Financial Analysis

Commitments and Contingencies Management and Franchise Agreements In order to maintain its qualification as a REIT, the Company cannot directly or indirectly operate any of its hotels. The Company leases each hotel to TRS lessees, which in turn engage property managers to manage the hotels. Each hotel is operated pursuant to a hotel management agreement with an independent third-party hotel management company. Pursuant to the hotel management agreements, the management company controls the day-to-day operation of each hotel, and the Company is granted limited approval rights with respect to certain of the management companys actions. The hotel management agreements typically contain a two-tiered fee structure, wherein the management company receives a base management fee and, if certain financial thresholds are exceeded, an incentive management fee. Many hotel management agreements also require the maintenance of a capital reserve fund based on a percentage of hotel revenues to be used for capital expenditures to maintain the quality of the hotels. Management agreements for brand-managed hotels have terms generally ranging from 10 to 30 years and allow for one or more renewal periods at the option of the hotel manager. Assuming all renewal periods are exercised, the average remaining term is approximately 24 years. Management agreements for franchised hotels generally contain initial terms of ten years with an average remaining term of approximately ten years; none of these a …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

"Debt Debt as of June 30, 2026 and December 31, 2025 consisted of the following (dollar amounts in thousands): Balance Outstanding as of Rate Type Rate (1) Maturity Date June 30, 2026 December 31, 2025 Mortgage Loans Grand Bohemian Hotel Orlando, Autograph Collection Fixed (2) % 3/1/2026 $ $ 52,034 Marriott San Francisco Airport Waterfront Fixed 4.63 % 5/1/2027 102,572 103,732 Andaz Napa Fixed (3) 5.72 % 1/19/2028 42,000 54,081 Total Mortgage Loans 4.95 % (4) $ 144,572 $ 209,847 Corporate Credit Facilities (5) 2024 Initial Term Loan Variable (6) 5.29 % 11/3/2028 225,000 225,000 2024 Delayed Draw Term Loan Variable (6) 5.29 % 11/3/2028 100,000 100,000 Revolving Credit Facility (2024) Variable (7) 5.29 % 11/3/2028 Total Corporate Credit Facilities $ 325,000 $ 325,000 2029 Senior Notes $500M Fixed 4.88 % 6/1/2029 500,000 500,000 2030 Senior Notes $400M Fixed 6.63 % 5/15/2030 400,000 400,000 Loan premiums, discounts and unamortized deferred financing costs, net (8) (10,452) (11,966) Total Debt, net of loan premiums, discounts and unamortized deferred financing costs 5.49 % (4) $ 1,359,120 $ 1,422,881 (1) The rates shown represent the annual interest rates as of June 30, 2026. The variable index for the corporate credit facilities is Term SOFR, subject to a zero basis point floor, as further described below under ""Corporate Credit Facilities."" (2) This mortgage loan was repaid in full in February 2026. (3) A variable interest loan for which the interest rate has been fixed with …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

"The following represents total revenues disaggregated by primary geographical markets (as defined by STR, Inc. (""STR"")) for the three and six months ended June 30, 2026 and 2025 (in thousands): Three Months Ended June 30, Primary Markets 2026 2025 Orlando, FL $ 38,431 $ 38,785 Phoenix, AZ 32,589 28,334 Houston, TX 31,366 29,607 San Diego, CA 30,985 31,259 Atlanta, GA 18,889 17,888 San Francisco/San Mateo, CA 17,260 15,690 Nashville, TN 16,488 16,157 San Jose-Santa Cruz, CA 12,058 11,354 Washington, DC-MD-VA 12,025 12,008 Portland, OR 11,487 13,192 Other 73,914 73,305 Total $ 295,492 $ 287,579 Six Months Ended June 30, Primary Markets 2026 2025 Orlando, FL $ 85,759 $ 84,123 Phoenix, AZ 75,861 60,877 Houston, TX 65,120 60,250 San Diego, CA 56,500 56,587 Atlanta, GA 38,049 37,089 San Francisco/San Mateo, CA 33,893 31,682 Nashville, TN 27,275 28,299 San Jose-Santa Cruz, CA 24,425 22,517 Portland, OR 22,848 23,050 Washington, DC-MD-VA 21,584 22,114 Other 139,586 149,918 Total $ 590,900 $ 576,506"

