Summit Hotel Properties, Inc.: Form 10-Q for the period ended Mar 31, 2026

Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our audited Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K for the year ended December 31, 2025, and our unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

Unless stated otherwise or the context otherwise requires, references in this report to “we,” “our,” “us,” “our company” or “the company” mean Summit Hotel Properties, Inc. and its consolidated subsidiaries.

Cautionary Statement about Forward-Looking Statements

This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “forecast,” “project,” “potential,” “continue,” “likely,” “will,” “would” or similar expressions. Forward-looking statements in this report include, among others, statements about our business strategy, including acquisition and development strategies, industry trends, estimated revenues and expenses, ability to realize deferred tax assets and expected liquidity needs and sources (including capital expenditures and the ability to obtain financing or raise capital). You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond our control and which could materially affect actual results, performance or achievements. Factors that may cause actual results to differ materially from current expectations include, but are not limited to:

• global, national, regional and local economic and geopolitical conditions and events, including wars or potential hostilities, such as future terrorist attacks, that may negatively affect business transient, group, international and other travel or consumer behavior;
• changes in federal or state regulations or policies, such as the effect of significantly increased tariffs or retaliatory responses to increased tariffs, that could affect the labor market or our business;
• the effect of government shut-downs;
• macroeconomic conditions related to, and our ability to manage, inflationary pressures for commodities, labor and other costs of our business;
• consumer purchasing power and overall behavior, or a potential recessionary environment, which could adversely affect our costs, liquidity, consumer confidence, and demand for travel and lodging;
• levels of spending for business and leisure travel;
• adverse changes in occupancy, average daily rate (“ADR”) and revenue per available room (“RevPAR”) and other lodging property operating metrics;
• potential changes in operations, including as a result of new regulations or changes in brand standards;
• financing risks, 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;
• effects of infectious disease outbreaks or pandemics;
• default by borrowers to which we lend or provide seller financing;
• supply and demand factors in our markets or sub-markets;
• the effect of alternative accommodations on our business;
• financial condition of, and our relationships with, third-party property managers and franchisors;
• the degree and nature of our competition;
• increased interest rates or continued high rates of interest;
• increased renovation costs, which may cause actual renovation costs to exceed our current estimates;
• supply-chain disruption, which may reduce access to operating supplies or construction materials and increase related costs;
• changes in zoning laws;
• significant increases in real property taxes;
• significant increases in insurance costs or availability, including losses in excess of estimates for self-insured risks;
• risks associated with lodging property acquisitions, including the ability to ramp up and stabilize newly acquired lodging properties with limited or no operating history or that require substantial amounts of capital improvements for us to earn economic returns consistent with our expectations at the time of acquisition;
• risks associated with dispositions of lodging properties, including our ability to successfully complete the sale of lodging properties under contract to be sold, including the risk that the purchaser may not have access to the capital needed to complete the purchase;
• the nature of our structure and transactions such that our federal and state taxes are complex and there is risk of successful challenges to our tax positions by the Internal Revenue Service (“IRS”) or other federal and state taxing authorities;
• availability of and the abilities of our property managers and us to retain qualified personnel at our lodging property and corporate offices;
• our failure to maintain our qualification as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “IRC”);
• changes in our business or investment strategy;
• availability, terms and deployment of capital;
• general volatility of the capital markets and the market price of our common stock;
• environmental uncertainties and risks, including related to natural disasters;
• our ability to recover fully under third-party indemnities or our existing insurance policies for insurable losses and our ability to maintain adequate or full replacement cost “all-risk” property insurance policies on our properties on commercially reasonable terms;
• a data breach or significant disruption of our information technology systems and networks, or those of our brand or third-party property manager partners, due to cybersecurity incidents may result in losses that are greater than insurance coverages or indemnities from service providers. Cybersecurity incidents could also result in, among other things, a loss of business due to a decline in consumer confidence;
• our ability to manage rapidly advancing artificial intelligence technology related to our business;
• our ability to effectively manage our joint ventures with our joint venture partners;
• current and future changes to the IRC;
• our ability to continue to maintain an effective corporate responsibility program;
• our ability to successfully implement our share repurchase program or implement future share repurchase programs;
• the other factors discussed under the heading “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2025.

