AHT 10-K & 10-Q changes, risk factors and insider trading

•catastrophic events or geopolitical conditions, such as the conflict between Russia and Ukraine, the Israel-HamasIsrael-Palestine-Iran warconflict, ongoing instability in Venezuela and changes to tariffs or trade policies;

•actual and potential conflicts of interest with Ashford Inc. and its subsidiaries (including Ashford LLC, Remington Hospitality and Premier), Braemar, Stirling Inc., our executive officers and our non-independent directors;

•limitations imposed on our business and our ability to satisfy complex rules in order for us to qualify as a REIT for U.S. federal income tax purposes; and

•future sales and issuances of our common stock or other securities might result in dilution and could cause the price of our common stock to decline.decline; and

Economic conditions in the United States and geopolitical developments could have a material adverse impact on our earnings and financial condition.

Our business could be adversely affected by unstable economic and political conditions within the United States and foreign jurisdictions and by geopolitical conflicts, such as the conflict between Russia and Ukraine, the Israel-Palestine-Iran conflict, and other regional or international tensions, including the ongoing uncertainty in Venezuela. Because economic conditions in the United States may affect demand within the hospitality industry, current and future economic conditions in the United States, including slower economic growth, stock market volatilityvolatility, andheightened recessioninflationary fears,pressures, recessionary concerns, or reduced consumer spending could have a material adverse impact on our earnings and financial condition. Economic conditions may be affected by numerous factors, including but not limited to, the pace of economic growth and/or recessionary concerns,pressures, inflation, increases in theunemployment levels of unemployment,levels, energy prices, tariffs and trade barriers, changes in currency exchange rates, uncertainty aboutregarding government fiscalfiscal, monetary, and tax policy, geopolitical events, the regulatory environmentdevelopments, changes in U.S. foreign policy and the availability and cost of credit and interest rates. President Trump has indicated that his administration is likely to impose significant tariffs on imported goods. The imposition of such tariffs may strain international trade relations and increase the risk that foreign governments implement retaliatory tariffs on goods imported from the United States.

We did not pay cash dividends on our common stock in fiscal year 2024.2025. We do not expect to pay cash dividends on our common stock for the foreseeable future.

We did not pay cash dividends on our common stock in fiscal year 2024.2025. We do not expect to pay cash dividends on our common stock for the foreseeable future. We do not anticipate paying any cash dividends on our outstanding common stock for any quarter during 2025.2026. The board of directors will continue to review our dividend policy and make future announcements with respect thereto.

As of December 31, 2024,2025, we have entered into management agreements with Remington Hospitality, a subsidiary of Ashford Inc., to manage 50 of our 69 hotel properties and three of the four Stirling OP68 hotel properties. We have hired unaffiliated third-party hotel managers to manage our remaining properties. We do not supervise any of the hotel managers or their respective personnel on a day-to-day basis, and we cannot assure you that the hotel managers will manage our properties in a manner that is consistent with their respective obligations under the applicable management agreement or our obligations under our hotel franchise agreements. We also cannot assure you that our hotel managers will not be negligent in their performance, will not engage in criminal or fraudulent activity, or will not otherwise default on their respective management obligations to us. If any of the foregoing occurs, our relationships with any franchisors may be damaged, we may be in breach of our franchise agreement, and we could incur liabilities resulting from loss or injury to our property or to persons at our properties. In addition, from time to time, disputes may arise between us and our third-party managers regarding their performance or compliance with the terms of the hotel management agreements, which in turn could adversely affect us. We generally will attempt to resolve any such disputes through discussions and negotiations; however, if we are unable to reach satisfactory results through discussions and negotiations, we may choose to terminate our management agreement, litigate the dispute or submit the matter to third-party dispute resolution, the expense of which may be material and the outcome of which may adversely affect us.

We are increasingly dependent on information technology, and cyber-attacks, security problemsproblems, artificial intelligence-related risks, or other disruption and expanding social media vehicles present new risks.

Ashford LLC and our hotel managers rely on information technology networks and systems, including the Internet, to process, transmit and store electronic information, and to manage or support a variety of business processes, including financial transactions and records, personal identifying information, reservations, billing and operating data. We are also increasingly exposed to risks associated with the use of artificial intelligence (“AI”) and machine learning technologies, both as tools we and/or our hotel managers may adopt to improve operations. The collection and use of personally identifiable information is governed by federal and state laws and regulations. Privacy and information security laws continue to evolve and may be inconsistent from one jurisdiction to another. The regulatory landscape governing AI is also rapidly developing, with new federal and state laws, regulatory guidance, and international frameworks emerging that may impose additional compliance obligations on us. Compliance with all such laws and regulations may increase the Company’s operating costs and adversely impact the Company’s ability to market the Company’s properties and services.

