divided by the total number of guestrooms available.

• Average Daily Rate — ADR represents total room revenues divided by the total number of paid occupied guestrooms.

• Revenue Per Available Room — RevPAR is the product of ADR and Occupancy.

Occupancy, ADR and RevPAR are commonly used measures within the lodging industry to evaluate operating performance. RevPAR is an important metric for monitoring operating performance at the individual lodging property level and across our business as a whole. We evaluate individual lodging property RevPAR performance on an absolute basis with comparisons to budget and prior periods, as well as on a company-wide and market-by-market basis. ADR and RevPAR are based only on room revenue. Room revenue depends on demand (as measured by occupancy), pricing (as measured by ADR), and our available supply of lodging property guestrooms. Our ADR, occupancy and RevPAR performance may be affected by macroeconomic factors such as regional and local employment growth, personal income and corporate earnings, office vacancy rates and business relocation decisions, air travel and other business and leisure travel, new lodging property construction, and the pricing strategies of competitors. In addition, our ADR, occupancy and RevPAR performance is dependent on the continued success of our partners, franchisors and brands.

Lodging Property Portfolio Activity

We continually evaluate alternatives to refine our portfolio to drive growth and create value. In the normal course of business, we evaluate opportunities to acquire additional properties that meet our investment criteria and opportunities to recycle capital through the disposition of properties. As such, the composition and size of our portfolio of properties may change materially over time. Significant changes to our portfolio of properties could have a material effect on our Consolidated Financial Statements.

During the fourth quarter of 2023, the GIC Joint Venture entered into a purchase and sale agreement with a third-party to sell the 127-guestroom Hyatt Place Dallas (Plano), TX for $10.3 million. We reclassified the property in Assets held for sale, net at December 31, 2023 and recorded a write-down of $4.0 million in the fourth quarter of 2023 for the excess of the net carrying amount of the portfolio of properties over the net selling price less estimated costs to sell. We completed the sale of the property in February 2024 under the terms described above.

In April 2024, we completed the sale of the 202-guestroom Courtyard by Marriott and the 208-guestroom SpringHill Suites by Marriott, both located in New Orleans, LA, for an aggregate selling price of $73.0 million, which resulted in a gain of approximately $28.3 million.

In April 2024, the GIC Joint Venture completed the sale of the 119-guestroom Hilton Garden Inn - Bryan (College Station), TX for $11.0 million. The net selling price of the lodging property approximated its net book value on the closing date.

In October 2024, we completed the sale of the 101-guestroom Four Points by Marriott San Francisco Airport for $17.7 million, which resulted in a gain of approximately $0.4 million.

In December 2024, the GIC Joint Venture acquired the Hampton Inn located in Revere (Boston), MA and the Hilton Garden Inn located in Tysons Corner (Vienna), VA with an aggregate total of 399 guestrooms for a combined purchase price of $96.0 million. The purchase price (including approximately $0.3 million of acquisition costs) was funded through a combination of a $2.9 million escrow deposit, capital contributions from our GIC Joint Venture partner totaling $21.5 million, $49.5 million of borrowings on our expanded GIC Joint Venture Credit Facility (See “Part II – Item 8. – Financial Statements and Supplementary Data – Note 6 - Debt ”), and our capital contribution of $22.4 million from proceeds from the sale of the Four Points by Marriott San Francisco Airport and cash on hand.

In February 2025, we closed on the sale of a 5.99-acre parcel of undeveloped land in San Antonio, TX for a selling price of $1.3 million, which approximated its carrying amount.

In October 2025, the GIC Joint Venture completed the sale of the 107-guestroom Courtyard by Marriott, Amarillo, Texas for a selling price of $20.0 million, which resulted in a gain of approximately $4.2 million.

In October 2025, we completed the sale of the 123-guestroom Courtyard by Marriott in Kansas City, MO for a selling price of $19 million, which resulted in a gain of approximately $2.5 million.

In November 2025, the GIC Joint Venture entered into a purchase and sale agreement to sell the 122-guestroom Hilton Garden Inn, Longview, TX for a selling price of $12.3 million. We reclassified the carrying value of the property to Assets held for sale, net at December 31, 2025 and recorded a write-down of $1.8 million in the fourth quarter of 2025 for the excess of the net carrying amount of the lodging property over the net selling price less estimated costs to sell. We completed the sale of the property on February 20, 2026 under the terms described above.

See “Part II – Item 8. – Financial Statements and Supplementary Data –Note 3 - Investments in Lodging Property, net ” to the Consolidated Financial Statements for additional information concerning our asset acquisitions, development, and dispositions.

Revenues and Operating Expenses

Our revenues are derived from lodging operations and consist of room revenue, food and beverage revenue and other revenue. As a result of our focus on lodging properties with efficient operating models, substantially all of our revenues are related to the sales of guestrooms. Our other revenue consists of ancillary revenues related to meeting rooms, parking and other guest services provided at certain of our properties.

Our property operating expenses consist primarily of expenses incurred in the day-to-day operation of our lodging properties. Many of our expenses are fixed, such as essential lodging property staff, real estate taxes, insurance, and depreciation. These expenses generally do not decrease even if the revenues at our lodging properties decrease. Room expense includes housekeeping and front office wages and payroll taxes, room supplies, laundry services and other costs. Food and beverage expense primarily includes the cost of food, the cost of beverages and associated labor costs. Other operating expenses include labor and other costs associated with administrative departments, sales and marketing, repair and maintenance, utility costs and franchise fees.

Results of Operations

The comparisons that follow should be reviewed in conjunction with the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.

Comparison of 2025 to 2024

The following table contains key operating metrics for our total portfolio and our same-store portfolio for the year ended December 31, 2025 compared with the year ended December 31, 2024 (dollar amounts in thousands, except ADR and RevPAR). Our same-store portfolio consists of properties that we owned as of December 31, 2025 and that we have owned at all times since January 1, 2024.

Year-over-Year

Dollar Change

Year-over-Year

Percentage Change

Total

Portfolio

(95 Properties)

Same-Store (1)

Portfolio

(93 properties)

Total

Portfolio

(97 properties)

Same-Store

Portfolio

(93 properties)

Total

Portfolio

(95/97 properties)

Same-Store

Portfolio

(93 properties)

Total

Portfolio

(95/97 properties)

Same-Store

Portfolio

(93 properties)

Revenues:

Room

Food and beverage

Other

Total

Expenses:

Room

Food and beverage

Other lodging property operating expenses

Total

Occupancy

ADR

RevPAR

(1)    Same-store information includes operating results for 93 hotels owned by the Company as of January 1, 2024, and at all times during the years ended December 31, 2025, and 2024.

