Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

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

Overview

The Company is a lodging REIT incorporated in Maryland in August 2004 to pursue opportunities in the full-service, primarily upscale and upper-upscale segments of the hotel industry located in primary and secondary markets in the mid-Atlantic and southern United States. The Company may also opportunistically acquire hotels throughout the United States. For the years ended December 31, 2025, 2024 and 2023, we made no acquisitions and had no dispositions of hotel properties.

As of December 31, 2025, our hotel portfolio consisted of ten full-service, primarily upscale and upper-upscale hotels with an aggregate total of 2,786 rooms, as well as interests in two condominium hotels and their associated rental programs. Seven (7) of our hotels operate under well-known brands such as DoubleTree by Hilton, Tapestry Collection by Hilton, and Hyatt Centric, and three (3) operate as independent hotels. As of December 31, 2025, our portfolio consisted of the following hotel properties:

We conduct substantially all our business through the Operating Partnership, Sotherly Hotels LP. The Company is the sole general partner of the Operating Partnership and currently owns more than a 99.9% interest in the Operating Partnership, with the remaining interest being held by limited partners who were contributors of our initial hotel properties and related assets.

To qualify as a REIT, neither the Company nor the Operating Partnership can operate our hotels. Therefore, our wholly-owned hotel properties are leased to our TRS Lessees that are wholly-owned subsidiaries of the Operating Partnership, which then engage an

eligible independent contractor to operate the hotels under a management agreement. For the years ended December 31, 2025, 2024 and 2023, Our Town was engaged by our TRS Lessees to operate our hotels. Our TRS Lessees, and their parent, MHI Holding (MHI Hospitality TRS Holding, Inc.), are consolidated into each of our financial statements for accounting purposes. The earnings of MHI Holding are taxable as regular C corporations and are subject to federal, state, local, and, if applicable, foreign taxation on its taxable income.

Key Operating Metrics

In the hotel industry, room revenue is considered the most important category of revenue and drives other revenue categories such as food, beverage, catering, parking and telephone. There are three key performance indicators used in the hotel industry to measure room revenues:

RevPAR changes that are primarily driven by changes in occupancy have different implications for overall revenues and profitability than changes that are driven primarily by changes in ADR. For example, an increase in occupancy at a hotel would lead to additional variable operating costs (such as housekeeping services, laundry, utilities, room supplies, franchise fees, management fees, credit card commissions and reservations expenses), but could also result in increased non-room revenue from the hotel's restaurant, banquet or parking facilities. Changes in RevPAR that are primarily driven by changes in ADR typically have a greater impact on operating margins and profitability as they do not generate all the additional variable operating costs associated with higher occupancy. When calculating composite portfolio metrics, we include available rooms at the Lyfe Resort & Residences and the Hyde Beach House Resort & Residences that participate in our rental programs and are not reserved for owner-occupancy.

We also use Funds from Operations ("FFO"), Adjusted FFO and Hotel EBITDA as measures of our operating performance. See "Non-GAAP Financial Measures".

Results of Operations

Comparison of Year Ended December 31, 2025 to Year Ended December 31, 2024

The following table illustrates the key operating metrics for the years ended December 31, 2025 and 2024 for our wholly-owned hotels and the condominium hotel units, during each respective reporting period ("composite portfolio" properties), as well as the key operating metrics for the ten wholly-owned hotel properties that were under our control during all of 2025 ("actual" properties).

Revenue. Total revenue for the year ended December 31, 2025 was approximately $176.4 million, a decrease of approximately $5.5 million, or 3.0%, from total revenue for the year ended December 31, 2024 of approximately $181.9 million. There was an aggregate decrease in total revenue of approximately $6.0 million from eight of our properties, offset by an increase of approximately $0.5 million, at four of our properties. The overall decreases in revenue are reflected individually in room revenues, food and beverage revenues and other operating revenues, as noted below:

Room revenues at our properties for the year ended December 31, 2025 decreased approximately $4.7 million, or 3.9%, to approximately $114.4 million compared to room revenues for the year ended December 31, 2024 of approximately $119.1 million Two of our properties experienced increased room revenue by approximately $0.2 million, offset by a decrease of approximately $4.9 million at our other properties. Occupancy decreased by 2.4% for the year ended December 31, 2025, compared to the same period in 2024, as a result of decreases in transient consumers, group business, and other business travel. ADR also decreased 1.3% in 2025 compared to 2024.

Food and beverage revenues at our properties for the year ended December 31, 2025 decreased approximately $0.1 million, or 0.5%, to approximately $36.5 million compared to food and beverage revenues of approximately $36.6 million for the year ended December 31, 2024, with a majority of our properties experiencing decreased demand for food and beverage services as a result of decreased occupancy as well as a decrease in meetings, banqueting and catering from the group business segment. The decrease in

food and beverage revenues for the year ended December 31, 2025, resulted from an aggregate decrease of approximately $1.4 million from six of our properties, offset by an increase in food and beverage revenue of approximately $1.3 million at the other four properties.

Other operating revenues for the year ended December 31, 2025 decreased approximately $0.7 million, or 2.5%, to approximately $25.5 million compared to other operating revenues for the year ended December 31, 2024 of approximately $26.2 million. A decrease of approximately $1.9 million in other operating revenues was realized at six of our properties was offset by increases of approximately $1.2 million at the remaining six properties.

Hotel Operating Expenses. Hotel operating expenses, which consist of room expenses, food and beverage expenses, other direct expenses, indirect expenses, and management fees, decreased approximately $1.2 million, or 0.8%, for the year ended December 31, 2025 to approximately $133.9 million compared to hotel operating expenses for the year ended December 31, 2024 of approximately $135.1 million. The aggregate decrease of approximately $1.2 million in hotel operating expenses for the twelve months ended December 31, 2025, is directly related to the decrease in hotel occupancy and gross revenue.

Rooms expense at our properties for the year ended December 31, 2025 decreased approximately $0.7 million, or 2.4%, to approximately $26.7 million compared to rooms expense of approximately $27.4 million for the year ended December 31, 2024. The decrease in rooms expense for the year ended December 31, 2025, resulted from an aggregate decrease of approximately $0.8 million from seven of our hotel properties, offset by an increase of approximately $0.1 million from the remaining hotel properties.