Ashford LLC and our hotel managers may purchase some of our information technology from vendors, on whom our systems will depend, and Ashford LLC relies on commercially available systems, software, tools and monitoring to provide security for processing, transmission and storage of confidential operator and other customer information. This includes systems that may incorporate AI or machine learning capabilities, which may introduce additional risks, including algorithmic errors, biased outputs, unintended data exposure, or vulnerabilities that could be exploited by third parties. We depend upon the secure transmission of this information over public networks. Ashford LLC’s and hotel managers’ networks and storage applications could be subject to unauthorized access by hackers or others through cyber-attacks, which are rapidly evolving and becoming increasingly sophisticated, including through the use of AI-enabled tools that allow malicious actors to identify vulnerabilities, automate attacks, generate convincing phishing or social engineering content, or bypass traditional security controls, or by other means, or may be breached due to operator error, malfeasance or other system disruptions. During the quarter ended September 30, 2023, we had a cyber incident that resulted in the potential exposure of certain personal information. We have completed an investigation and have identified certain information that may have been exposed and notified potentially impacted individuals pursuant to applicable state guidelines. All systems have been restored. Privacy and information security risks have generally increased in recent years because of the proliferation of new technologies, such as ransomware,ransomware and AI-powered attack tools, and the increased sophistication and activities of perpetrators of cyber-attacks. Further, there has been a surge in widespread cyber-attacks during and since the COVID-19 pandemic, and the use of remote work environments and virtual platforms may increase our risk of cyber-attack or data security breaches. In light of the increased risks, including due to the increased remote access associated with work-from-home arrangements as a result of the COVID-19 pandemic, Ashford LLC has dedicated additional resources on our behalf to strengthen the security of our computer systems. In the future, Ashford LLC may expend additional resources on our behalf to continue to enhance our information security measures and/or to investigate and remediate any information security vulnerabilities. We may also incur costs related to evaluating, adopting, or monitoring AI technologies and ensuring their responsible use in compliance with applicable law. Despite these steps, there can be no assurance that we will not suffer a significant data security incident in the future, that unauthorized parties will not gain access to sensitive data stored on our systems, that AI systems we or our vendors use will perform as intended without error or bias, or that any such incident will be discovered in a timely manner.

In addition, the use of social media or AI technologies could cause us to suffer brand damage or information leakage. Negative posts or comments about us, our hotel managers or our hotels on any social networking website could damage our or our hotels’ reputations. In addition, employees or others might disclose non-public sensitive information relating to our business through external media channels.channels or inadvertently through the use of AI tools. The continuing evolution of social media and AI will present us with new challenges and risks.

As of December 31, 2024,2025, our outstanding indebtedness consisted of approximately $2.7$2.6 billion in property-level debt, including approximately $2.5$2.4 billion of variable interest rate debt. We may also incur additional variable rate debt. In the future, we may incur additional indebtedness to finance future hotel acquisitions, capital improvements and development activities and other corporate purposes. Adverse conditions in credit markets or reduced availability of financing could limit our ability to refinance existing debt or obtain new debt on favorable terms, which may negatively impact our liquidity and financial flexibility.

Substantially all of our assets are encumbered by property-level indebtedness; therefore, we may be limited in our ability to raise additional capital through property-level or other financings. In addition, our ability to raise additional capital could be limited to refinancing existing secured mortgages before their maturity date which may result in yield maintenance or other prepayment penalties to the extent that the mortgage is not open for prepayment at par. Due to these limitations on our ability to raise additional capital, we may face difficulties obtaining liquidity and negotiating with lenders in times of distress. Adverse conditions in credit markets or tightening lending standards could further limit our ability to raise capital or refinance existing obligations on favorable terms.