The total portfolio information above for the years ended December 31, 2025 and 2024 reflects operating results for various portions of each year for certain lodging properties as a result of the sales and acquisitions of lodging properties. The following table details how the acquisition and disposition transactions affect each reporting year:

Portion of Operating Results Included

Transaction

For the Years Ended December 31,

Date

Acquired Properties:

For the Year Ended December 31, 2024 (the “2024 Acquired Properties”):

Portfolio of Two Lodging Properties

December 2024

Full Period

Partial Period

Sold Properties:

For the Year Ended December 31, 2025 (the “2025 Sold Properties”):

Courtyard by Marriott - Amarillo, TX

October 2025

Partial Period

Full Period

Courtyard by Marriott - Kansas City, MO

October 2025

Partial Period

Full Period

For the Year Ended December 31, 2024 (the “2024 Sold Properties”):

Four Points by Marriott San Francisco Airport

October 2024

None

Partial Period

Courtyard by Marriott and SpringHill Suites - New Orleans, LA

April 2024

None

Partial Period

Hilton Garden Inn - College Station, TX

April 2024

None

Partial Period

Hyatt Place - Dallas (Plano), TX

February 2024

None

Partial Period

Changes from the year ended December 31, 2025 compared with the year ended December 31, 2024 were due to the following:

• Revenues and RevPAR . Room revenues for our total portfolio decreased by $6.9 million for the year ended December 31, 2025 compared with the year ended December 31, 2024 as a result of a $12.8 million decrease in same-store revenues driven primarily by reduced government-related and inbound international travel, partially offset by a $5.9 million increase in room revenues due to the net effect of the acquisition of the 2024 Acquired Properties and the sale of the 2025 Sold Properties and the 2024 Sold Properties (collectively, the “Sold Properties”).

On a same-store basis, occupancy decreased approximately 0.1% and ADR decreased 1.7% during the year ended December 31, 2025, which resulted in a 1.8% decrease in same-store RevPAR. For the total portfolio, we experienced an increase of approximately 0.1% in occupancy and a decrease of 1.6% in ADR during the year ended December 31, 2025. This resulted in a decrease in RevPAR of 1.4% for the year ended December 31, 2025 compared with the year ended December 31, 2024.

• Room Expenses . Room expenses for our total portfolio increased by $4.7 million for the year ended December 31, 2025 compared with the year ended December 31, 2024 as a result of a $1.4 million increase in room expenses due to the net effect of the sale of the 2024 and 2025 Sold Properties, and the acquisition of the 2024 Acquired Properties, coupled with a $3.3 million increase in same-store room expenses due to increased labor and benefits expenses.

• Food and Beverage Revenues and Expenses . Total portfolio food and beverage revenues increased by $2.3 million for the year ended December 31, 2025 compared with the year ended December 31, 2024 primarily as a result of a $2.0 million increase in same-store food and beverage revenues due to the completion of renovations at various properties and additional banquet and catering revenues due to special events. In addition, food and beverage revenues increased $0.3 million due to the net effect of the sale of the Sold Properties and the acquisition of the 2024 Acquired Properties. Total portfolio food and beverage expenses increased by $2.0 million due to a $1.6 million increase in same store food and beverage expenses, which is commensurate with the increase in food and beverage revenues, in addition to a $0.4 million increase due to the net effect of the sale of the Sold Properties and the acquisition of the 2024 Acquired Properties.

• Other Hotel Operating Revenues and Expenses . Other lodging property operating revenues for our total portfolio increased by $2.3 million for the year ended December 31, 2025 compared with the year ended December 31, 2024 as a result of a $2.3 million increase in same-store Other lodging property and operating revenues primarily related to an increase in parking, resort fees, and marketplace sales.

The $6.9 million increase in total portfolio Other lodging property operating expenses for the year ended December 31, 2025 in comparison with the year ended December 31, 2024 was driven by a $2.0 million increase in Other lodging property operating expenses due to the net effect of the sale of the Sold Properties, and the acquisition of the 2024 Acquired Properties, coupled with a $4.9 million increase in same-store Other lodging property operating expenses that resulted from increased labor costs, sales and marketing costs, and utilities.

The following table includes other consolidated income and expenses for 2025 compared with the prior year (dollar amounts in thousands):

For the Twelve Months Ended

December 31,

Dollar Change

Percentage Change

Property taxes, insurance and other

Management fees

Depreciation and amortization

Corporate general and administrative

Loss on impairment and write-down of assets

Gain on disposal of assets, net

Interest expense

Interest income

Gain on extinguishment of debt

Other income, net

Income tax expense (benefit)

(1)    Not meaningful

Changes from the year ended December 31, 2025 compared with the year ended December 31, 2024 were due to the following:

• Property Taxes, Insurance and Other . The $0.6 million increase in Property taxes, insurance and other during the year ended December 31, 2025 is primarily due to a $1.1 million increase in property taxes as a result of increased property assessment values in certain locations and higher cash refunds in the prior year as a result of successful appeals, a $0.4 million increase in business taxes primarily due to franchise tax refunds received in the prior year, and $0.2 million increase due to the net effect of the acquisition of the 2024 Acquired Properties and the sale of the Sold Properties, offset by a $1.2 million decrease in insurance premiums in the current year.

• Management Fees . Management fees decreased during the year ended December 31, 2025 by $0.1 million due to the net effect of the sale of the Sold Properties and the acquisition of the 2024 Acquired Properties. Same-store management fees were relatively flat from the prior year to the current year as a result of a decrease in management fees related to lower revenues during the year ended December 31, 2025, offset by certain management fee adjustments in prior years.

• Depreciation and Amortization . Depreciation and amortization increased by $3.2 million for the year ended December 31, 2025 compared with the prior year primarily due to an increase of $2.9 million in depreciation and amortization due to the net effect of the sale of the Sold Properties, and the acquisition of the 2024 Acquired Properties, in addition to a $0.3 million increase in same-store depreciation and amortization due to assets placed in service as a result of completed renovations.

• Corporate General and Administrative . Corporate general and administrative expenses increased by $0.9 million for the year ended December 31, 2025 compared with the prior year primarily due to a $0.7 million increase in non-cash stock compensation expenses, and an increase of approximately $0.2 million in professional fees and corporate employee-related costs.

• Loss on Impairment and Write-down of Assets. During the year ended December 31, 2025, the Company recorded a loss on write-down of assets of $1.8 million to reduce the carrying amount of one property classified as Held for sale at December 31, 2025 to its expected net selling price less estimated costs to sell.

During the year ended December 31, 2024, the Company recorded a Loss on impairment of assets of $6.7 million to reduce the carrying amount of one property to its estimated fair value.