Food and beverage expenses at our properties for the year ended December 31, 2025 increased approximately $0.2 million, or 0.7%, to approximately $25.6 million compared to food and beverage expense of approximately $25.4 million for the year ended December 31, 2024. The net increase in food and beverage expenses for the twelve months ended December 31, 2025, resulted from an aggregate increase of approximately $0.9 million at four of our hotels, offset by a decrease of approximately $0.7million from the remaining hotel properties.

Expenses from other operating departments decreased approximately $0.2 million, or 2.6%, to approximately $9.2 million for the year ended December 31, 2025, compared to expenses from other operating departments of approximately $9.4 million for the year ended December 31, 2024. The decrease in expenses from other operating departments for the twelve months ended December 31, 2025, resulted from aggregate decreases at six of our properties by approximately $0.4 million, which were offset by increases in other operating expenses of approximately $0.2 million from our remaining properties.

Indirect expenses at our properties for the year ended December 31, 2025 decreased approximately $0.4 million, or 0.6%, to approximately $72.4 million compared to indirect expenses of approximately $72.8 million for the year ended December 31, 2024. The increase in utilities, property taxes and insurance for the twelve months ended December 31, 2025, were offset by decreases in other indirect expenses.

Depreciation and Amortization. Depreciation and amortization for the year ended December 31, 2025 increased by approximately $0.3 million or 1.4%, to approximately $19.7 million, compared to depreciation and amortization expense of approximately $19.4 million for the year ended December 31, 2024.

Corporate General and Administrative. Corporate general and administrative expenses for the year ended December 31, 2025 increased approximately $2.0 million, or 29.4%, to approximately $8.8 million compared to corporate general and administrative expenses of approximately $6.8 million for the year ended December 31, 2024. The increase in corporate general and administrative expenses was mainly due to expenses related to the Merger, which were expensed as incurred.

Interest Expense. Interest expense for the year ended December 31, 2025 increased approximately $3.9 million, or 18.8%, to approximately $24.8 million, compared to approximately $20.9 million of interest expense for the year ended December 31, 2024. The increase in interest expense for the twelve months ended December 31, 2025, was substantially related to the imputed interest on the finance lease obligation on the Hyatt Centric Arlington. Additionally, we had increased interest expense related to new indebtedness in mid-2024, on the DoubleTree by Hilton Jacksonville Riverfront and The DeSoto and a refinance of the mortgage on the DeSoto in September 2025. Lastly, we incurred default interest on the mortgages on The Georgian Terrace beginning in June 2025 and on the DoubleTree Resort by Hilton Hollywood Beach beginning in October 2025.

Interest Income. Interest income for the year ended December 31, 2025, decreased approximately $0.4 million, or 63.5%, to approximately $0.3 million compared to approximately $0.7 million of interest income for the year ended December 31, 2024. The decrease in interest income for the twelve months ended December 31, 2025, was substantially related to decreases in cash balances in interest-bearing accounts.

Loss on Early Extinguishment of Debt. The loss for the year ended December 31, 2025 relates to the refinance of the mortgage on the DeSoto, resulting in a loss on early extinguishment of debt consisting of a prepayment penalty and the write-off of unamortized origination costs which totaled approximately $0.5 million. The loss for the year ended December 31, 2024 relates to the refinance of the mortgage on the Hotel Alba, resulting in a loss on early extinguishment of debt consisting of the write-off of unamortized origination costs, which totaled approximately $0.2 million.

Net Gain on Involuntary Conversion of Assets. The net gain on involuntary conversion of assets for the year ended December 31, 2025 relates to insurance proceeds received for the replacement of components of our hotel properties in Jacksonville, Florida and Tampa, Florida affected by casualties including Hurricane Helene in September 2024 which totaled approximately $4.0 million. Gain on involuntary conversion of assets for the year ended December 31, 2024 relates to insurance proceeds received for the replacement of components of our hotel properties at our properties in Jacksonville, Florida and Hollywood, Florida.

Income Tax (Expense) Benefit. We had income tax expense of approximately $0.1 million for the year ended December 31, 2025, compared to an income tax provision of approximately $0.1 million, for the year ended 2024. MHI TRS realized an operating loss for each of the years ended December 31, 2025 and 2024, respectively.

Net Income (Loss). We realized a net loss for the year ended December 31, 2025 of approximately $7.8 million compared to net income of approximately $1.2 million for the year ended December 31, 2024, as a result of the operating results discussed above.

Distributions to Preferred Stockholders. During the year ended December 31, 2025, we accounted for undeclared distributions to preferred stockholders of approximately $8.0 million, compared to undeclared distributions to preferred stockholders of approximately $8.0 million for the year ended December 31, 2024.

Comparison of Year Ended December 31, 2024 to Year Ended December 31, 2023

The following table illustrates the key operating metrics for the years ended December 31, 2024 and 2023 for our wholly-owned hotels and the condominium hotel units, during each respective reporting period ("composite portfolio" properties), as well as the key operating metrics for the ten wholly-owned hotel properties that were under our control during all of 2024 ("actual" properties).

Revenue. Total revenue for the year ended December 31, 2024 was approximately $181.9 million, an increase of approximately $8.1 million, or 4.6%, from total revenue for the year ended December 31, 2023 of approximately $173.8 million. There was an aggregate increase in total revenue of approximately $8.9 million from nine of our properties, offset by a decrease of approximately $0.8 million, at three of our properties. The overall increases in revenue are reflected individually in room revenues, food and beverage revenues and other operating revenues, as noted below:

Room revenues at our properties for the year ended December 31, 2024 increased approximately $4.4 million, or 3.8%, to approximately $119.1 million compared to room revenues for the year ended December 31, 2023 of approximately $114.7 million Eight of our properties experienced increased room revenue by approximately $5.3 million, offset by a decrease of approximately $0.9 million at our other properties. Occupancy increased by 4.4% for the year ended December 31, 2024, compared to the same period in 2023, as a result of increases in transient consumers, group business, and other business travel. Although ADR decreased by 3.0% in 2024 compared to 2023, the RevPAR increased by 3.7% for year ended December 31, 2024, compared to the same period in 2023.

Food and beverage revenues at our properties for the year ended December 31, 2024 increased approximately $1.4 million, or 4.0%, to approximately $36.6 million compared to food and beverage revenues of approximately $35.2 million for the year ended December 31, 2023, with a majority of our properties experiencing increased demand for food and beverage services as a result of increased occupancy as well as an increase in meetings, banqueting and catering from the group business segment. The increase in food and beverage revenues for the year ended December 31, 2024, resulted from an aggregate increase of approximately $2.5 million from six of our properties, offset by a decrease in food and beverage revenue of approximately $1.1 million at the other four properties.