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"Share-Based Compensation 2015 Incentive Award Plan Restricted Stock Unit Grants The Compensation Committee of the Board of Directors approved the following awards of restricted stock units under the 2015 Incentive Award Plan: Grant Date Grant Description Time-Based Grants Performance-Based Grants Weighted-Average Grant Date Fair Value February 2026 2026 Restricted Stock Units 135,157 86,532 $ 13.54 Each award of time-based Restricted Stock Units will vest as follows, subject to continued employment with the Company or its affiliates through each applicable vesting date: thirty-three percent (33%) on the first anniversary of the vesting commencement date, thirty-three percent (33%) on the second anniversary of the vesting commencement date, and thirty-four percent (34%) on the third anniversary of the vesting commencement date. The performance-based Restricted Stock Units are designated twenty-five percent (25%) as absolute total stockholder return (""TSR"") units and seventy-five percent (75%) as relative TSR share units. The absolute TSR share units vest based on achievement of varying levels of the Company's TSR over the three-year performance period. The relative TSR share units vest based on the ranking of the Company's TSR as compared to a defined peer group over the three-year performance period. Vesting of performance-based Restricted Stock Units is also subject to continued employment with the Company or its affiliates through the applicable vesting date. LTIP Unit G …

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Fair Value Measurements The Company defines fair value based on the price that would be received upon sale of an asset or the exit price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value. The fair value hierarchy consists of three broad levels, which are described below: Level 1 - Quoted prices for identical assets or liabilities in active markets that the entity has the ability to access. Level 2 - Observable inputs, other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The Company has estimated the fair value of its financial and non-financial instruments using available market information and valuation methodologies it believes to be appropriate for these purposes. Considerable judgment and a high degree of subjectivity are involved in developing these es …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

Income Taxes The Companys provision for income taxes for the three and six months ended June 30, 2026 and 2025 was estimated using the discrete method and was based on the financial results through the end of the period. The Company determined that using the discrete method is more appropriate than using the annual effective tax rate method as the estimated annual effective tax method produced a negative tax rate and an unreliable estimate. The Company estimated the income tax expense for the three and six months ended June 30, 2026 using an estimated federal and state combined effective tax rate of 77.22% and recognized an income tax expense of $1.1 million and $2.1 million, respectively. The Company estimated the income tax expense for the three and six months ended June 30, 2025 using an estimated federal and state combined effective tax rate of 2.94% and recognized an income tax expense of $1.4 million and $2.2 million, respectively. Deferred tax assets are recognized to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations. …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Leases The Company leases real property, land and equipment under operating and finance leases. The following is a summary of the Company's lease related assets and liabilities as of June 30, 2026 and December 31, 2025 (dollar amounts in thousands): Consolidated Balance Sheet Classification June 30, 2026 December 31, 2025 Assets: Operating lease assets, net Other assets $ 11,851 $ 12,281 Finance leases assets, net (1) Net investment properties 5,675 5,787 Total lease assets $ 17,526 $ 18,068 Liabilities: Operating lease liabilities Other liabilities $ 10,678 $ 11,103 Finance lease liabilities Finance lease liabilities 7,601 7,606 Total lease liabilities $ 18,279 $ 18,709 (1) Finance lease assets are net of accumulated amortization of approximately $1.0 million and $0.9 million as of June 30, 2026 and December 31, 2025, respectively. The following is a summary of the Company's weighted-average remaining lease term and weighted-average discount rate as of June 30, 2026: June 30, 2026 Weighted-average remaining lease term: Operating leases (1) 24 years Finance leases 51 years Weighted-average discount rate: Operating leases 5.72% Finance leases 8.43% (1) The weighted-average remaining lease term including all available extension options is approximately 55 years. The following table sets forth the lease costs related to the Companys operating and finance leases included in the consolidated statements of operations and comprehensive income for the six months ended June 30, 2026 a …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

"Recently Issued Accounting Pronouncements In November 2024, the Financial Accounting Standards Board issued Accounting Standard Update 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) (""ASU 2024-03""). This new guidance requires disclosure of additional information for certain income statement captions within the footnotes to the financial statements. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on the disclosures to its consolidated financial statements."