• Gain on Disposal of Assets, net. The gain on disposal of assets, net of $6.6 million for the year ended December 31, 2025 was primarily the result of a $4.2 million gain recorded on the sale of the Courtyard by Marriott in Amarillo, TX, and a $2.5 million recorded on the sale of the Courtyard by Marriott Kansas City, MO.

The gain on disposal of assets, net of $28.9 million for the year ended December 31, 2024 was primarily the result of a $28.3 million gain recorded on the sale of a portfolio of two lodging properties in New Orleans, LA, a $0.4 million gain recorded on the sale of the Four Points by Marriott San Francisco Airport and an aggregate $0.2 million gain recorded on the sale of Hilton Garden Inn - Bryan (College Station), TX and the Hyatt Place - Dallas (Plano), TX.

• Interest Expense . Interest expense decreased by $1.9 million primarily due to a reduction in interest rates for the year ended December 31, 2025 compared with the prior year, partially offset by a $0.3 million increase in amortization of deferred financing costs related to the refinancing of the $400 million 2025 GIC Joint Venture Term Loan (as defined in “Part II - Item 8. - Financial and Supplementary Data - Note 6 - Debt ”

• Interest Income. Interest income decreased by $0.7 million during the year ended December 31, 2025 primarily due to $0.4 million of non-cash interest income related to the amortization of the Onera Purchase Option recorded during the year ended December 31, 2024, which became fully amortized in September 2024, combined with a $0.3 million decrease related to lower average cash balances invested in money market accounts, as well to a decrease in interest rates.

• Gain on Extinguishment of Debt. The gain on extinguishment of debt for the year ended December 31, 2024 was the result of the repayment of the MetaBank Loan (as defined in “Part II - Item 8. - Financial and Supplementary Data - Note 6 - Debt ” to the accompanying Consolidated Financial Statements) in June 2024 prior to its scheduled maturity date, which resulted in a gain on extinguishment of debt of $3.0 million after legal fees and unamortized debt issuance costs that were written-off on the closing date.

• Other Income, net. Other income, net for the year ended December 31, 2025 consists primarily of third-party tenant income of $3.1 million, the realization of $2.2 million of tax rebates related to the NCI Transaction and $0.5 million in amortization of key money liabilities, partially offset by a net casualty loss of $1.6 million, $0.3 million of expensed debt transaction costs related to the refinancing of the 2022 GIC Joint Venture Term Loan with the $400 million 2025 GIC Joint Venture Term Loan (both of which are as defined in “Part II - Item 8. - Financial and Supplementary Data - Note 6 - Debt ” to the accompanying Consolidated Financial Statements), and $0.9 million of costs related to property manager transitions.

Other income, net for the year ended December 31, 2024 consists primarily of third-party tenant income of $2.2 million, the realization of $2.0 million of tax rebates related to the NCI Transaction, and miscellaneous income of $1.0 million, partially offset by debt transaction costs of $0.6 million and a net casualty loss of $0.2 million.

• Income Tax Expense (Benefit) . Income tax expense amounted to $0.8 million, during the year ended December 31, 2025, and was primarily related to federal and state income taxes on our TRSs.

Income tax benefit amounted to $8.7 million during the year ended December 31, 2024 and was primarily due to the reversal of a significant portion of our valuation allowance totaling $12.1 million, partially offset by current federal and state income tax expenses of $2.6 million, and deferred tax expense of $0.8 million for the year ended December 31, 2024. We reversed the valuation allowance during the year ended December 31, 2024 based on our determination that it is probable that we will realize the tax benefits related to a significant portion of our deferred tax assets.

For information about our key operating metrics and results of operations for the year ended December 31, 2024 compared with the year ended December 31, 2023, refer to “Part II – Item 7. – Management's Discussion and Analysis of Financial Conditions and Results of Operations - Results of Operations ” of the Company's Annual Report on Form 10-K for the year ended December 31, 2024.

Non-GAAP Financial Measures

We disclose certain “non-GAAP financial measures,” which are measures of our historical financial performance. Non-GAAP financial measures are financial measures not prescribed by GAAP. These measures are as follows: (i) Funds From Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”), (ii) EBITDA, Earnings before Interest, Taxes, Depreciation and Amortization for Real Estate (“EBITDA re ”) and Adjusted EBITDA re (as described below). We caution investors that amounts presented in accordance with our definitions of non-GAAP financial measures may not be comparable to similar measures disclosed by other companies, since not all companies calculate these non-GAAP financial measures in the same manner. Our non-GAAP financial measures should be considered along with, but not as alternatives to, net income (loss) as a measure of our operating performance. Our non-GAAP financial measures may include funds that may not be available for our discretionary use due to functional requirements to conserve funds for capital expenditures, property acquisitions, debt service obligations and other commitments and uncertainties. Although we believe that our non-GAAP financial measures can enhance the understanding of our financial condition and results of operations, these non-GAAP financial measures are not necessarily better indicators of any trend as compared to a comparable measure prescribed by GAAP such as net income (loss).

FFO and AFFO

As defined by Nareit, FFO represents net income or loss (computed in accordance with GAAP), excluding preferred dividends, gains (or losses) from sales of real property, impairment losses on real estate assets, items classified by GAAP as extraordinary, the cumulative effect of changes in accounting principles, plus depreciation and amortization related to real estate assets, and adjustments for unconsolidated partnerships, and joint ventures. AFFO represents FFO excluding amortization of deferred financing costs, franchise fees, equity-based compensation expense, transaction costs, debt transaction costs, premiums on redemption of preferred shares, losses from net casualties, non-cash interest income and non-cash income tax related adjustments to our deferred tax asset. Unless otherwise indicated, we present FFO and AFFO applicable to our common shares and common units. We present FFO and AFFO because we consider FFO and AFFO an important supplemental measure of our operational performance and believe it is frequently used by securities analysts, investors, and other interested parties in the evaluation of REITs, many of which present FFO and AFFO when reporting their results. FFO and AFFO are intended to exclude GAAP historical cost depreciation and amortization, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO and AFFO exclude depreciation and amortization related to real estate assets, gains and losses from real property dispositions and impairment losses on real estate assets, and certain transaction costs related to lodging property acquisition activities and debt, FFO and AFFO provide performance measures that, when compared year over year, reflect the effect to operations from trends in occupancy, guestroom rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from net income. Our computation of FFO differs slightly from the computation of Nareit-defined FFO related to the reporting of depreciation and amortization expense on assets at our corporate offices, which is de minimus. Our computation of FFO may also differ from the methodology for calculating FFO used by other equity REITs and, accordingly, may not be comparable to such other REITs. FFO and AFFO should not be considered as an alternative to net income (loss) (computed in accordance with GAAP), as an indicator of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions. Where indicated in this Annual Report on Form 10-K, FFO is based on our computation of FFO and not the computation of Nareit-defined FFO unless otherwise noted.