Other operating revenues for the year ended December 31, 2024 increased approximately $2.3 million, or 9.8%, to approximately $26.2 million compared to other operating revenues for the year ended December 31, 2023 of approximately $23.9

million. The increase in other operating revenues was realized at eight of our properties with an increase of approximately $3.2 million, with the remaining offsetting properties decreases of approximately $0.9 million.

Hotel Operating Expenses. Hotel operating expenses, which consist of room expenses, food and beverage expenses, other direct expenses, indirect expenses, and management fees, increased approximately $6.0 million, or 4.7%, for the year ended December 31, 2024 to approximately $135.1 million compared to hotel operating expenses for the year ended December 31, 2023 of approximately $129.0 million. The aggregate increase of approximately $6.9 million in hotel operating expenses for the twelve months ended December 31, 2024, is directly related to the increase in hotel occupancy and gross revenue at ten of our properties, and reductions in hotel operating expenses at two properties of approximately $0.9 million.

Rooms expense at our properties for the year ended December 31, 2024 increased approximately $1.2 million, or 4.6%, to approximately $27.4 million compared to rooms expense of approximately $26.2 million for the year ended December 31, 2023. The increase in rooms expense for the year ended December 31, 2024, resulted from an aggregate increase of approximately $1.5 million from seven of our hotel properties, offset by a decrease of approximately $0.3 million from the remaining hotel properties.

Food and beverage expenses at our properties for the year ended December 31, 2024 increased approximately $1.2 million, or 5.0%, to approximately $25.4 million compared to food and beverage expense of approximately $24.2 million for the year ended December 31, 2023. The net increase in food and beverage expenses for the twelve months ended December 31, 2024, resulted from an aggregate increase of approximately $1.4 million, offset by a decrease of approximately $0.2 million from the remaining hotel properties.

Expenses from other operating departments increased approximately $0.4 million, or 4.4%, to approximately $9.4 million for the year ended December 31, 2024, compared to expenses from other operating departments of approximately $9.0 million for the year ended December 31, 2023. The increase in expenses from other operating departments for the twelve months ended December 31, 2024, resulted from aggregate increases at eight of our properties by approximately $0.6 million, which were offset by decreases in other operating expenses of approximately $0.2 million from four of our properties. These increases were seen mainly from bringing back parking servicing contractors.

Indirect expenses at our properties for the year ended December 31, 2024 increased approximately $3.2 million, or 4.6%, to approximately $72.8 million compared to indirect expenses of approximately $69.6 million for the year ended December 31, 2023. The increase in indirect expenses for the twelve months ended December 31, 2024, resulted from an aggregate increase in total indirect expenses of approximately $3.9 million from ten of our properties, offset by decreases of approximately $0.7 million.

Depreciation and Amortization. Depreciation and amortization for the year ended December 31, 2024 increased by approximately $0.6 million or 3.2%, to approximately $19.4 million, compared to depreciation and amortization expense of approximately $18.8 million for the year ended December 31, 2023.

Corporate General and Administrative. Corporate general and administrative expenses for the year ended December 31, 2024 decreased approximately $0.3 million, or 4.1%, to approximately $6.8 million compared to corporate general and administrative expenses of approximately $7.1 million for the year ended December 31, 2023. The decrease in corporate general and administrative expenses was mainly due to decreases in professional fees and legal fees offset by an increase in audit fees.

Interest Expense. Interest expense for the year ended December 31, 2024 increased approximately $3.3 million, or 18.7%, to approximately $20.9 million, compared to approximately $17.6 million of interest expense for the year ended December 31, 2023. The increase in interest expense for the twelve months ended December 31, 2024, was substantially related to the new mortgage obtained in early 2024 on the Hotel Alba, higher interest cost on the mortgage on the DoubleTree by Hilton Philadelphia as well as imputed interest on the finance lease obligation on the Hyatt Centric Arlington. An increase in interest expense was also realized on the new indebtedness in mid-2024, on the DoubleTree by Hilton Jacksonville Riverfront and The DeSoto.

Interest Income. Interest income for the year ended December 31, 2024, decreased approximately $0.1 million, or 13.6%, to approximately $0.7 million compared to approximately $0.8 million of interest income for the year ended December 31, 2023. The decrease in interest income for the twelve months ended December 31, 2024, was substantially related to decreases in cash balances receiving interest.

Loss on Early Extinguishment of Debt. The fiscal year 2024 loss relates to the refinancing of the Hotel Alba mortgage, resulting in a loss on early extinguishment of debt consisting of the unamortized origination costs, which totaled approximately $0.2 million for the twelve months ended December 31, 2024. No losses were recorded for the twelve months ended December 31, 2023.

Realized Gain on Hedging Activities. The realized gain on hedging activities during the twelve months ended December 31, 2024, was approximately $1.0 million, due to termination of the Hotel Alba Tampa, Tapestry Collection by Hilton interest rate swap.

PPP Loan Forgiveness. During the year ended December 31, 2024, there were no other notifications of PPP Loan Forgiveness. During the year ended December 31, 2023, we received notification from our banks and the Small Business Administration that we received partial forgiveness on one of our unsecured notes, relating to the original PPP Loans we received in 2020. We received approximately $0.3 million PPP loan forgiveness, which includes principal forgiveness and the accrued interest on that portion of the loans.

Net Gain on Involuntary Conversion of Assets. The net gain on involuntary conversion of assets decreased approximately $0.9 million, to approximately $0.5 million for the year ended December 31, 2024 from approximately $1.4 million, for the year ended December 31, 2023. The gains were related to casualties at our properties in Savannah, Georgia, Arlington, Virginia, Jacksonville and Hollywood, Florida.

Income Tax (Expense) Benefit. We had income tax expense of approximately $0.1 million for the year ended December 31, 2024, compared to an income tax benefit of approximately $0.3 million, for the year ended 2023. MHI TRS realized an operating loss for each of the years ended December 31, 2024 and 2023, respectively.

Net Income. Net income for the year ended December 31, 2024 decreased approximately $2.6 million, or 69.0%, to approximately $1.2 million, compared to a net income of approximately $3.8 million for the year ended December 31, 2023, as a result of the operating results discussed above.