Some of our hotels are on land subject to ground leases, at least three of which cover the entire property. Accordingly, we only own a long-term leasehold rather than a fee simple interest, with respect to all or a portion of the real property at these hotels. If we fail to make a payment on a ground lease or are otherwise found to be in breach of a ground lease, we could lose the right to use the hotel or portion of the hotel property that is subject to the ground lease. In addition, unless we can purchase the fee simple interest in the underlying land and improvements or extend the terms of these ground leases before their expiration, we will lose our right to operate these properties and our interest in the improvements upon expiration of the ground leases. We may not be able to renew any ground lease upon its expiration or if renewed, the terms may not be favorable. Our ability to exercise any extension options relating to our ground leases is subject to the condition that we are not in default under the terms of the ground lease at the time that we exercise such options. If we lose the right to use a hotel due to a breach or non-renewal of the ground lease, we would be unable to derive income from such hotel and would need to purchase an interest in another hotel to attempt to replace that income, which could materially and adversely affect our business, operating results and prospects. Our ability to refinance a hotel property subject to a ground lease may be negatively impacted as the ground lease expiration date approaches. Market conditions or changes in property values could also impact our ability to renew ground leases on favorable terms.

•development-related liabilities, such as claims for design/construction defects.defects;

Our advisor and its key employees, most of whom are StirlingBraemar’s Inc.’s, Braemar’s,and Ashford Inc.’s and our executive officers, face competing demands relating to their time and this may adversely affect our operations.

We rely on our advisor and its employees for the day-to-day operation of our business. Certain key employees of our advisor are executive officers of Stirling Inc., Braemar and Ashford Inc. Because our advisor’s key employees have duties to Stirling Inc., Braemar and Ashford Inc., as well as to our company, we do not have their undivided attention and they face conflicts in allocating their time and resources between our company, Stirling Inc.,company Braemar and Ashford Inc. Our advisor may also manage other entities in the future. During turbulent market conditions or other times when we need focused support and assistance from our advisor, other entities for which our advisor also acts as an external advisor will likewise require greater focus and attention as well, placing competing high levels of demand on the limited time and resources of our advisor’s key employees. Additionally, activist investors have, and in the future, may commence campaigns seeking to influence other entities advised by our advisor to take particular actions favored by the activist or gain representation on the board of directors of such entities, which could result in additional disruption and diversion of management’s attention. We may not receive the necessary support and assistance we require or would otherwise receive if we were internally managed by persons working exclusively for us.

Conflicts of interest in general and specifically relating to Ashford Inc. and its subsidiaries (including Ashford LLC, Remington Hospitality and Premier) may lead to management decisions that are not in the stockholders’ best interest. The chairman of our board of directors, Mr. Monty J. Bennett, is the chairman, chief executive officer and a significant stockholder of Ashford Inc. and Mr. Archie Bennett, Jr., who is our chairman emeritus, is a significant stockholder of Ashford Inc. Prior to its acquisition by Ashford Inc. on November 6, 2019, Messrs. Archie Bennett, Jr. and Monty J. Bennett beneficially owned 100% of Remington Hospitality. As of December 31, 2024,2025, Remington Hospitality managed 50 of our 69 hotel properties and three of the four Stirling OP68 hotel properties and provides other services.

Mr. Monty J. Bennett is chairman and chief executive officer of Ashford Inc. and, together with his father Mr. Archie Bennett, Jr., as of December 31, 2024,2025, holds a controlling interest in Ashford Inc. As of December 31, 2024,2025, the Bennetts owned approximately 809,937 shares of Ashford Inc. common stock, which represented an approximate 46.6%51.9% ownership interest in Ashford Inc., and owned 18,758,600 shares of Ashford Inc. Series D Convertible Preferred Stock, which, along with all unpaid accrued and accumulated dividends thereon, was convertible (at a conversion price of $117.50 per share) into an additional approximate 4,395,2814,573,359 shares of Ashford Inc. common stock, which if converted as of December 31, 2024,2025, would have increased the Bennetts’ ownership interest in Ashford Inc. to 84.9%.87.8%. The 18,758,600 shares of Series D Convertible Preferred Stock owned by Mr. Monty J. Bennett and Mr. Archie Bennett, Jr. include 360,000 shares owned by trusts. Additionally, Mr. Monty J. Bennett acquired the right to direct votes, effective March 25, 2025, and as of December 31, 2025 those rights represented approximately 551,000 common shares.

As part of our business strategy, we may originate or acquire lodging-related uninsured and mortgage assets, including mezzanine loans. While holding these interests, we are subject to risks of borrower defaults, bankruptcies, fraud and related losses, and special hazard losses that are not covered by standard hazard insurance. Also, costs of financing the mortgage loans could exceed returns on the mortgage loans. In the event of any default under mortgage loans held by us, we will bear the risk of loss of principal and non-payment of interest and fees to the extent of any deficiency between the value of the mortgage collateral and the principal amount of the mortgage loan. We suffered significant impairment charges with respect to our investments in mortgage loans in 2009 and 2010. The value and the price of our securities may be adversely affected.