Accordingly, there is no assurance that our expectations will be realized. Except as otherwise required by the federal securities laws, we disclaim any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Overview

Summit Hotel Properties, Inc. is a self-managed lodging property investment company that was organized in June 2010 and completed its initial public offering in February 2011. We focus on owning lodging properties with efficient operating models that generate strong margins and investment returns. Our lodging properties are typically located in markets with multiple demand generators such as corporate offices and headquarters, retail centers, airports, state capitols, convention centers, and leisure attractions. Substantially all of our assets are held by, and all of our operations are conducted through, our operating partnership, Summit Hotel OP, LP (the “Operating Partnership”). Through a wholly-owned subsidiary, we are the sole general partner of the Operating Partnership. At March 31, 2026, we owned, directly and indirectly, approximately 89% of the Operating Partnership’s issued and outstanding common units of limited partnership interest (“Common Units”), and all of the Operating Partnership’s issued and outstanding 6.25% Series E and 5.875% Series F preferred units of limited partnership interest. NewcrestImage Holdings, LLC and NewcrestImage Holdings II, LLC own all of the issued and outstanding 5.25% Series Z Cumulative Perpetual Preferred Units of the Operating Partnership (“Series Z Preferred Units”), which was issued as part of the NCI Transaction (as defined in “Note 5 -Debt” to the accompanying Condensed Consolidated Financial Statements). We collectively refer to preferred units of limited partnership interests of our Operating Partnership as “Preferred Units.”

At March 31, 2026, our portfolio consisted of 94 lodging properties with a total of 14,226 guestrooms located in 24 states of the United States of America. We own our lodging properties in fee simple, except for six lodging properties which are subject to ground leases or subleases. As of March 31, 2026, we own 100% of the outstanding equity interests in 52 of the 94 lodging properties. We own a 51% controlling interest in 39 lodging properties through a joint venture that was formed in July 2019 with USFI G-Peak, Ltd. (“GIC”), a private limited company incorporated in the Republic of Singapore (the “GIC Joint Venture”). We also own 90% equity interests in two separate joint ventures (the “Brickell Joint Venture” and the “Onera Joint Venture”). The Brickell Joint Venture owns two lodging properties, and the Onera Joint Venture owns one lodging property.

Our hotel properties primarily operate under premium franchise brands owned by Marriott® International, Inc. (“Marriott”), Hilton® Worldwide (“Hilton”), Hyatt® Hotels Corporation (“Hyatt”) and InterContinental® Hotels Group (“IHG”). We also own two independent lodging properties.

We have elected to be taxed as a REIT for federal income tax purposes commencing with our short taxable year ended December 31, 2011. To qualify as a REIT, we cannot operate or manage our lodging properties. Accordingly, all of our lodging properties are leased to our taxable REIT subsidiaries (“TRS Lessees” or “TRSs”). All of our lodging properties are operated pursuant to lodging property management agreements between our TRS Lessees and professional, third-party lodging property management companies that are not affiliated with us as follows:

Our typical lodging property management agreement requires us to pay a base fee to our lodging property manager calculated as a percentage of lodging property revenues. In addition, our property management agreements generally provide that the lodging property manager can earn an incentive fee for hotel-level Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) over certain thresholds of a required investment return to us. Our TRS Lessees may employ other lodging property managers in the future. We currently do not have any ownership or economic interest in any of the lodging property management companies engaged by our TRS Lessees. However, we have a purchase option to acquire a minority equity interest in the entity that owns the Onera brand, which is an affiliate of Blink Data Services, LLC, if we reach certain investment thresholds in Onera-branded properties.

Our revenues are derived from lodging property operations and consist of room revenue, food and beverage revenue and other lodging property operations revenue. Revenues from our other lodging property operations consist of ancillary revenues related to parking, cancellation fees, meeting rooms, and other guest services provided at certain of our lodging properties.

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 trade agreements.

During the first quarter of 2026, we experienced modest same-store RevPAR growth driven by improved demand that facilitated higher average daily rates as room night mix shifted favorably toward higher rated demand segments. While these positive trends are generally expected to continue, ongoing macroeconomic uncertainty driven by the current political environment, geopolitical conflict, recent policy changes, and ongoing concerns related to inflationary pressures continues to affect consumer and corporate sentiment and spending. 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.