Distributions to Preferred Stockholders. During the year ended December 31, 2024, we accounted for undeclared distributions to preferred stockholders of approximately $8.0 million, compared to undeclared distributions to preferred stockholders of approximately $8.0 million for the year ended December 31, 2023.

Sources and Uses of Cash

Our principal sources of cash are cash from hotel operations, proceeds from the sale of common and preferred stock, proceeds from the sale of secured and unsecured notes, proceeds of mortgage or other debt and hotel property sales. Our principal uses of cash are acquisitions of hotel properties, capital expenditures, debt service and balloon maturities, operating costs, corporate expenses and dividends. As of December 31, 2025, we had unrestricted cash of approximately $7.0 million and restricted cash of approximately $21.5 million. Our net decrease in cash for the year ended December 31, 2025, was approximately $0.2 million, generally consisting of net cash flow used in investing activities.

Operating Activities. Our cash provided by operating activities for the year ended December 31, 2025, was approximately $10.3 million. Our cash provided by operating activities for the year ended December 31, 2024, was approximately $25.9 million. Our cash provided by operating activities for the year ended December 31, 2023, was approximately $21.4 million. Cash used in or provided by operating activities generally consists of the cash flow from hotel operations, offset by the interest portion of our debt service, corporate expenses and positive or negative changes in working capital.

Investing Activities. Our cash used in investing activities for the year ended December 31, 2025 was approximately $10.7 million. Of this amount approximately $14.9 million was used for capital expenditures, including the replacement and refurbishment of furniture, fixtures and equipment offset by insurance proceeds of approximately $4.2 million.

Our cash used in investing activities for the year ended December 31, 2024, was approximately $14.1 million. Of this amount approximately $14.6 million was used for capital expenditures, including the replacement and refurbishment of furniture, fixtures and equipment offset by insurance proceeds of approximately $0.5 million.

Our cash used in investing activities for the year ended December 31, 2023, was approximately $6.7 million. Of this amount approximately $8.2 million was used for capital expenditures, including the replacement and refurbishment of furniture, fixtures and equipment offset by insurance proceeds of approximately $1.3 million.

Financing Activities. Our cash provided by financing activities for the year ended December 31, 2025, was approximately $0.2 million. During the year ended December 31, 2025, the Company and Operating Partnership received proceeds of $42.0 million from the refinance of the mortgage loan on The DeSoto, received proceeds of $7.5 million from a new line of credit and made scheduled principal payments and other prepayments on its mortgages of approximately $43.4 million, paid approximately $0.7 million in unsecured notes, and paid approximately $1.2 million in deferred financing costs. We also paid distributions to preferred stockholders of approximately $4.0 million.

During the year ended December 31, 2024, cash used in financing activities was approximately $9.3 million. The Company and Operating Partnership received proceeds of $66.3 million from the refinance of the DoubleTree by Hilton Philadelphia and the Hotel

Alba mortgage loans, made scheduled principal payments on its mortgages of approximately $65.0 million, paid approximately $1.7 million in deferred financing costs, and made scheduled principal payments of approximately $0.9 million on its unsecured notes. We received a redemption payment from the interest rate swap on the refinance of the Hotel Alba mortgage loan for approximately $1.0 million. We also paid distributions to preferred stockholders in the amount of approximately $8.0 million.

During the year ended December 31, 2023, cash used in financing activities was approximately $15.8 million. The Company and Operating Partnership received proceeds of $2.7 million from the refinance of the DoubleTree by Hilton Laurel mortgage loan, made scheduled principal payments on its mortgages of approximately $7.3 million, paid approximately $0.5 million in deferred financing costs, and made scheduled principal payments of approximately $0.7 million on its unsecured notes. We also paid distributions to preferred stockholders in the amount of approximately $10.0 million.

Capital Expenditures

We intend to maintain all our hotels, including any hotel we acquire in the future, in good repair and condition, in conformity with applicable laws and regulations and, when applicable, with franchisor's standards. Routine capital improvements are determined through the annual budget process over which we maintain approval rights, and which are implemented or administered by our management company.

Historically, we have aimed to maintain overall capital expenditures, except for those required by our franchisors as a condition to a franchise license or license renewal, at 4.0% of gross revenue. In anticipation of renovations and improvements at our properties in conjunction with product improvement programs ("PIP"s) that will be required by one or more of our franchisors in the coming years, we intend to reduce expenditures for the routine replacement of furniture, fixtures and equipment from historical levels and anticipate total capital expenditures for 2026 to be approximately $3.5 million.

We expect a substantial portion of our capital expenditures for the routine replacement or refurbishment of furniture, fixtures and equipment at our properties will be funded by our replacement reserve accounts, other than costs that we incur to make capital improvements required by our franchisors. Reserve accounts are escrowed accounts with funds deposited monthly and reserved for capital improvements or expenditures with respect to most of our hotels. Under the mortgages to which we were subject on December 31, 2025, we were required to deposit an amount equal to 4.0% of gross revenue for The DeSoto, the Hotel Ballast Wilmington, the DoubleTree by Hilton Laurel, the DoubleTree Resort by Hilton Hollywood Beach, The Whitehall, Hotel Alba, and the Georgian Terrace, as well as 4.0% of room revenues for the DoubleTree by Hilton Philadelphia Airport and the Hyatt Centric Arlington on a monthly basis. With the refinance of our indebtedness on February 12, 2026, we are required to deposit an amount equal to 4.0% of gross revenue with the respective lender for each of our hotels.

From time to time, certain of our hotel properties may undergo renovations as a result of our decision to upgrade portions of the hotel, such as guestrooms, meeting space and restaurants, in order to better compete with other hotels in our markets. In addition, we may be required by one or more of our franchisors to complete a property improvement program ("PIP") in order to bring the hotel up to the franchisor's standards. Generally, we expect to fund such renovations and improvements out of working capital, including reserve accounts established by our lenders, and proceeds of mortgage debt or equity offerings.

In October 2024, we renewed the franchise license for the DoubleTree by Hilton Philadelphia Airport, subject to a product improvement plan. We expect total capital expenditures related to the renovation of that property of approximately $11.8 million as a condition to the renewal of our franchise license. As of December 31, 2025, we had incurred costs totaling approximately $5.3 million.