•We may continue to experience increases in our state and local income tax burden. Over the past several years, certain state and local taxing authorities have significantly changed their income tax regimes in order to raise revenues. The changes enacted that have increased our state and local income tax burden include the taxation of modified gross receipts (as opposed to net taxable income), the suspension of and/or limitation on the use of net operating loss deductions, increases in tax rates and fees, the addition of surcharges, and the taxation of our partnership income at the entity level. Facing mounting budget deficits, more state and local taxing authorities have indicated that they are going to revise their income tax regimes in this fashion and/or eliminate certain federally allowed tax deductions such as the REIT dividends paid deduction. Further, while we have entered into a Rights Agreement designed to prevent the Company from facing a substantial limitation on its ability to use its Tax Benefits (as such term is defined in the Rights Agreement) to offset potential future income taxes for federal income tax purposes and realized other efficiencies, we cannot assure you that such Rights Agreement will be effective in protecting our valuable Tax Benefits.

We monitor the value of our respective investments in our TRSs for the purpose of ensuring compliance with TRS ownership limitations. In addition, we scrutinize all of our transactions with our TRSs to ensure that they are entered into on arm’s-length terms to avoid incurring the 100% excise tax described above. For example, in determining the amounts payable by our TRSs under our leases, we engaged a third party to prepare transfer pricing studies to ascertain whether the lease terms we established are on an arm’s-length basis as required by applicable Treasury Regulations. HoweverHowever, the receipt of a transfer pricing study does not prevent the IRS from challenging the arm’s length nature of the lease terms between a REIT and its TRS lessees. Consequently, there can be no assurance that we will be able to avoid application of the 100% excise tax discussed above.

Our charter authorizes the issuance of up to 395,000,000 shares of common stock and 55,000,000 shares of preferred stock. As of March 19,18, 2025,2026, we had 5,775,1676,476,491 shares of our common stock issued and outstanding, 1,111,127 shares of our Series D Cumulative Preferred Stock, 1,037,044 shares of our Series F Cumulative Preferred Stock, 1,470,948 shares of our Series G Cumulative Preferred Stock, 1,037,956 shares of our Series H Cumulative Preferred Stock, and 1,034,303 shares of our Series I Cumulative Preferred Stock, 7,423,3517,684,201 shares of our Series J Redeemable Preferred StockStock, and 683,028731,102 shares of our Series K Redeemable Preferred Stock.Stock, As of March 19, 2025, no238,191 shares of our Series L Redeemable Preferred Stock orand 550,888 shares of our Series M Redeemable Preferred StockStock. areAdditionally, issuedon December 15, 2025, we declared a dividend of one Right for each outstanding share of common stock, each Right initially representing the right to purchase one one-thousandth of a share of Series N Preferred Stock, and outstanding.we designated 300,000 shares of Series N Preferred Stock for issuance pursuant to the Rights Agreement. Accordingly, we may issue up to an additional 389,224,833388,523,509 shares of common stock and 41,202,24340,104,240 shares of preferred stock.

Future issuances of common stock or preferred stock could decrease the relative voting power of our common stock or preferred stock and may cause substantial dilution in the ownership percentage of our then-existing holders of common or preferred stock. Further, if the Rights become exercisable, our common stock may be diluted, though only the interests of the Acquiring Person would be diluted. Future issuances may have the effect of reducing investors’ relative voting power and/or diluting the net tangible book value of the shares held by our stockholders, and might have an adverse effect on any trading market for our securities. Our board of directors may designate the rights, terms and preferences of our authorized but unissued common shares or preferred shares at its discretion, including conversion and voting preferences without stockholder approval.

As of December 31, 2024,2025, our portfolio consisted of 6867 consolidated operating hotel properties, which represent 17,05116,445 total rooms.rooms, Oneand one additional consolidated operating hotel property, which represents 188 total rooms isproperty owned through a 29.3% investment in a consolidated entity. Additionally, our portfolio consists of four consolidated operating hotel properties,entity, which representrepresents 405188 total rooms owned through a 98.8% ownership interest in Stirling OP, which was formed by Stirling Inc. to acquire and own a diverse portfolio of stabilized income-producing hotels and resorts.rooms. Currently, all of our hotel properties are located in the United States.