EBITDA, EBITDAre and Adjusted EBITDAre

EBITDA

EBITDA represents net income or loss, excluding: (i) interest, (ii) income tax expense and (iii) depreciation and amortization. We believe EBITDA is useful to an investor in evaluating our operating performance because it provides investors with an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures and to fund other cash needs or reinvest cash into our business. We also believe it helps investors meaningfully evaluate and compare the results of our operations from period to period by removing the effect of our asset base (primarily depreciation and amortization) from our operating results. Our management team also uses EBITDA as one measure in determining the value of acquisitions and dispositions.

EBITDAre and Adjusted EBITDAre

In September 2017, Nareit proposed a standardized performance measure, called EBITDA re , which is based on EBITDA and is expected to provide additional relevant information about REITs as real estate companies in support of growing interest among generalist investors. The conclusion was reached that, while dedicated REIT investors have long been accustomed to utilizing the industry’s supplemental measures such as FFO and net operating income to evaluate the investment quality of REITs as real estate companies, it would be helpful to generalist investors for REITs as real estate companies to also present EBITDA re  as a more widely known and understood supplemental measure of performance. EBITDA re  is intended to be a supplemental non-GAAP performance measure that is independent of a company’s capital structure and will provide a uniform basis for one measurement of the enterprise value of a company compared to other REITs.

EBITDA re , as defined by Nareit, is calculated as EBITDA, excluding: (i) loss and gains on disposition of property and (ii) asset impairments, if any. We believe EBITDA re is useful to an investor in evaluating our operating performance because it provides investors with an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures and to fund other cash needs or reinvest cash into our business. We also believe it helps investors meaningfully evaluate and compare the results of our operations from period to period by removing the effect of our asset base (primarily depreciation and amortization) from our operating results.

We make additional adjustments to EBITDA re  when evaluating our performance because we believe that the exclusion of certain additional non-recurring or unusual items described below provides useful supplemental information to investors regarding our ongoing operating performance. We believe that the presentation of Adjusted EBITDA re , when combined with the primary GAAP presentation of net income, is useful to an investor in evaluating our operating performance because it provides investors with an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures and to fund other cash needs or reinvest cash into our business. We also believe it helps investors meaningfully evaluate and compare the results of our operations from period to period by removing the effect of our asset base (primarily depreciation and amortization) from our operating results.

EBITDAre and Adjusted EBITDAre

The following is a reconciliation of our GAAP net income to EBITDA re for the years ended December 31, 2025, 2024 and 2023 (in thousands):

Net (loss) income

Depreciation and amortization

Interest expense

Interest income on cash deposits

Income tax expense (benefit)

EBITDA

Loss on impairment and write-down of assets

(Gain) loss on disposal of assets and other dispositions, net

EBITDA re

Recoveries of credit losses

Amortization of key money liabilities

Equity-based compensation

Debt transaction costs

Gain on extinguishment of debt

Non-cash interest income

Non-cash lease expense, net

Casualty losses, net

Loss related to non-controlling interests in consolidated joint ventures

Adjustments related to non-controlling interests in consolidated joint ventures

Non-cash state taxes and other, net

Adjusted EBITDA re

Adjusted EBITDA re decreased $17.3 million for the year ended December 31, 2025 in comparison with the year ended December 31, 2024 as a result of a decrease in Hotel EBITDA (see “Part II - Item 8. - Financial Statements and Supplementary Data - Note 18 – Segment Reporting”) due to a decline in same-store RevPAR resulting from a reduction in government-related and inbound international travel, and the net effect of the acquisition of the 2024 Acquired Properties and the sale of the Sold Properties.

For information about our Adjusted EBITDA re for the year ended December 31, 2024 compared with the year ended December 31, 2023, refer to “Part II – Item 7. – Management’s Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Financial Measures ” of the Company's Annual Report on Form 10-K for the year ended December 31, 2024.

FFO and AFFO

The following is a reconciliation of our GAAP net income to FFO and AFFO for the years ended December 31, 2025, 2024 and 2023 (in thousands, except per common share/Common Unit amounts):

Net (loss) income

Preferred dividends

Distributions to and accretion of redeemable non-controlling interests

Loss related to non-controlling interests in consolidated joint ventures

Net (loss) income applicable to common shares and Common Units

Real estate-related depreciation

Loss on impairment and write-down of assets

(Gain) loss on disposal of assets and other dispositions, net

FFO adjustments related to non-controlling interests in consolidated joint ventures

FFO applicable to common shares and Common Units

Recoveries of credit losses

Amortization of deferred financing costs

Amortization of franchise fees

Amortization of intangible assets, net

Equity-based compensation

Debt transaction costs

Gain on extinguishment of debt

Non-cash interest income

Non-cash lease expense, net

Casualty losses, net

Deferred tax (benefit) expense

Reversal of valuation allowance on deferred tax assets

AFFO adjustments related to non-controlling interests in consolidated joint ventures

Non-cash state taxes and other, net

AFFO applicable to common shares and Common Units

FFO per common share/Common Unit

AFFO per common share/Common Unit (1)

Weighted average diluted common shares/Common Units:

FFO and AFFO (2)(3)

(1)    AFFO for the years ended December 31, 2025, 2024 and 2023 has not been adjusted for interest related to the Convertible Notes for purposes of calculating AFFO per common share/Common Unit because we intended to settle the principal portion of the Convertible Notes in cash. In February 2026, we repaid the outstanding balance of the Convertible Notes.

(2)    Includes Common Units in the Operating Partnership held by limited partners (other than us and our subsidiaries) because the Common Units are redeemable for cash or, at our election, shares of our common stock.

(3)    The weighted average diluted common shares/common units used to calculate FFO and AFFO per common share/Common Unit for the years ended December 31, 2025, 2024 and 2023 includes the dilutive effect of our outstanding restricted stock awards. These shares were excluded from our weighted average shares outstanding used to calculate net (loss) income per share for the years ended December 31, 2025 and 2023 because they would have been antidilutive. The weighted average common shares/Common Unit used to calculate FFO and AFFO per common share/Common Unit exclude the potential dilution related to our Convertible Notes as we intended to settle the principal of the Convertible Notes in cash. In February 2026, we repaid the outstanding balance of the Convertible Notes.