We expect total capital expenditures related to the renovation of our property in Jacksonville, Florida of approximately $14.6 million, as a condition to the renewal of our franchise license. As of December 31, 2025, we had incurred costs totaling approximately $2.3 million.

Liquidity and Capital Resources

As of December 31, 2025, we had cash, cash equivalents and restricted cash of approximately $28.5 million, of which approximately $21.5 million was in restricted reserve accounts for cash collateral, capital improvements, real estate tax and insurance escrows. We expect that our cash on hand combined with our cash flow from our hotels should be adequate to fund continuing operations, recurring capital expenditures for the refurbishment and replacement of furniture, fixtures and equipment, and monthly scheduled payments of principal and interest (excluding any balloon payments due upon maturity of our mortgage debt or secured notes).

On February 7, 2024, we secured a $35.0 million mortgage loan on the Hotel Alba located in Tampa, Florida with Citi Real Estate Funding Inc. Pursuant to the loan documents, the loan has a maturity date of March 6, 2029; carries a fixed rate of interest of

8.49%; requires monthly payments of interest only; and cannot be prepaid until the last four months of the loan term. We used a portion of the proceeds to repay the existing first mortgage on the hotel and will use the balance of the proceeds for general corporate purposes.

On September 12, 2025, we secured a $42.0 million mortgage loan on The DeSoto hotel located in Savannah, Georgia with Citi Real Estate Funding Inc. The loan has a maturity date of October 6, 2030, carries a fixed rate of interest of 7.13% and requires monthly payments of interest only; and cannot be prepaid without penalty until the last four months of the loan term. We used a portion of the proceeds to repay the existing first and second mortgages on the hotel. The remainder of the proceeds were used for working capital.

On February 12, 2026, we completed the transaction with the Parent Parties contemplated by the Merger Agreement. Upon completion of the Merger, we survived as a wholly owned subsidiary of Parent and the separate existence of the Merger Sub ceased. As a result of the Merger, limited partnership units which we did not own were purchased by an affiliate of Parent for the same per share Merger Consideration that each share of Company Common Stock received pursuant to the Merger Agreement. In connection with the Merger, we received approximately $21.2 million in additional paid-in-capital.

On February 12, 2026, in connection with the consummation of the Merger and as required by the Merger Agreement, Andrew M. Sims resigned as Chairman of the Board of Directors of the Company, David R. Folsom resigned as the President and Chief Executive Officer of the Company, Anthony E. Domalski resigned as the Vice President, Chief Financial Officer and Secretary of the Company, Scott M. Kucinski resigned as the Executive Vice President and Chief Operating Officer of the Company, and Robert E. Kirkland IV resigned as General Counsel and Chief Compliance Officer of the Company. Messrs. Sims, Folsom, Domalski, Kucinski and Kirkland received payments in accordance with the change of control provision of their respective employment agreements totaling approximately $7.3 million.

On February 12, 2026, in connections with the Merger and pursuant to the Asset Purchase Agreement between Our Town and Parent, we terminated the OTH Master Management Agreement and each OTH Hotel Management Agreement. Termination fees totaled $9.7 million.

On February 12, 2026, we secured an approximately $243.0 million mortgage loan on the DoubleTree by Hilton Laurel, DoubleTree by Hilton Philadelphia Airport, DoubleTree by Hilton Jacksonville Riverfront, The Georgian Terrace, The Whitehall, Hotel Ballast, DoubleTree Resort by Hilton Hollywood Beach, and Hyatt Centric Arlington with various affiliates of Apollo Global Management, Inc. The loan may be increased to as much as $308.0 million pursuant to certain terms and provisions including the pledge of additional collateral. Pursuant to the loan documents, the mortgage loan: (i) has an initial term of 3 years term maturing on February 12, 2029 with two (2) extension options of one (1) year each, subject to certain terms and conditions; (ii) requires monthly payments of interest at a floating interest rate of SOFR plus 3.60%; (iii) is guaranteed by an affiliate of Parent; (iv) cannot be prepaid in whole or in part before August 1, 2027 without penalty; (v) required the Company to enter into an interest-rate cap agreement with (A) a notional amount equal to the balance of the loan; (B) a strike rate of 5.50% indexed to SOFR and (C) a term expiring no later than the maturity date of the loan; and (vi) contains customary representations, warranties, covenants and events of default for a mortgage loan. Proceeds of the loan were used to repay existing indebtedness.

On February 12, 2026, in connection with the Merger, we secured an approximately $26.7 million loan with an affiliate of Ascendant Capital Partners LP. The loan may be increased to as much as $45.0 million pursuant to certain terms and conditions. Pursuant to the loan documents, the loan: (i) has an initial term of four (4) years term maturing on February 12, 2030 with one (1) extension option of one (1) year, subject to certain terms and conditions; (ii) requires quarterly payments of interest at a fixed rate of 16.0% for the first year of the loan term, increasing to 16.25% for the second year of the loan term, and increasing to 16.50% for the remainder of the loan term; (iii) is guaranteed by an affiliate of Parent; (iv) requires mandatory partial prepayment coincident with the sale of property collateralized by the mortgage loan with affiliates of Apollo Global Management, Inc.; and (vi) contains customary representations, warranties, covenants and events of default for a mezzanine loan. Proceeds of the loan were used to repay existing indebtedness.

On March 24, 2026, we received additional proceeds from the mortgage loan with affiliates of Apollo Global Management Inc. in the amount of $15.0 million; additional proceeds from the loan with an affiliate of Ascendant Capital Partners LP in the amount of approximately $13.3 million; and proceeds of approximately $22.7 million from our sole stockholder. The equity proceeds were contributed to the Operating Partnership.

On March 25, 2026, we redeemed in connection with the Merger, holders of 1,188,042 shares of the Company's Series B Preferred Stock exercised their Change of Control Conversion Right described in the Articles Supplementary. The Company canceled the shares in exchange for approximately $22.2 million. Additionally, holders of 1,202,415 shares of the Company's Series C Preferred Stock exercised their Change of Control Conversion Right described in the Articles Supplementary. The Company canceled the shares in exchange for approximately $23.0 million. Lastly, holders of 820,066 shares of the Company's Series D Preferred Stock exercised their Change of Control Conversion Right described in the Articles Supplementary. The Company canceled the shares in exchange for approximately $13.7 million.

As of the date of this report, we were current on all loan payments on all other mortgages per the terms of our mortgage agreements, as amended.