Our current investment strategy is to focus on owning predominantly full-service hotels in the upper upscale segment in domestic markets that have RevPAR generally less than twice the national average. We believe that as supply, demand,demand and capital market cycles change, we will be able to shift our investment strategy to take advantage of new lodging-related investment opportunities as they may develop. Our board of directors may change our investment strategy at any time without stockholder approval or notice. We will continue to seek ways to benefit from the cyclical nature of the hotel industry.

On JanuaryOctober 10,15, 2025, the Company completed the sale of the 315-room150-room CourtyardResidence BostonInn DowntownSan Diego Sorrento Mesa located in Boston,San MassachusettsDiego, California, for $123.0$42.0 million, subject to customary pro rations and adjustments.

On MarchNovember 10, 2025, the parties to the Third AmendedCompany and RestatedAshford Advisory AgreementLLC entered into Amendment No. 36 to the Third Amended and Restated Advisory Agreement (the “ThirdSixth Amendment”). The ThirdSixth Amendment further extends the outside date for which any sale or disposition of any of the Company’s Highland loan portfolioPortfolio and JPM8 hotel properties securing the associated mortgage loans following certainan defaultsevent of default (as describeddefined in the Ashford Trust Advisory Agreement), including a maturity default, would be excluded from the numerator of the calculation of the percentage of gross book value of the Company’s assets sold or disposed (but, for the avoidance of doubt, included in the denominator of such calculation) for purposes of determining whether a Company Change of Control (as defined in the Advisory Agreement) has occurred, from NovemberAugust 30,15, 20252026 to MarchNovember 31,15, 2026.

The discussion of our business and operations should be read together with the risk factors contained in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the Securities and Exchange Commission, which describe various risks and uncertainties to which we are or may become subject. These risks and uncertainties have the potential to affect our business, financial condition, results of operations, cash flows, strategies or prospects in a material and adverse manner. AsIn of March 31, 2026, there have been no material changesaddition to the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2025.2025, the following risk factor should be carefully considered in evaluating us and our business.

As of MarchJune 31,30, 2026, our portfolio consisted of 6252 consolidated operating hotel properties, which represent 15,40313,241 total rooms, and one additional consolidated operating hotel property owned through a 29.3% investment in a consolidated entity, which represents 188 total rooms. Currently, all of our hotel properties are located in the United States.

We do not operate any of our hotel properties directly; instead we employ hotel management companies to operate them for us under management contracts. As of MarchJune 31,30, 2026, Remington Lodging & Hospitality, LLC (“Remington Hospitality”), a subsidiary of Ashford Inc., manages 4536 of our 6353 operating hotel properties. Third-party management companies manage the remaining hotel properties.

Mr. Monty J. Bennett, chairman and chief executive officer of Ashford Inc. and, together with his father, Mr. Archie Bennett, Jr. (the “Bennetts”), as of MarchJune 31,30, 2026, hold a controlling interest in Ashford Inc. The Bennetts owned approximately 809,937810,123 shares of Ashford Inc. common stock, which represented an approximate 52.5% ownership interest in Ashford Inc., and owned 18,758,60018,777,914 shares of Ashford Inc. Series D Convertible Preferred Stock, which, along with all unpaid accrued and accumulated dividends thereon, was convertible (at a conversion price of $117.50 per share) into an additional approximate 4,656,3374,745,833 shares of Ashford Inc. common stock, which, if converted as of MarchJune 31,30, 2026, would have increased the Bennetts’ ownership interest in Ashford Inc. to 88.2%.88.4%. The 18,758,60018,777,914 shares of Series D Convertible Preferred Stock owned by Mr. Monty J. Bennett and Mr. Archie Bennett, Jr. include 360,000 shares owned by trusts. Additionally, Mr. Monty J. Bennett acquired the right to direct votes, effective March 25, 2025, and as of MarchJune 31,30, 2026, those rights represented approximately 534,000 common shares.

On AprilJuly 8,24, 2026, the Company entered into a definitive agreement to sell the 144-room150-room SilversmithEmbassy HotelSuites Dulles located in Chicago,Herndon, IllinoisVirginia for a purchase price of $16.0$22.8 million. The agreement included a nonrefundable deposit of $200,000$500,000 which was paid onin AprilJuly 17,of 2026.