A reconciliation of weighted average diluted common shares to non-GAAP weighted average diluted common shares/Common Units for FFO and AFFO is as follows (in thousands):

Weighted average common shares outstanding - diluted

Non-GAAP adjustment for restricted stock awards (1)

Non-GAAP adjustment for dilutive effects of Common Units

Non-GAAP adjustment for dilutive effect of shares of common stock issuable upon conversion of convertible debt

Non-GAAP weighted diluted share of common stock and Common Units

(1)    Adjustment reflects the difference between the total weighted-average unvested restricted time-based shares outstanding as of the reporting date and the weighted-average restricted time-based shares computed for diluted earnings per share under the treasury stock method in accordance with GAAP, plus the difference between the estimated total weighted average unvested restricted performance-based shares expected to vest based on achievement of the performance measures as if the vesting date were the reporting date and the estimated weighted-average unvested restricted performance-based shares computed for diluted earnings per share under the treasury stock method in accordance with GAAP.

AFFO applicable to common stock and Common Units decreased by $15.6 million for the year ended December 31, 2025 compared with the year ended December 31, 2024 primarily as a result of a decrease in Hotel EBITDA (see “Part II - Item 8. - Financial Statements and Supplementary Data - Note 18 – Segment Reporting”) due to a decline in same-store RevPAR resulting from a reduction in government-related and inbound international travel, and the net effect of the acquisition of the 2024 Acquired Properties and the disposition of the Sold Properties.

For information about our AFFO for the year ended December 31, 2024 compared with the year ended December 31, 2023, refer to “Part II – Item 7. – Management’s Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Financial Measures ” of the Company's Annual Report on Form 10-K for the year ended December 31, 2024.

Liquidity and Capital Resources

Our short-term cash obligations consist primarily of operating expenses and other expenditures directly associated with our lodging properties, recurring maintenance and capital expenditures necessary to maintain our lodging properties in accordance with internal and brand standards, capital expenditures to improve our lodging properties, interest payments, settlement of any applicable interest rate swaps, scheduled principal payments on outstanding indebtedness, restricted cash funding obligations, our joint venture acquisitions and capital requirements, contractual lease payments, corporate overhead, and distributions to our stockholders and holders of Common and Preferred Units in our Operating Partnership when declared. Our corporate overhead primarily consists of employee compensation expenses, professional fees, corporate insurance and rent expenses. Cash requirements for our corporate overhead expenses (excluding non-cash stock-based compensation), which are generally paid from operating cash flows, were $24.0 million, $23.8 million and $24.8 million for the years ended December 31, 2025, 2024 and 2023, respectively. We generally expect our corporate overhead expenses to remain consistent with the level of our operating activities and market conditions for goods and services.

Our long-term cash uses are primarily related to the costs of acquiring additional lodging properties, renovations and other non-recurring capital expenditures that periodically are made with respect to our lodging properties, dividends and distributions to our stockholders and holders of Common and Preferred Units in our Operating Partnership when declared, and scheduled debt payments, including maturing loans.

Our property acquisition and disposition activity for the years ended December 31, 2025 and 2024 was as follows:

• In February 2024, the GIC Joint Venture completed the sale of the 127-guestroom Hyatt Place Dallas (Plano), TX for $10.3 million. At December 31, 2023, we reclassified the property in Assets held for sale and recorded a write-down of $4.0 million to reduce the carrying amount of the lodging property to the selling price less estimated costs to sell. As such, the net selling proceeds approximated the net carrying amount of the Sale Portfolio at closing.

• In April 2024, we completed the sale of the 202-guestroom Courtyard by Marriott and the 208-guestroom SpringHill Suites by Marriott, both located in New Orleans, LA, for an aggregate selling price of $73.0 million, which resulted in a gain of approximately $28.3 million.

• In April 2024, the GIC Joint Venture completed the sale of the 119-guestroom Hilton Garden Inn - Bryan (College Station), TX for $11.0 million. The net selling price of the lodging property approximated its net book value on the closing date.

• In October 2024, we completed the sale of the 101-guestroom Four Points by Marriott San Francisco Airport for $17.7 million, which resulted in a gain of approximately $0.4 million.

• In December 2024, the GIC Joint Venture acquired the Hampton Inn located in Revere (Boston), MA and the Hilton Garden Inn located in Tysons Corner (Vienna), VA with an aggregate total of 399 guestrooms for a combined purchase price of $96.0 million. The purchase price (including approximately $0.3 million of acquisition costs) was funded through a combination of a $2.9 million escrow deposit, capital contributions from our GIC Joint Venture partner totaling $21.5 million, $49.5 million of borrowings on our expanded GIC Joint Venture Credit Facility and our capital contribution of $22.4 million using the proceeds from the sale of the Four Points by Marriott San Francisco Airport and cash on hand.

• In February 2025, we closed on the sale of a 5.99-acre parcel of undeveloped land in San Antonio, TX for $1.3 million, which approximated its carrying amount.

• In October 2025, the GIC Joint Venture completed the sale of the 107-guestroom Courtyard by Marriott, Amarillo, Texas for a selling price of $20.0 million, which resulted in a gain of approximately $4.2 million.

• In October 2025, we completed the sale of the 123-guestroom Courtyard by Marriott in Kansas City, MO for a selling price of $19.0 million, which resulted in a gain of approximately $2.5 million.

• In November 2025, the GIC Joint Venture entered into a purchase and sale agreement to sell the 122-guestroom Hilton Garden Inn, Longview, TX for a selling price of $12.3 million. We reclassified the carrying value of the property to Assets held for sale, net at December 31, 2025 and recorded a write-down of $1.8 million in the fourth quarter of 2025 for the excess of the net carrying amount of the lodging property over the net selling price less estimated costs to sell. We completed the sale of the property on February 20, 2026 under the terms described above.

Significant changes related to our outstanding debt agreements for the years ended December 31, 2025 and 2024 were as follows:

• In February 2024, our Operating Partnership, as borrower, the Company, as parent guarantor, and each party executing the term loan document as a subsidiary guarantor, entered into a $200.0 million senior unsecured term loan financing (the “2024 Term Loan”) with Regions Bank. Proceeds from the 2024 Term Loan financing and advances on our $400 Million Revolver were used to repay in full the Company’s $225 million term loan that was scheduled to mature in February 2025. The 2024 Term Loan has an initial maturity date of February 2027 and can be extended for two 12-month periods by the Company, subject to certain conditions.

• In May 2024, we repaid the outstanding principal of the Bank of the Cascades loan that was scheduled to mature in December 2024 with no prepayment penalty. This repayment resulted in the release of the lodging property that was pledged as collateral for this mortgage loan.