Our Lodging Property Portfolio

According to current chain scales as defined by STR Global (“STR”), as of March 31, 2026, six of our lodging properties with a total of 954 guestrooms are categorized as Upper-upscale hotels, 71 of our lodging properties with a total of 10,944 guestrooms are categorized as Upscale hotels and 15 of our lodging properties with a total of 2,248 guestrooms are categorized as Upper-midscale hotels. We have two independent lodging properties that are not categorized by STR. Lodging property information at March 31, 2026 is as follows:

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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 Condensed Consolidated Financial Statements.

See “Note 3 - Investments in Lodging Property, net” to the Condensed Consolidated Financial Statements for further information related to lodging property acquisitions and dispositions.

Results of Operations

The comparisons that follow should be reviewed in conjunction with the unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

Comparison of the Three Months Ended March 31, 2026 with the Three Months Ended March 31, 2025

The following table contains key operating metrics for our portfolio for the three months ended March 31, 2026 compared with the three months ended March 31, 2025 (dollars in thousands, except ADR and RevPAR).

(1) Includes the operating results of the Hilton Garden Inn - Longview, TX, which was sold in the first quarter of 2026, from January 1, 2026 through the disposition date of February 20, 2026. Therefore, total portfolio operating results reflect 95 lodging properties for a portion of the period.

(2) Same-store information includes operating results for 94 hotels owned by the Company as of January 1, 2025, and at all times during the three months ended March 31, 2026, and 2025.

The portfolio information above for the three months ended March 31, 2026 and 2025 reflects operating results for various portions of each period for certain lodging properties as a result of sales of lodging properties. The following table details how the disposition transactions affect each reporting period:

Changes from the three months ended March 31, 2026 compared with the three months ended March 31, 2025 were due to the following:

• Revenues and RevPAR. Room revenues for our total portfolio during the first quarter of 2026 compared with the first quarter of 2025 decreased by $1.2 million primarily as a result of a $1.8 million decrease in room revenues due to the sale of three lodging properties (collectively, the “Sold Properties”), partially offset by a $0.6 million increase in same-store revenues. The same-store increase was primarily driven by the completion of the renovation of the Courtyard Oceanside Fort Lauderdale Beach and improved performance in markets such as San Francisco and Phoenix, offset by decreased performance due to the lack of snowfall in leisure-oriented mountain destinations, the temporary closure of convention centers in various markets, and an unfavorable Super Bowl host city comparison.

Occupancy decreased 0.9% and ADR increased by 2.0% for the total portfolio during the first quarter of 2026, which resulted in a 1.1% increase in RevPAR. On a same-store basis, we experienced a decrease of 1.3% in occupancy and a 1.5% increase in ADR during the first quarter of 2026. This resulted in an increase in same-store RevPAR of 0.2%. The increase in ADR was driven by improved performance in higher rated demand segments.

• Room Expenses. Room expenses for our total portfolio for the first quarter of 2026 compared with the first quarter of 2025 increased $0.2 million as a result of a $0.7 million increase in same-store room expenses primarily related to increases in labor and benefits costs offset by a $0.5 million decrease due to the sale of the Sold Properties.
• Food and Beverage Revenues and Expenses. Total portfolio food and beverage revenues increased $0.5 million for the first quarter of 2026 primarily due to a $0.6 million increase in same-store food and beverage revenues driven by the completion of the renovation of the Courtyard Oceanside Fort Lauderdale Beach and other food and beverage initiatives, offset by a $0.1 million decrease due to the sale of the Sold Properties. Total portfolio food and beverage expenses increased by $0.5 million as a result of a $0.7 million increase in same-store food and beverage expenses primarily to support the increase in food and beverage revenues, partially offset by a $0.2 million decrease due to the sale of the Sold Properties.
• Other Lodging Property Operating Revenues and Expenses. Other lodging property operating revenues for our total portfolio during the first quarter of 2026 compared with the first quarter of 2025 increased $1.3 million primarily due to increases in same-store resort and parking fees.