Mortgage Debt

As of December 31, 2025, we had a principal mortgage debt balance of approximately $315.2 million. The following table sets forth our mortgage debt obligations on our hotels:

As discussed in Liquidity and Capital Resources, on February 12, 2026, we secured an approximately $243.0 million mortgage loan on the DoubleTree by Hilton Laurel, DoubleTree by Hilton Philadelphia Airport, DoubleTree by Hilton Jacksonville Riverfront, The Georgian Terrace, The Whitehall, Hotel Ballast, DoubleTree Resort by Hilton Hollywood Beach, and Hyatt Centric Arlington with various affiliates of Apollo Global Management, Inc. The loan may be increased up to $308.0 million pursuant to certain terms and provisions including the pledge of additional collateral. Pursuant to the loan documents, the mortgage loan: (i) has an initial term of 3 years term maturing on February 12, 2029 with two (2) extension options of one (1) year each, subject to certain terms and conditions; (ii) requires monthly payments of interest at a floating interest rate of SOFR plus 3.60%; (iii) is guaranteed by an affiliate of Parent; (iv) cannot be prepaid in whole or in part before August 1, 2027 without penalty; (v) required the Company to enter into an interest-rate cap agreement with (A) a notional amount equal to the balance of the loan; (B) a strike rate of 5.50% indexed to SOFR and (C) a term expiring no later than the maturity date of the loan; and (vi) contains customary representations, warranties, covenants and events of default for a mortgage loan. Proceeds of the loan were used to repay existing indebtedness.

On March 24, 2026, we received additional proceeds from the mortgage loan with affiliates of Apollo Global Management Inc. in the amount of $15.0 million. Proceeds of the loan were used to pay a portion of the amounts due holders of preferred stock that exercised their Change of Control Conversion Right.

On April 8, 2026, we accessed approximately $35.0 million in additional proceeds from the mortgage loan with affiliates of Apollo Global Management Inc. when Tampa Hotel Associates LLC became an additional borrower as owner of the Hotel Alba, which became one of the Subject Hotels. The proceeds were used to repay the existing indebtedness on the Hotel Alba.

On February 12, 2026, in connection with the Merger, we secured an approximately $26.7 million loan with an affiliate of Ascendant Capital Partners LP. The loan may be increased up to $45.0 million pursuant to certain terms and conditions. Pursuant to the loan documents, the loan: (i) has an initial term of four (4) years term maturing on February 12, 2030 with one (1) extension option of one (1) year, subject to certain terms and conditions; (ii) requires quarterly payments of interest at a fixed rate of 16.0% for the first year of the loan term, increasing to 16.25% for the second year of the loan term, and increasing to 16.50% for the remainder of the loan term; (iii) is guaranteed by an affiliate of Parent; (iv) requires mandatory partial prepayment coincident with the sale of property collateralized by the mortgage loan with affiliates of Apollo Global Management, Inc.; and (vi) contains customary representations, warranties, covenants and events of default for a mezzanine loan. Proceeds of the loan were used to repay existing indebtedness.

On March 24, 2026, we received additional proceeds from the loan with an affiliate of Ascendant Capital Partners LP in the amount of approximately $13.3 million. Proceeds of the loan were used to pay a portion of the amounts due holders of preferred stock that exercised their Change of Control Conversion Right.

Financial Covenants

Mortgage Loans

Our mortgage loan agreements contain various financial covenants directly related to the financial performance of the collateralized properties. Failure to comply with these financial covenants could result from, among other things, changes in the local competitive environment, disruption caused by renovation activity, major weather disturbances, as well as general economic conditions.

As described in "Liquidity and Capital Resources," as of December 31, 2025, we were in compliance with all debt covenants, current on all loan payments and not otherwise in default under any of our mortgage loans, with the exception (i) a payment at maturity default on the non-recourse mortgage on the Georgian Terrace; (2) a payment at maturity default on the mortgage the on the DoubleTree Resort by Hilton Hollywood Beach ; and (iii) a covenant default on the mortgage on the DoubleTree by Hilton Jacksonville Riverfront. On February 12, 2026, each of these loans was repaid.

Certain of our loan agreements, including our new loan agreement with affiliates of Apollo Global Management, Inc., contain "cash trap" provisions that may be triggered if the performance of our hotels declines below a certain threshold. At December 31, 2025, we continued to meet the provisions under the mortgage secured by the DoubleTree Resort by Hilton Hollywood Beach as well as the mortgage secured by The Georgian Terrace, which required substantially all the revenue generated by these hotels to be deposited directly into a lockbox account and swept into a cash management account for the benefit of the lender until the property meets the criteria in the loan agreement for exiting the "cash trap". On February 12, 2026, these two mortgage loans were repaid and the respective cash management periods terminated.

Contractual Obligations

The following table outlines our contractual obligations as of December 31, 2025, and the effect such obligations are expected to have on our liquidity and cash flow in future periods (in thousands).

Dividend Policy

The Company has elected to be taxed as a REIT commencing with our taxable year ending December 31, 2004. To maintain qualification as a REIT, the Company is required to make annual distributions to its stockholders of at least 90.0% of our REIT taxable income, (excluding net capital gain, which does not necessarily equal net income as calculated in accordance with generally accepted accounting principles). The Company's ability to pay distributions to its stockholders will depend, in part, upon its receipt of distributions from the Operating Partnership which may depend upon receipt of lease payments with respect to our properties from our TRS Lessees, and in turn, upon the management of our properties by our hotel manager. Distributions to the Company's stockholders will generally be taxable to the Company's stockholders as ordinary income; however, because a portion of our investments are equity ownership interests in hotels, which will result in depreciation and noncash charges against our income, a portion of our distributions may constitute a non-taxable return of capital. To the extent not inconsistent with maintaining the Company's REIT status, our TRS Lessees may retain any after-tax earnings.

Distributions to Stockholders and Holders of Units in the Operating Partnership. The Company may not make distributions with respect to any shares of its common stock, unless and until full cumulative distributions on the outstanding preferred stock for all past unpaid periods are paid or declared and a sum sufficient for the payment thereof in cash is set aside.

Distributions to Preferred Stockholders and Holders of Preferred Partnership Units in the Operating Partnership. On January 24, 2023, the Company announced that it will resume quarterly distribution to holders of our preferred stock and set a record date of February 28, 2023 with a payment date of March 15, 2023.