• In June 2024, we repaid the outstanding balance of $42.3 million of a non-recourse loan with MetaBank (the “MetaBank Loan”) for $39.1 million prior to its scheduled maturity date. The payment represented a discount of $3.2 million and resulted in a gain on extinguishment of debt of $3.0 million after legal fees and unamortized debt issuance costs that were written-off on the closing date. As a result of this repayment, the three lodging properties previously held as collateral for the MetaBank Loan were released.

• In March 2025, the Operating Partnership, as borrower, the Company, as parent guarantor, and each party executing the loan documentation as a subsidiary guarantor, entered into a $275 million delayed draw term loan (the 2025 Delayed Draw Term Loan”) with Bank of America, N.A., as administrative agent. The 2025 Delayed Draw Term Loan has an initial maturity date of March 27, 2028 and can be extended by the Company for two 12-month periods, subject to certain conditions. In February 2026, we drew the $275 million balance of the 2025 Delayed Draw Term Loan to refinance a significant portion of our Convertible Notes which matured in February 2026. The 2025 Delayed Draw Term Loan has an accordion feature which allows the Company to increase the total commitments to $325.0 million.

• In May 2025, the Brickell Joint Venture closed a $58 million mortgage loan (the “Brickell Mortgage Loan”) with Wells Fargo Bank, N.A., as administrative agent, the proceeds of which were primarily used to repay the $45.4 million outstanding balance of the mortgage loan with City National Bank of Florida that was scheduled to mature in June 2025. The Brickell Mortgage Loan provides for an interest rate equal to the Secured Overnight Financing Rate (“SOFR”) plus 260 basis points, which represents a 40 basis point reduction from the previous loan. The Brickell Mortgage Loan will mature in May 2028, and can be extended by the Brickell Joint Venture for two 12-month periods, subject to certain conditions. Subsequent to the closing of the Brickell Mortgage Loan, we entered into a $58.0 million interest rate swap to fix SOFR until May 2028. Pursuant to the interest rate swap, we will pay a fixed rate of 3.57%.

• In July 2025, the Operating Partnership and the GIC Joint Venture entered into a $400 million term loan with Bank of America, N.A., as administrative agent (the “2025 GIC Joint Venture Term Loan”) to refinance and replace a $410 million senior secured term loan facility (the “2022 GIC Joint Venture Term Loan”) with Bank of America, N.A., that was used as part of the NCI Transaction, (a portfolio of 27 lodging properties, containing an aggregate of 3,709 guestrooms, and two parking structures containing 1,002 spaces, and various financial incentives). The 2025 GIC Joint Venture Term Loan provides for an interest rate equal to SOFR plus 235 basis points, which represents a 50 basis point reduction from the 2022 GIC Joint Venture Term Loan. The 2025 GIC Joint Venture Term Loan will mature on July 24, 2028 and can be extended by the GIC Joint Venture for two 12-month periods, subject to certain conditions.

• In August 2025, the GIC Joint Venture entered into two $150 million forward starting interest rate swaps to fix one-month term SOFR. The interest rate swaps have an effective date of January 13, 2026 and a termination date of January 13, 2028. The two $150 million interest rate swaps with an average SOFR rate of 3.26% will replace $300 million of existing GIC Joint Venture interest rate swaps with an average SOFR rate of 3.49% scheduled to mature in January 2026.

• In November 2025, we entered into a $125 million interest rate swap to fix one-month term SOFR. The interest rate swap has an effective date of December 31, 2025 and a termination date of December 31, 2027. This interest rate swap has an interest rate of 3.31% and replaces a $125 million swap with a rate of 2.92% that matured on December 31, 2025.

• In December 2025, we executed amendments to the $600 Million Senior Credit and Term Loan Facility, the 2024 Term Loan, the 2025 Delayed Draw Term Loan, and the GIC Joint Venture Credit Facility to reduce the interest payable pursuant to each respective credit agreement by removing the 10 basis point credit spread adjustment to the term SOFR rate therein.

To satisfy the requirements for qualification as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute annually at least 90% of our REIT taxable income to our stockholders, determined without regard to the deduction for dividends paid and excluding any net capital gains. We intend to distribute a sufficient amount of our taxable income to maintain our status as a REIT and to avoid tax on undistributed income. Because we anticipate distributing a substantial amount of our available cash from operations, if sufficient funds are not available to us from lodging property dispositions, our senior revolving credit and term loan facilities and other loans, we may need to raise additional capital to grow our business.

Outstanding Indebtedness

At December 31, 2025, we had no outstanding borrowings on our $400 Million Revolver, $200.0 million outstanding on our $200 Million Term Loan and $200.0 million outstanding on our 2024 Term Loan (as defined under “Part II - Item 8. - Financial Statements and Supplementary Data - Note 6 – Debt ”). Each of the credit facilities is currently supported by the 52 lodging properties included in the credit facility borrowing base. We also had $287.5 million of outstanding Convertible Notes. In March 2025, we closed on the 2025 Delayed Draw Term Loan to refinance a significant portion of our outstanding $287.5 million convertible notes when they mature in February 2026. As of December 31, 2025, we had not drawn any amounts under the 2025 Delayed Drawn Term Loan. In February 2026, using amounts available on the 2025 Delayed Drawn Term Loan and borrowings on our $400 Million Revolver, we repaid the outstanding $287.5 million Convertible Notes.

At December 31, 2025, the GIC Joint Venture had $250.0 million in outstanding loans and available commitments under our GIC Joint Venture Credit Facility consisting of borrowings on a $125.0 million term loan (after giving effect to an additional $50.0 million of borrowings under the accordion feature of the loan, which was used in the purchase of two lodging properties in December 2024) and a $125.0 million revolving line of credit. The GIC Joint Venture Credit Facility is secured primarily by a first priority pledge of the equity interests in the subsidiaries that hold the 15 lodging property borrowing base assets, and the related TRS entities that wholly own the TRS Lessees.

Additionally, to complete the NCI Transaction, the GIC Joint Venture entered into the 2022 GIC Joint Venture Term Loan and assumed a PACE loan totaling $6.5 million. In July 2025, the GIC Joint Venture entered into the 2025 GIC Joint Venture Term Loan to refinance and replace the 2022 GIC Joint Venture Term Loan. The 2025 GIC Joint Venture Term Loan has an accordion feature that permits an increase in the total commitments by up to $200 million, for aggregate potential borrowings of up to $600 million, and is secured by pledges of the equity in the entities (and affiliated entities) that own the remaining 24 lodging properties and two parking garages that were acquired as part of the NCI Transaction. The outstanding balances of the GIC Joint Venture Term Loan and the PACE loan were $390.7 million and $5.7 million, respectively, at December 31, 2025.

The GIC Joint Venture also has a mortgage loan outstanding of $12.3 million at December 31, 2025 related to the acquisition of the Embassy Suites in Tucson, AZ in December 2021.