The $1.7 million increase in other lodging property operating expenses for the total portfolio for the three months ended March 31, 2026 in comparison with the three months ended March 31, 2025 was attributable to a $2.6 million increase in same-store other lodging property operating expenses offset by a $0.9 million decrease due to the sale of the Sold Properties. The same-store increase was driven by increased royalties and franchise fees, property operation and maintenance costs, utilities, and labor expenses.

The following table includes other consolidated income and expenses for the three months ended March 31, 2026 compared with the three months ended March 31, 2025 (dollars in thousands):

Changes for the three months ended March 31, 2026 compared with the three months ended March 31, 2025 were due to the following:

• Property Taxes, Insurance and Other. Property taxes, insurance and other increased $0.6 million during the three months ended March 31, 2026 as a result of a $0.8 million increase in property tax expenses, partially offset by a $0.2 million decrease in insurance premiums. The increase in property tax expenses was primarily due to a $0.4 million decrease in property tax refunds and a $0.5 million increase due to increased property assessment values in certain locations, partially offset by a $0.1 million decrease due to the sale of the Sold Properties. The decrease in insurance premiums was due to favorable rates in the current period for our property insurance and the establishment of a partial self-insurance program for general liability coverage.
• Management Fees. Management fees decreased by $0.3 million during the three months ended March 31, 2026 primarily due to certain property management transitions in 2025, which resulted in lower management fees during the three months ended March 31, 2026.
• Depreciation and Amortization. Depreciation and amortization decreased by $0.5 million during the three months ended March 31, 2026 due to the sale of the Sold Properties, partially offset by additional depreciation expense related to assets placed in service as a result of completed renovations.
• Corporate General and Administrative. Corporate general and administrative expenses increased by $0.3 million during the three months ended March 31, 2026 primarily due to increases in non-cash stock compensation expenses and corporate employee-related costs.
• Interest Expense. Interest expense increased by $0.5 million during the three months ended March 31, 2026, primarily due to the refinancing in February 2026 of the $287.5 million 1.5% Convertible Notes with the $275 million 2025 Delayed Draw Term Loan, which has a higher variable interest rate.
• Other Income, net. Other income, net for the three months ended March 31, 2026 consists primarily of $0.6 million of third-party tenant income and the realization of approximately $0.6 million of tax rebates related to the NCI Transaction during the period, partially offset by a net casualty loss of $0.3 million.

Other income, net for the three months ended March 31, 2025 consists primarily of $0.7 million of third-party tenant income and the realization of approximately $0.7 million of tax rebates related to the NCI Transaction during the period, partially offset by a net casualty loss of $0.3 million.

• Income Tax Expense. The Company recorded an income tax expense of $0.9 million during the three months ended March 31, 2026, compared to an income tax expense of $0.8 million during the same period in the previous year. Income tax expense varies based on changes in our effective tax rate and variability in quarterly net income (loss).

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 Generally Accepted Accounting Principles (“GAAP”). These measures are as follows: (i) Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”), Earnings before Interest, Taxes, Depreciation and Amortization for Real Estate (“EBITDAre”) and Adjusted EBITDAre, (ii) Funds From Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”) (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).

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

EBITDAre 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. EBITDAre 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 to measure the enterprise value of a company compared to other REITs.

EBITDAre, as defined by the National Association of Real Estate Investment Trusts (“Nareit”), is calculated as EBITDA, excluding: (i) loss and gains on disposition of property and (ii) asset impairments, if any. We believe EBITDAre 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 EBITDAre when evaluating our performance, such as adjustments related to the provision for credit losses, because we believe that the exclusion of certain additional non-recurring or certain non-cash items described below provides useful supplemental information to investors regarding our on-going operating performance. We believe that the presentation of Adjusted EBITDAre, 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.