On April 24, 2023, the Company announced the declaration of a quarterly distribution to holders of our preferred stock and with a record date of May 31, 2023 with a payment date of June 15, 2023.

On May 30, 2023, the Company announced the declaration of a quarterly distribution to holders of our preferred stock and with a record date of June 30, 2023 with a payment date of July 14, 2023.

On August 1, 2023, the Company announced the declaration of a quarterly distribution to holders of our preferred stock and with a record date of August 31, 2023 with a payment date of September 15, 2023.

On October 31, 2023, the Company announced the declaration of a quarterly distribution to holders of our preferred stock and with a record date of November 30, 2023 with a payment date of December 15, 2023.

On January 30, 2024, the Company announced the declaration of a quarterly distribution to holders of our preferred stock and with a record date of February 29, 2024 with a payment date of March 15, 2024.

On April 30, 2024, we announced the declaration of a quarterly distribution to holders of our preferred stock with a record date of May 31, 2024 and a payment date of June 17, 2024.

On July 30, 2024, we announced the declaration of a quarterly distribution to holders of our preferred stock with a record date of August 30, 2024 and a payment date of September 16, 2024.

On October 29, 2024, we announced the declaration of a quarterly distribution to holders of our preferred stock with a record date of November 29, 2024 and a payment date of December 16, 2024.

On January 28, 2025, we announced the declaration of a quarterly distribution to holders of our preferred stock with a record date of February 28, 2025 and a payment date of March 14, 2025.

On April 29, 2025, we announced the declaration of a quarterly distribution to holders of our preferred stock with a record date of May 30, 2025 and a payment date of June 16, 2025.

On July 24, 2025, we announced the declaration of a quarterly distribution to holders of our preferred stock with a record date of October 31, 2025 and a payment date of November 20, 2025. On October 27, 2025, we approved the deferral of payment of this previously announced distribution to holders of our preferred stock. In connection with that payment deferral, the October 31, 2025 record date for each of those series of preferred stock has been cancelled. The Company is also suspending future preferred stock dividends.

As of December 31, 2025, the amount of cumulative unpaid dividends on our outstanding preferred shares was approximately $25.9 million, of which approximately $2.0 million has been declared. The aggregate liquidation preference with respect to our outstanding preferred shares was approximately $123.3 million. The preferred stock is not redeemable by the holders, has no maturity date and is not convertible into any other security of the Company or its affiliates, except in the event of a change of control.

Pursuant to the exercise of the Change of Control Conversion Right by holders of Series B, Series C and Series D preferred stock, the amount of cumulative unpaid dividends as of April 1, 2026, has been reduced to approximately $5.4 million, of which approximately $0.4 million has been declared. The aggregate liquidation preference with respect to our outstanding preferred shares has been reduced to approximately $24.1 million.

Inflation

We generate revenues primarily from lease payments from our TRS Lessees and net income from the operations of our TRS Lessees. Therefore, we rely primarily on the financial performance of properties in our portfolio and the ability of the management company to increase revenue and to keep pace with inflation. Operators of hotels, in general, possess the ability to adjust room rates daily to keep pace with inflation. However, competitive pressures at some or all of our hotels may limit the ability of the management company to raise room rates.

Our expenses, including hotel operating expenses, administrative expenses, real estate taxes, and property and casualty insurance are subject to inflation. These expenses are expected to grow with the general rate of inflation, except for energy, liability insurance, property and casualty insurance, property tax rates, employee benefits, and some wages, which may vary at rates that differ from the general rate of inflation.

Geographic Concentration and Seasonality

Our hotels are located in Florida, Georgia, Maryland, North Carolina, Pennsylvania, Texas and Virginia. As a result, we are particularly susceptible to adverse market conditions in these geographic areas, including industry downturns, relocation of businesses and any oversupply of hotel rooms or a reduction in lodging demand. Adverse economic developments in the markets in which we have a concentration of hotels, or in any of the other markets in which we operate, or any increase in hotel supply or decrease in lodging demand resulting from the local, regional or national business climate, could materially and adversely affect us.

The operations of our hotel properties have historically been seasonal. The months of April and May are traditionally strong, as is October. The periods from mid-November through mid-February are traditionally slow with the exception of hotels located in certain markets, namely Florida and Texas, which experience significant room demand during this period.

Competition

The hotel industry is highly competitive with various participants competing on the basis of price, level of service and geographic location. Each of our hotels is located in a developed area that includes other hotel properties. The number of competitive hotel properties in a particular area could have a material adverse effect on occupancy, ADR and RevPAR of our hotels or at hotel properties acquired in the future. We believe that brand recognition, location, the quality of the hotel, consistency of services provided, and price, are the principal competitive factors affecting our hotels.

Critical Accounting Policies

Our consolidated financial statements, prepared in conformity with U.S. GAAP, require management to make estimates and assumptions that affect the reported amount of assets and liability at the date of our financial statements, the reported amounts of revenue and expenses during the reporting periods and the related disclosures in the consolidated financial statements and

accompanying footnotes. We believe that of our significant accounting policies, which are described in Note 2, Summary of Significant Accounting Policies, in the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K, the following accounting policies are critical because they require difficult, subjective and complex judgments and include estimates about matters that are inherently uncertain, involve various assumptions, require management judgment, and because they are important for understanding and evaluating our financial position, results of operations and related disclosures. We evaluate our estimates, assumptions and judgments on an ongoing basis, based on information that is available to us, our historical experiences and various matters that we believe are reasonable and appropriate for consideration under the circumstances. Actual results may differ significantly from these estimates due to changes in judgments, assumptions and conditions as a result of unforeseen events or otherwise, which could have a material impact on our financial position or results of operations.

Investment in Hotel Properties. Hotel properties are stated at cost, net of any impairment charges, and are depreciated using the straight-line method over an estimated useful life of 7-39 years for buildings and improvements and 3-10 years for furniture and equipment. In accordance with generally accepted accounting principles, the controlling interests in hotels comprising our accounting predecessor, MHI Hotels Services Group, and noncontrolling interests held by the controlling holders of our accounting predecessor in hotels, which were acquired from third parties contributed to us in connection with the Company's initial public offering, are recorded at historical cost basis. Noncontrolling interests in those entities that comprise our accounting predecessor and the interests in hotels, other than those held by the controlling members of our accounting predecessor, acquired from third parties are recorded at fair value at the time of acquisition.