At December 31, 2025, the Brickell Joint Venture had $58.0 million outstanding on the Brickell Mortgage Loan, which is secured by the dual-branded 264-guestroom AC Hotel by Marriott and Element Hotel Miami Brickell.

At December 31, 2025, we have scheduled debt principal payments during the next 12 months totaling $0.5 million, not including the $287.5 million of Convertible Notes outstanding that was repaid in February 2026 using amounts available on the 2025 Delayed Draw Term Loan and borrowings on our $400 Million Revolver.

Currently, we have the capacity to pay scheduled principal payments using cash on hand or draws under our $400 Million Revolver. We have obtained financing through debt instruments that have staggered maturities and intend to continue to do so in the future. Our debt includes, and may include in the future, debt secured by first priority mortgage liens on certain lodging properties, debt secured by equity pledges, and unsecured debt. We believe that we will have adequate liquidity to meet the requirements for scheduled maturities and principal repayments. However, we can provide no assurance that we will be able to refinance our indebtedness as it becomes due and, if refinanced, whether such refinancing will be available on favorable terms.

At December 31, 2025, we and our GIC Joint Venture are in compliance with all of our loan agreements, and we believe we will be in compliance with these agreements for at least the next four quarters. See “Part II – Item 8. – Financial Statements and Supplementary Data – Note 6 – Debt ” for additional information concerning our loans, loan amendments and our financing arrangements.

A summary of our debt at December 31, 2025 is as follows (dollar amounts in thousands):

Interest

Rate

Amortization Period

(Years)

Initial Maturity Date

Fully Extended Maturity Date

Number of

Properties

Encumbered

Principal Amount Outstanding December 31, 2025

Principal Amount Outstanding December 31, 2024

2023 Senior Credit Facility

Bank of America, NA

$400 Million Revolver (1)

5.84% Variable

$200 Million Term Loan (1)

6.02% Variable

Total Senior Credit and Term Loan Facility

Convertible Notes (2)

1.50% Fixed

Term Loans

Regions Bank 2024 Term Loan Facility (1)

5.92% Variable

2025 Delayed Draw Term Loan (1) (2)

5.79% Variable

Total Operating Partnership Debt

Brickell Joint Venture Mortgage Loan

City National Bank of Florida

Wells Fargo Bank, N.A.

6.47% Variable

GIC Joint Venture Credit Facility and Term Loans

Bank of America, N.A.

$125 Million Revolver (3)

6.07% Variable

$125 Million Term Loan (3)

6.02% Variable

Bank of America, N.A. 2022 Term Loan

Bank of America, N.A. 2025 Term Loan (4)

6.27% Variable

Wells Fargo

4.99% Fixed

PACE loan (5)

6.10% Fixed

Total GIC Joint Venture Credit Facility and Term Loans

Total Joint Venture Debt

Total Debt

Pro rata debt outstanding (6)

(1) The 2023 Senior Credit Facility, the Regions Bank 2024 Term Loan Facility, and the 2025 Delayed Draw Term Loan are supported by a borrowing base of 52 unencumbered hotel properties and their affiliates.

(2) The $287.5 million of Convertible Notes were repaid in February 2026 using amounts available on the 2025 Delayed Drawn Term Loan and borrowings on our $400 Million Revolver.

(3) The $125 Million Revolver and the $125 Million Term Loan are secured by pledges of the equity in the entities (and affiliated entities) that own 15 lodging properties.

(4)    The GIC Joint Venture Term Loan with Bank of America, N.A. is secured by pledges of the equity in the entities (and affiliated entities) that own 24 lodging properties and two parking garages.

(5)    As part of the NCI Transaction, a subsidiary of the GIC Joint Venture assumed a PACE loan of approximately $6.5 million. The loan bears fixed interest at 6.10%, has an amortization period of 20 years, and matures on July 31, 2040. The PACE loan is secured by an assessment lien imposed by the County of Tarrant, Texas for the benefit of the lender.

(6)    Pro rata debt represents our portion of total debt taking into consideration only our pro rata share of joint venture debt.

Capital Expenditures

During the year ended December 31, 2025, we funded $75.5 million of capital expenditures and $7.5 million of development expenditures on a consolidated basis. When taking into consideration only our pro rata portion related to our joint ventures, capital and development expenditures for the year ended December 31, 2025 were $64.2 million, and $6.7 million.

We anticipate spending an estimated $55.0 million to $65.0 million in capital expenditures across our portfolio (excluding the pro rata portion related to our joint venture partners) during the year ended December 31, 2026. We expect to fund these expenditures through a combination of cash on hand, working capital, cash flows from operations, restricted cash, borrowings under our $400 Million Revolver, or other potential sources of capital, to the extent available to us.

Cash Flow Analysis

The following table summarizes changes in cash flows for the years ended December 31, 2025 and December 31, 2024 (in thousands):

For the Years Ended December 31,

Change

Net cash provided by operating activities

Net cash used in investing activities

Net cash used in financing activities

Net change in cash, cash equivalents and restricted cash

Changes from the year ended December 31, 2025 compared with the year ended December 31, 2024 were due to the following:

• Net cash provided by operating activities . Cash provided by operating activities for the year ended December 31, 2025 was the result of net income of $149.5 million, after adjusting for non-cash items such as depreciation and amortization, equity-based compensation, reversal of our valuation allowance on deferred tax assets, gain on the disposition of assets, and gain on extinguishment of debt, partially offset by a net change in working capital of $0.4 million.

Cash provided by operating activities for the year ended December 31, 2024 was the result of net income of $164.3 million, after adjusting for non-cash items such as depreciation and amortization, loss on write-down of assets, recovery of credit losses, and equity-based compensation, and a net change in working capital of $2.1 million.

• Net cash used in investing activities . Cash used in investing activities for the year ended December 31, 2025 was primarily due to $75.5 million of renovation expenditures and $7.5 million of development expenditures, partially offset by $39.7 million in net cash proceeds from the sale of the 107-guestroom Courtyard by Marriott, Amarillo, Texas, the sale of the 123-guestroom Courtyard by Marriott in Kansas City, MO, and the sale of an undeveloped land parcel in San Antonio, TX in February 2025.

Cash used in investing activities for the year ended December 31, 2024 was primarily due to the acquisition of the 2024 Acquired Properties for $96.3 million, $89.3 million of renovation expenditures and $5.2 million of development expenditures, partially offset by the $109.4 million in net cash proceeds from the sale of the 2024 Sold Properties, and the collection of a $9.9 million tax incentive related to the NCI Transaction.