FFO and AFFO

As defined by the 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, debt transaction costs, premiums on redemption of preferred shares, losses from net casualties, non-cash lease expense, non-cash interest income, and non-cash income tax related adjustments to our deferred tax assets. Unless otherwise indicated, we present FFO and AFFO applicable to our Common Stock and Common Units. We present FFO and AFFO because we consider FFO and AFFO important supplemental measures of our operational performance and believe they are 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, 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 corporate depreciation and amortization expense, which is de minimis. 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 alternatives to net income (loss) (computed in accordance with GAAP), as an indicator of our liquidity, nor are they indicative of funds available to meet our cash needs, including our ability to pay dividends or make distributions. Where indicated in this Quarterly Report on Form 10-Q, FFO is based on our computation of FFO and not the computation of Nareit-defined FFO unless otherwise noted.

EBITDA, EBITDAre and Adjusted EBITDAre

The following is an unaudited reconciliation of our Net (loss) income, determined in accordance with GAAP, to EBITDA, EBITDAre and Adjusted EBITDAre, (in thousands):

Adjusted EBITDAre decreased $0.8 million for the three months ended March 31, 2026 in comparison with the three months ended March 31, 2025. The decrease is primarily due to the sale of the Sold Properties.

FFO and AFFO

The following is an unaudited reconciliation of our Net (loss) income, determined in accordance with GAAP, to FFO and AFFO (in thousands, except per share/unit amounts):

The following is an unaudited reconciliation of weighted-average diluted shares of Common Stock to non-GAAP weighted-average diluted shares of Common Shares and Common Units for FFO and AFFO (in thousands):

(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, 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.

(2) The Company includes the outstanding Common Units issued by our Operating Partnership held by limited partners other than the Company because the Common Units are redeemable for cash or, at the Company’s option, shares of the Company’s common stock on a one-for-one basis.

AFFO applicable to shares of common stock and Common Units decreased by $1.8 million for the three months ended March 31, 2026 compared with the three months ended March 31, 2025. The decrease is primarily due to the sale of the Sold Properties and increased interest expense due to the refinancing of the $287.5 million 1.5% Convertible Notes with the $275 million 2025 Delayed Draw Term Loan in February 2026.

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 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 dividends and distributions to our stockholders and unitholders when declared and paid. 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 equity-based compensation), which are generally paid from operating cash flows, were $6.8 million and $6.7 million, for the three months ended March 31, 2026 and 2025, 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 obligations consist primarily of dividends and distributions, scheduled debt payments, including maturing loans, capital required for renovations and other non-recurring capital expenditures that periodically are made with respect to our lodging properties, and lease obligations.

Our sources of cash are primarily from operating cash flows, sales of lodging properties, principal and interest payments from borrowers on notes receivable, and debt financing including available balances on our revolving loans.

At March 31, 2026, we have scheduled debt principal payments in the next 12 months totaling $0.5 million. In February 2026 we drew upon our $275 million delayed draw term loan (the “2025 Delayed Draw Term Loan”) and $400 Million Revolver (defined in “Note 5 - Debt” to the accompanying Condensed Consolidated Financial Statements) to repay the outstanding Convertible Notes at their maturity.

We have obtained financing through debt instruments having staggered maturities and intend to continue to do so in the future. Our debt includes, and may include in the future, debt secured by equity pledges, debt secured by first priority mortgage liens on certain lodging properties and unsecured debt. Our outstanding indebtedness requires us to comply with various financial and other covenants. 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.

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.

From time to time, we may repurchase shares of our common stock pursuant to our 2025 Share Repurchase Program (see “Note 8 - Equity”). During the three months ended March 31, 2026, we repurchased 1.4 million shares of our common stock for $6.0 million, or $4.17 per share. At March 31, 2026, approximately $28.6 million is authorized for the repurchase of under the 2025 Share Repurchase Program.

Outstanding Indebtedness

At March 31, 2026, we had $25 million in borrowings under our $400 Million Revolver, $200 million outstanding on our $200 Million Term Loan, $275 million outstanding on our 2025 Delayed Draw Term Loan, and $200 million outstanding on our 2024 Term Loan (each of such credit facilities are defined in “Note 5 - Debt” to the accompanying Condensed Consolidated Financial Statements). Each of the credit facilities was supported by the 52 lodging properties included in the credit facility borrowing base.