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"Revenues The following represents total revenues disaggregated by primary geographical markets (as defined by STR, Inc. (""STR"")) for the three and six months ended June 30, 2026 and 2025 (in thousands): Three Months Ended June 30, Primary Markets 2026 2025 Orlando, FL $ 38,431 $ 38,785 Phoenix, AZ 32,589 28,334 Houston, TX 31,366 29,607 San Diego, CA 30,985 31,259 Atlanta, GA 18,889 17,888 San Francisco/San Mateo, CA 17,260 15,690 Nashville, TN 16,488 16,157 San Jose-Santa Cruz, CA 12,058 11,354 Washington, DC-MD-VA 12,025 12,008 Portland, OR 11,487 13,192 Other 73,914 73,305 Total $ 295,492 $ 287,579 Six Months Ended June 30, Primary Markets 2026 2025 Orlando, FL $ 85,759 $ 84,123 Phoenix, AZ 75,861 60,877 Houston, TX 65,120 60,250 San Diego, CA 56,500 56,587 Atlanta, GA 38,049 37,089 San Francisco/San Mateo, CA 33,893 31,682 Nashville, TN 27,275 28,299 San Jose-Santa Cruz, CA 24,425 22,517 Portland, OR 22,848 23,050 Washington, DC-MD-VA 21,584 22,114 Other 139,586 149,918 Total $ 590,900 $ 576,506"

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"Segment Reporting The Company invests in uniquely positioned luxury and upper upscale hotels and resorts with a focus on the top 25 lodging markets as well as key leisure destinations in the United States and manages its business activities on a consolidated basis. The Company has identified its Chief Executive Officer as its Chief Operating Decision Maker (""CODM""). The CODM evaluates performance, allocates capital resources and manages the overall investing strategy of each hotel individually. Further, the Company considers each hotel to be an operating segment and aggregates each operating segment into one reportable segment. Each hotel in this reportable segment derives revenues from the sale of room nights at hotel properties, food and beverage revenues and ancillary revenue such as parking, resort or destination amenity fees, golf, spa services and other guest services and tenant leases. Further, each operating segment follows the same accounting policies as those described in Note 2. The measure of segment assets is reported on the balance sheet as total consolidated assets. The CODM uses Hotel Earnings Before Interest, Taxes, Depreciation and Amortization (Hotel EBITDA) to evaluate income generated from segment assets (return on assets) in deciding whether to reinvest profits into the reportable segment or into other areas, such as for acquisitions, share repurchases, payment of dividends and other corporate expenditures. The CODM also uses Hotel EBITDA to monitor b …

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"Summary of Significant Accounting Policies The unaudited interim condensed consolidated financial statements and related notes have been prepared on an accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (""U.S. GAAP"" or ""GAAP"") and in conformity with the rules and regulations of the Securities and Exchange Commission (""SEC"") applicable to financial information. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted in accordance with the rules and regulations of the SEC. The unaudited condensed consolidated financial statements include normal recurring adjustments, which management considers necessary for the fair presentation of the condensed consolidated balance sheets, condensed consolidated statements of operations and comprehensive income (loss), condensed consolidated statements of changes in equity and condensed consolidated statements of cash flows for the periods presented. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of and for the year ended December 31, 2025, included in the Company's Annual Report on Form 10-K filed with the SEC on February 24, 2026. Operating results for the three and six months ended June 30, 2026 are not necessarily indicative of actual operating results for the entire year. Bas …

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"Stockholders' Equity Common Stock The Company maintains an ""At-The-Market"" (""ATM"") program pursuant to an Equity Distribution Agreement (""ATM Agreement"") with Wells Fargo Securities, LLC, Robert W. Baird & Co. Incorporated, Jefferies LLC, KeyBanc Capital Markets Inc. and Raymond James & Associates, Inc. In accordance with the terms of the ATM Agreement, the Company may from time to time offer and sell shares of its common stock having an aggregate offering price of up to $200 million. No shares were sold under the ATM Agreement during the three and six months ended June 30, 2026 and 2025 and, as of June 30, 2026, $200 million of common stock remained available for issuance under the ATM Agreement. As of June 30, 2026 and December 31, 2025, the Company had accumulated offering related costs included in other assets on the condensed consolidated balance sheets of $0.6 million and $0.5 million, respectively. These offering costs will be reclassified to additional paid in capital to offset proceeds from the sale of common stock. Any remaining accumulated offering costs will be written off when the current registration statement expires in August 2026. The Board of Directors has authorized a stock repurchase program (the ""Repurchase Program"") resulting in authorization to repurchase common stock in the open market, in privately negotiated transactions or otherwise, including pursuant to Rule 10b5-1 plans. Such repurchases or exchanges, if any, will depend on preva …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing

Subsequent Event During the three and six months ended June 30, 2026, the Company entered into an agreement to sell the 85-room Kimpton RiverPlace Hotel, located in Portland, Oregon, for a sale price of $11.0 million. As of June 30, 2026, the property was classified as held for sale and the Company recorded an impairment loss of approximately $38.8 million as the carrying value exceeded the fair value net of selling costs. The sale closed on July 21, 2026. Net cash proceeds from the sale, after transaction closing costs, were $10.3 million.

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