• Net cash used in financing activities . Cash used in financing activities for the year ended December 31, 2025 was primarily due to the payment of dividends and distributions of approximately $82.0 million, repurchases of our common stock of approximately $15.4 million, financing costs of approximately $10.3 million primarily related to the 2025 Delayed Draw Term Loan and the refinancing of the GIC Joint Venture Term Loan, net repayments on our $400 Million Revolver of $10.0 million, net term loan repayments of $5.3 million, $1.6 million related to shares acquired for employee withholding requirements, $1.1 million in scheduled principal payments on mortgage debt, and $0.6 million related to the redemption of certain GIC Joint Venture preferred stock, partially offset by net proceeds from the refinancing of the Brickell Mortgage Loan totaling $12.6 million, and joint venture contributions by our GIC Joint Venture partner of $0.9 million.

Cash used in financing activities for the year ended December 31, 2024 was primarily due to the $93.3 million repayment of the MetaBank and Bank of the Cascades term loans, the payment of dividends and distributions of approximately $77.6 million, financing costs of approximately $3.5 million related to the 2024 Term Loan and our GIC Joint Venture Credit Facility, scheduled principal payments on mortgage loans of $1.4 million and $0.9 million related to shares acquired for employee withholding requirements, partially offset by net borrowings on our $400 Million Revolver of $10.0 million, contributions by our GIC Joint Venture partner of $22.5 million and borrowings on our GIC Joint Venture Term Loan of $50.0 million for the acquisition of the 2024 Acquired Properties.

For information about our consolidated cash flows for the year ended December 31, 2024 compared with the year ended December 31, 2023, refer to “Part II – Item 7. – Management's Discussion and Analysis of Financial Conditions and Results of Operations – Cash Flow Analysis ” of the Company's Annual Report on Form 10-K for the year ended December 31, 2024.

Critical Accounting Policies and Estimates

We consider the following policies critical because they require estimates about matters that are inherently uncertain, involve various assumptions and require significant management judgment, and because they are important for understanding and evaluating our reported consolidated financial results. These judgments affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Applying different estimates or assumptions may result in materially different amounts reported in our financial statements.

Acquisitions of Lodging Property and Purchase Price Allocation

Our acquisitions generally consist of land, land improvements, buildings, building improvements, furniture, fixtures and equipment, inventory, and assumed debt. We analyze the acquisition of a lodging property to determine if it qualifies as the purchase of a business or an asset acquisition. If substantially all of the fair value of the gross assets acquired are concentrated in a single identifiable asset or group of similar identifiable assets, the asset or asset group is not considered a business and we would record the transaction as an asset acquisition, which includes the capitalization of acquisition costs. For an asset acquisition, we allocate the purchase price paid to the assets acquired and the liabilities assumed in the transaction based on their relative fair values. For a business combination, we would record the assets and liabilities acquired at their respective estimated fair values.

When we acquire a lodging property, we estimate the fair values of the assets acquired and the liabilities assumed using all available information to make these fair value determinations, including discounted cash flow analyses and market comparable data. In addition, we make significant estimates regarding replacement costs for the buildings and furniture, fixtures and equipment, including estimated useful lives and judgments related to certain market assumptions. We also may engage independent valuation specialists to assist in the fair value determinations of the assets acquired and the liabilities assumed. Fair value determinations required numerous estimates and assumptions, such as estimates of future income growth, replacement cost per unit, value per acre or buildable square foot, capitalization rates, discount rates, borrowing rates, market rental rates, capital expenditures, and cash flow projections at the respective lodging properties. The determination of fair value is subjective and is based on assumptions and estimates that could differ materially from actual results in future periods.

The Company allocates the purchase price of acquired lodging properties based on the relative fair values of the acquired land, land improvements, building, furniture, fixtures and equipment, identifiable intangible assets or liabilities, other assets and assumed liabilities. Intangible assets may include certain value associated with the on-going operations of the lodging business being acquired as part of the property acquisition. Acquired intangible assets that derive their values from real property, or an interest in real property, are inseparable from that real property or interest in real property, do not produce or contribute to the production of income other than consideration for the use or occupancy of space, and are recorded as a component of the related real estate asset in our Consolidated Financial Statements.

Investments in Lodging Property, net

Our lodging properties and related assets are recorded at cost, less accumulated depreciation. We capitalize development costs and the costs of significant additions and improvements that materially upgrade, increase the value or extend the useful life of the property. These costs may include development, refurbishment, renovation, and remodeling expenditures, as well as certain indirect internal costs related to construction projects. If an asset requires a period of time in which to carry out the activities necessary to bring it to the condition necessary for its intended use, the interest cost incurred during that period as a result of expenditures for the asset is capitalized as part of the cost of the asset. We expense the cost of repairs and maintenance as incurred.

When depreciable property and equipment is retired or disposed, the related costs and accumulated depreciation are removed from the balance sheet and any gain or loss is reflected in current operations.

On a limited basis, we provide financing to developers of lodging properties for development projects. We evaluate these arrangements to determine if we participate in residual profits of the lodging property through the loan provisions or other agreements. Where we conclude that these arrangements are more appropriately treated as an investment in the real property, we reflect the loan in Investments in lodging property, net in our Consolidated Balance Sheets.

Asset Impairment

Each quarter, we evaluate the net carrying amounts of our long-term assets for impairment when impairment indicators are present. We evaluate for impairment triggers based on qualitative factors such as macroeconomic trends, trends related to demand for travel and lodging, and current and projected trends related to local market conditions. We also evaluate for impairment triggers based on quantitative factors such as historical and projected revenue and profitability performance trends. When an impairment indicator is identified, we perform a recoverability analysis based on estimated future undiscounted cash flows for the asset. Forecasted undiscounted cash flows require substantial management judgment related to estimates of future revenues, expenses, and terminal capitalization rates used to derive residual value, which are based on historical results, our expectations related to revenue trends and future performance of the asset, our assessment of current and future market conditions and competition, our expectations related to performance of the overall economy, and third-party industry published forecasts. If we determine that an asset impairment exists, we will estimate the fair value of the asset and record a loss on impairment to record the asset at the lower of cost or fair value.

See “Part II – Item 8. – Financial Statements and Supplementary Data – Note 2 – Basis of Presentation and Significant Accounting Policies ” for significant accounting policies and new accounting standards.

Recent Developments

On December 31, 2025, we determined that we no longer qualify as a large-accelerated filer or a well-known seasoned issuer under SEC rules. Accordingly, we are now an accelerated filer for Exchange Act reporting purposes. As a result, our Form 10-K filing deadline is extended to 75 days after year-end, and we are no longer eligible to use automatic shelf registration statements. Any new registration statements will require SEC review prior to effectiveness.