At March 31, 2026, the GIC Joint Venture had $250 million outstanding under the GIC Joint Venture Credit Facility (as defined in “Note 5 - Debt” to the accompanying Condensed Consolidated Financial Statements), which included borrowings of $125 million on its $125 Million Term Loan and $125 million on its $125 Million Revolver. The GIC Joint Venture Credit Facility is secured primarily by a first priority pledge of the equity interests in the subsidiaries that own the 15 lodging property borrowing base assets, and the related TRS entities which wholly own the TRS Lessees.

In May 2025, the Company closed on a $58 million mortgage loan (the “Brickell Mortgage Loan”) for our dual-branded 264-guestroom AC Hotel by Marriott and Element Hotel in Miami, FL, with Wells Fargo Bank, N.A., as administrative agent, the proceeds of which were primarily used to repay the remaining $45.4 million balance of the mortgage loan with City National Bank of Florida that was scheduled to mature in June of 2025. The outstanding balance of the Brickell Mortgage Loan was $58 million at March 31, 2026.

In 2025, the Company closed on a $400 million senior unsecured term loan (the “2025 GIC Joint Venture Term Loan”) that refinanced and replaced the GIC Joint Venture Term Loan (as defined in Note 5 - Debt to the Condensed Consolidated Financial Statements). The 2025 GIC Joint Venture Term Loan has an initial maturity date of July 2028 and can be extended for two 12-month periods at the Company’s option, subject to certain conditions, for a fully extended maturity date of July 2030.

The GIC Joint Venture has a mortgage loan outstanding totaling $12.2 million related to the acquisition of the Embassy Suites in Tucson, AZ in December 2021 and a Property Assessed Clean Energy (“PACE”) loan totaling $5.5 million that was assumed as part of the NCI Transaction in the first quarter of 2022.

As a result of the 2025 GIC Joint Venture Term Loan financing and the 2025 Delayed Draw Term Loan financing, the Company has virtually no debt maturities until 2028 and has an average length to maturity of approximately 3.4 years.

At March 31, 2026, 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. For more information concerning our indebtedness, see “Note 5 - Debt” to the accompanying Condensed Consolidated Financial Statements.

A summary of our debt at March 31, 2026 is as follows (dollars in thousands):

(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) In March 2026, we exercised our first option to extend the maturity date of the $200 Million Term Loan for 12 months to June 2027.

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

(4) The GIC Joint Venture Term Loan with Bank of America, N.A. is secured by pledges of the equity in the entities that own 23 lodging properties and two parking garages and their affiliates.

Capital Expenditures

During the three months ended March 31, 2026, we funded $11.9 million in capital expenditures on a consolidated basis. When taking into consideration only our pro rata portion related to our joint ventures, capital expenditures for the three months ended March 31, 2026 were $9.3 million. We anticipate spending approximately $55 million to $65 million on capital expenditures on a pro rata basis during 2026. We expect to fund these expenditures through a combination of cash flows from operations and borrowings on our $400 Million Revolver, or other potential sources of capital, to the extent available to us.

Cash Flows

Unaudited cash flow information is as follows (in thousands):

Changes from the three months ended March 31, 2026 compared with the three months ended March 31, 2025 were due to the following:

• Net cash provided by operating activities. Cash provided by operating activities for the three months ended March 31, 2026 was the result of net income of $39.3 million, after adjusting for non-cash items such as depreciation and amortization and equity-based compensation, partially offset by a net change in working capital of $11.2 million. Cash provided by operating activities for the three months ended March 31, 2025 was the result of net income of $41.9 million, after adjusting for non-cash items such as depreciation and amortization and equity-based compensation, partially offset by a net change in working capital of $16.1 million. The net change in working capital each period can vary based on the timing and amounts incurred of working capital components and the timing of payments.
• Net cash provided by (used in) investing activities. Cash provided by investing activities for the three months ended March 31, 2026 was primarily due to the net cash proceeds of $12.0 million related to the sale of the Hilton Garden Inn in Longview, TX in February 2026, offset by $11.9 million of renovation expenditures.

Cash used in investing activities for the three months ended March 31, 2025 was due to $18.1 million of renovation and development expenditures partially offset by the net proceeds of $1.2 million related to the sale of an undeveloped land parcel in San Antonio, TX in February 2025.