We review our hotel properties for impairment whenever events or changes in circumstances indicate the carrying value of a hotel property may not be recoverable. Events or circumstances that may cause us to perform our review include, but are not limited to, adverse permanent changes in the demand for lodging at our properties due to declining national or local economic conditions and/or new hotel construction in markets where our hotels are located. When such conditions exist, management performs a recoverability analysis to determine if the estimated undiscounted future cash flows from operating activities and the estimated proceeds from the ultimate disposition of a hotel property exceed its carrying value. If the estimated undiscounted future cash flows are found to be less than the carrying amount of the hotel property, an adjustment to reduce the carrying value to the related hotel property's estimated fair market value would be recorded and an impairment loss recognized.

As of December 31, 2025, the Company determined that its investment in the hotel commercial condominium unit at the Lyfe Resort to be impaired based on the consideration to be received pursuant a settlement agreement with the condominium association. Accordingly, the Company recognized an impairment loss of approximately $1.3 million for the year ended December 31, 2025. No impairment loss was recognized for the year ended December 31, 2024.

Income Taxes. The Company has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. As a REIT, the Company generally will not be subject to federal income tax. The MHI TRS Entities, which leases our hotels from subsidiaries of the Operating Partnership, are subject to federal and state income taxes.

We account for income taxes using the asset and liability method under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. A valuation allowance is required for deferred tax assets if, based on all available evidence, it is "more-likely-than-not" that all or a portion of the deferred tax asset will or will not be realized due to the inability to generate sufficient taxable income in certain financial statement periods. The "more-likely-than-not" analysis means the likelihood of realization is greater than 50%, that we either will or will not be able to fully utilize the deferred tax assets against future taxable income. The net amount of deferred tax assets that are recorded on the financial statements must reflect the tax benefits that are expected to be realized using these criteria. As of December 31, 2025, we have determined that it is more-likely-than-not that we will not be able to fully utilize our deferred tax assets for future tax consequences, therefore a 100% valuation allowance is required. As of December 31, 2025 and 2024, deferred tax assets each totaled $0, respectively.

As of December 31, 2025, we had no uncertain tax positions. Our policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2025, the tax years that remain subject to examination by the major tax jurisdictions to which the Company is subject generally include 2011 through 2025. In addition, as of December 31, 2025, the tax years that remain subject to examination by the major tax jurisdictions to which the MHI TRS Entities are subject, because of available NOL carryforwards, generally include 2014 through 2025.

The Operating Partnership is generally not subject to federal and state income taxes as the unit holders of the Partnership are subject to tax on their respective shares of the Partnership's taxable income.

Recent Accounting Pronouncements

For a summary of recently adopted and newly issued accounting pronouncements, please refer to the New Accounting Pronouncements section of Note 2, Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements.

Non-GAAP Financial Measures

We consider the non-GAAP financial measures of FFO attributable to common stockholders and unitholders (including FFO per common share and unit), Adjusted FFO attributable to common stockholders and unitholders, EBITDA and Hotel EBITDA to be key supplemental measures of the Company's performance and could be considered along with, not alternatives to, net income (loss) as a measure of the Company's performance. These measures do not represent cash generated from operating activities determined by generally accepted accounting principles ("GAAP") or amounts available for the Company's discretionary use and should not be considered alternative measures of net income, cash flows from operations or any other operating performance measure prescribed by GAAP.

FFO and Adjusted FFO. Industry analysts and investors use FFO as a supplemental operating performance measure of an equity REIT. FFO is calculated in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT"). FFO, as defined by NAREIT, represents net income or loss determined in accordance with GAAP, excluding extraordinary items as defined under GAAP and gains or losses from sales of previously depreciated operating real estate assets, gains or losses from involuntary conversion of assets, plus certain non-cash items such as real estate asset depreciation and amortization or impairment and after adjustment for any noncontrolling interest from unconsolidated partnerships and joint ventures. Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting to be insufficient by itself.

We consider FFO to be a useful measure of adjusted net income (loss) for reviewing comparative operating and financial performance because we believe FFO is most directly comparable to net income (loss), which remains the primary measure of performance, because by excluding gains or losses related to sales of previously depreciated operating real estate assets and excluding real estate asset depreciation and amortization, FFO assists in comparing the operating performance of a company's real estate between periods or as compared to different companies. Although FFO is intended to be a REIT industry standard, other companies may not calculate FFO in the same manner as we do, and investors should not assume that FFO as reported by us is comparable to FFO as reported by other REITs.

We further adjust FFO attributable to common stockholders and unitholders for certain additional items that are not in NAREIT's definition of FFO, including changes in deferred income taxes, any unrealized gain (loss) on hedging instruments, loss on early extinguishment of debt, gain on extinguishment of preferred stock, aborted offering costs, loan modification fees, franchise termination costs, costs associated with the departure of executive officers, litigation settlement, management contract termination costs, operating asset depreciation and amortization, gain or loss on a change in control, ESOP and stock compensation expenses, negative lease amortization on our finance ground lease obligation and acquisition costs. We exclude these items as we believe it allows for meaningful comparisons between periods and among other REITs and is more indicative than FFO of the on-going performance of our business and assets. Our calculation of adjusted FFO may be different from similar measures calculated by other REITs.

The following is a reconciliation of net income (loss) to FFO and Adjusted FFO for the years ended December 31, 2025, 2024, and 2023.

Hotel EBITDA. We define Hotel EBITDA as net income or loss excluding: (1) interest expense, (2) interest income, (3) income tax expense or benefit, (4) depreciation and amortization, (5) impairment of long-lived assets or investments, (6) gains and losses on disposal and/or sale of assets, (7) gains and losses on involuntary conversions of assets, (8) realized and unrealized gains and losses on derivative instruments not included in other comprehensive income, (9) other income at the properties, (10) loss on early debt extinguishment, (11) Paycheck Protection Program (PPP) debt forgiveness, (12) gain on exercise of development right, (13) corporate general and administrative expense, and (14) other income. We believe this provides a more complete understanding of the operating results over which our wholly-owned hotels and their operators have direct control. We believe Hotel EBITDA provides investors with supplemental information on the on-going operational performance of our hotels and the effectiveness of third-party management companies operating our business on a property-level basis.

Our calculation of Hotel EBITDA may be different from similar measures calculated by other REITs.

The following is a reconciliation of net income to Hotel EBITDA for the years ended December 31, 2025, 2024, and 2023.