On MayJuly 6,27, 2026, the Company entered into a definitive agreement to sell the 378-room263-room SheratonEmbassy IndianapolisSuites City CentrePhiladelphia located in Indianapolis,Philadelphia, IndianaPennsylvania for a purchase price of $18.5$26.0 million. The agreement included a nonrefundable deposit of $641,000$500,000 which was paid onin MayJuly 8,of 2026.

The following table summarizes the changes in key line items from our consolidated statements of operations for the three and six months ended MarchJune 31,30, 2026 and 2025 (in thousands):

All hotel properties held during the three and six months ended MarchJune 31,30, 2026 and 2025 have been included in our results of operations during the respective periods in which they were held. Based on when a hotel property was acquired or disposed, operating results for certain hotel properties are not comparable for the three and six months ended MarchJune 31,30, 2026 and 2025. The hotel properties listed below are not comparable hotel properties for the periods indicated and all other hotel properties are considered comparable hotel properties. The following transactions affect the reporting comparability of our consolidated financial statements:

The following table illustrates the key performance indicators of the 6353 comparable hotel properties that were included in our results of operations for the full three and six months ended MarchJune 31,30, 2026 and 2025, respectively:

Comparison of the Three Months Ended MarchJune 31,30, 2026 and 2025

Net Income (Loss) Attributable to the Company. Net income (loss) attributable to the Company increasedchanged $43.8$158.4 millionmillion, from a net loss of $20.0$30.4 million for the three months ended MarchJune 31,30, 2025 (the “2025 quarter”) to a net lossincome of $63.8$128.0 million for the three months ended MarchJune 31,30, 2026 (the “2026 quarter”) as a result of the factors discussed below.

Revenue. Rooms revenue from our hotel properties decreased $6.3$17.6 million, or 3.0%,7.7%, to $200.0$209.6 million in the 2026 quarter compared to the 2025 quarter. This decrease in the 2026 quarter wasis primarily attributable to a decrease in rooms revenuedecreases of $12.3$28.3 million from our Hotel Dispositions.Dispositions Thisand decrease$758,000 wasfrom the derecognition of the Hilton Santa Cruz Scotts Valley in June 2026 (the “Hilton Santa Cruz Scotts Valley Derecognition”). These decreases were partially offset by an increase inhigher rooms revenue of $6.0$11.5 million atfrom our comparable hotel properties. Our comparable hotel properties experienced an increase of 2.1%5.8% in room rates and ana increase of 7954 basis pointspoint increase in occupancy.

Food and beverage revenue decreased $3.0$8.3 million, or 5.4%,15.1%, to $51.6$47.0 million in the 2026 quarter compared to the 2025 quarter. This decrease in the 2026 quarter wasis primarily attributable to decreases inof food and beverage revenuesales of $2.1$6.2 million from our Hotel Dispositions and $867,000$2.1 atmillion from our comparable hotel properties.hotels.

Other hotel revenue, which consists mainly of internet access, parking, and spa revenue, decreased $237,000,$2.6 million, or 1.5%,13.5%, to $16.0$16.4 million in the 2026 quarter compared to the 2025 quarter.quarter Thisprimarily decreasedue to our Hotel Dispositions. Other non-hotel revenue decreased $283,000, or 62.1%, to $173,000 in the 2026 quarter was primarily attributable to decreases in other hotel revenue of $735,000 from our Hotel Dispositions. This decrease was partially offset by an increase of $498,000 from our comparable hotel properties. Other revenue decreased $155,000, or 50.2%, to $154,000 in the 2026 quarteras compared to the 2025 quarter.

Hotel Operating Expenses. Hotel operating expenses decreased $7.3$22.4 million, or 3.9%,11.3%, to $181.1$176.5 million in the 2026 quarter compared to the 2025 quarter. Hotel operating expenses consist of direct expenses from departments associated with revenue streams and indirect expenses associated with support departments and management fees. Direct expenses decreased $3.1$10.3 million in the 2026 quarter as compared to the 2025 quarter,quarter primarily due to a decrease of $3.8$10.4 million from our Hotel Dispositions. The decrease in direct expenses was partially offset by an increase in the 2026 quarter of $664,000 from our comparable hotel properties. Direct expenses were 30.9%29.0% of total hotel revenue for the 2026 quarter and 30.9%29.7% for the 2025 quarter.