• Net cash used in financing activities. Cash used in financing activities for the three months ended March 31, 2026 was primarily related to the payment of dividends and distributions of approximately $16.8 million, the repayment of our Convertible Notes totaling $287.5 million from $275 million of borrowings on our 2025 Delayed Draw Term Loan and $12.5 million drawn on our $400 Million Revolver, $7.5 million of principal payments on debt, repurchases of our common stock of approximately $6.0 million, $0.3 million related to financing fees and costs, and $0.9 million related to employee withholding requirements on vested restricted stock, partially offset by other borrowings on our $400 Million Revolver of $12.5 million.

Cash used in financing activities for the three months ended March 31, 2025 was primarily related to the payment of dividends and distributions of approximately $15.0 million, financing costs of approximately $4.2 million related to the 2025 Delayed Draw Term Loan, $1.6 million related to employee withholding requirements on vested restricted stock, and scheduled debt principal repayments of $0.6 million, mostly offset by net borrowings on our line of credit of $20.0 million and GIC Joint Venture contributions of $0.4 million.

Critical Accounting Policies

For critical accounting policies, see “Note 2 - Basis of Presentation and Significant Accounting Policies” to the accompanying Condensed Consolidated Financial Statements and our Annual Report on Form 10-K for the year ended December 31, 2025.

Cybersecurity

The hospitality industry and certain of the major brand and franchise companies have in the past experienced cybersecurity breaches. We are not aware of any material cybersecurity losses related to our corporate information technology environment or any of our properties. Cybersecurity risks at our lodging properties are managed through our franchisors and property management companies. An important part of our cybersecurity risk mitigation efforts includes maintaining cybersecurity insurance and indemnifications in certain of our property management agreements. Our Board of Directors, primarily through the Audit Committee, oversees management's approach to managing cybersecurity risks.

Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices, and other market changes that affect market-sensitive instruments. In pursuing our business strategies, the primary market risk to which we are exposed is interest rate risk. All of our outstanding loans are now indexed to the Secured Overnight Funding Rate (“SOFR”), and therefore, our primary interest rate exposure is to SOFR. We primarily use derivative financial instruments to manage interest rate risk.

At March 31, 2026, we were party to six interest rate derivative agreements, pursuant to which we received variable-rate payments in exchange for making fixed-rate payments (dollars in thousands):

(1) Represents the weighted-average effective interest rate of our current interest rate swaps at March 31, 2026.

At March 31, 2026, after giving effect to our interest rate derivative agreements, $700.7 million, or 50%, of our consolidated debt had fixed interest rates and $708.4 million, or 50%, had variable interest rates. At March 31, 2026, debt related to our wholly-owned properties and our pro rata share of joint venture debt has a fixed-rate debt ratio of approximately 50% of our total pro rata indebtedness when taking into consideration interest rate swaps that are currently in effect.

Taking into consideration our existing interest rate swaps, an increase or decrease in interest rates of 1.0% would decrease or increase, respectively, our cash flows by approximately $7.1 million per year. See “Note 7 - Derivative Financial Instruments and Hedging” to the accompanying Condensed Consolidated Financial Statements for additional information.

As our fixed-rate debts mature, they will become subject to interest rate risk. In addition, as our variable-rate debts mature, lenders may impose interest rate floors on new financing arrangements because of the low interest rates experienced a few years ago.

Controls and Procedures

Disclosure Controls and Procedures

Our management team evaluated, with the participation of our Chief Executive Officer and our Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of March 31, 2026. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as of March 31, 2026, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Security Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the three-month period covered by this Quarterly Report on Form 10-Q, which were identified in connection with management’s evaluation required by Rules 13a-15(d) and 15d-15(d) under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We are updating the risk factors in our Annual Report on Form 10-K for the year ended December 31, 2025 as follows:

Self-Insurance Risks

We are self-insured for certain general liability risks up to specified retention levels, with third-party coverage above those amounts. Our program exposes us to the risk that actual claims, including guest-related incidents, may exceed our estimates. We establish reserves based on historical experience and management’s judgment; however, these estimates may prove insufficient. Unfavorable claims experience or increases in claim frequency, severity, or related costs could result in additional expense and could negatively affect our results of operations and financial condition.