Indirect expenses and management fees decreased $4.3$12.1 million in the 2026 quarter as compared to the 2025 quarter,quarter primarily due to a decreasedecreases of $5.5$14.1 million from our Hotel Dispositions.Dispositions and $392,000 from the Hilton Santa Cruz Scotts Valley Derecognition. The decrease in the 2026 quarter was partially offset by an increase of $1.2$2.4 million from our comparable hotel properties.

Property Taxes, Insurance and Other. Property taxes, insurance and other expense decreased $1.2$3.1 million, or 18.8%, to $13.2 million or 7.2%, to $14.9 million induring the 2026 quarter compared to the 2025 quarter. The decrease in the 2026 quarter was primarily due to decreases of $583,000$2.4 million and $594,000 from our Hotel Dispositions and $572,000 from our comparable hotel properties.properties, respectively.

Depreciation and Amortization. Depreciation and amortization decreased $5.3$6.6 million, or 18.8%, to $28.6 million or 14.3%, to $32.0 million induring the 2026 quarter compared to the 2025 quarter. The decreasesdecrease in the 2026 quarter werewas primarily due to decreases of $3.2$6.1 million from our Hotel Dispositions and $2.1 million$395,000 from our comparable hotel properties.

Advisory Services Fee. The advisoryAdvisory services fee increased $8.5$2.2 million, or 73.4%,18.2%, to $20.0$14.2 million in the 2026 quarter compared to the 2025 quarter primarily due to an increase in reimbursable expenses arising from the Company’s obligation to indemnify Ashford LLC for certain tax liabilities under the Advisory Agreement.quarter. The advisory services fee represents fees incurred in connection with the advisory agreements between Ashford Inc.LLC and the Company and, prior to September 2, 2025, between AshfordStirling Inc.Advisor and Stirling OP. In the 2026 quarter, the advisory services fee was primarily comprised of a base advisory fee of $8.3$8.5 million and reimbursable expenses of $11.7$5.7 million. In the 2025 quarter, the advisory services fee was primarily comprised of a base advisory fee of $8.1$8.2 million, equity-based compensation of $222,000 awarded to the officers and employees of Ashford LLC, reimbursable expenses of $3.2$3.3 million, an incentive advisory fee of $93,000,million and fees totaling $268,000$306,000 associated with Stirling OP’s advisory agreement.

Corporate, General and Administrative. Corporate, general and administrative expensesexpense decreased $2.7$4.2 million,million orfrom 63.0%,$5.5 million in the 2025 quarter to $1.6$1.3 million in the 2026 quarter compared to the 2025 quarter. The decrease was primarily attributable to decreases in reimbursements of Ashford Securities’ operating expenses of $1.3$2.5 million from the winding down of Ashford Securities, legal and professionalmiscellaneous expenses of $937,000,$888,000, public company costs of $414,000$536,000 and miscellaneouslegal expensesand professional costs of $97,000.$221,000.

Gain (Loss) on Disposition of Assets and Hotel Properties. Gain on disposition of assets and hotel properties increased $68.2$143.4 million,million from $31.9$6.7 million in the 2025 quarter to $100.0$150.0 million in the 2026 quarter. The gain in the 2026 quarter was primarily related to net gains from the sale of five of ournine hotel properties in the 2026 quarter. TheSee gainnote in the 2025 quarter was primarily related5 to theour saleconsolidated offinancial Courtyard Boston Downtown.statements.

Gain (Loss) on Derecognition of Assets. Gain on derecognition of assets decreased $2.3$3.1 million,million from $10.0$9.9 million in the 2025 quarter to $7.8$6.8 million in the 2026 quarter. The gain primarily represents the increase of the contract asset on our consolidated balance sheets. We record a contract asset associated with the accrued interest expense from the default of the KEYS A andA, KEYS B and Hilton Santa Cruz Scotts Valley loans as we expect to be released from this obligation upon final resolution with the lender. The gains in the 2026 quarter and in the 2025 quarter primarily relate to accrued interest on the mortgage loans of the KEYS AA, KEYS B and BHilton Santa Cruz Scotts Valley properties in receivership. See note 6 to our consolidated financial statements.

Equity in Earnings (Loss) of Unconsolidated Entities. Equity in lossearnings of unconsolidated entities was $202,000$47,000 in the 2026 quarter and $431,000$44,000 in the 2025 quarter. Equity in lossearnings primarily results from our investment in an entity that owns the Meritage Resort and Spa and the Grand Reserve at the Meritage in Napa, California.

Interest Income. Interest income was $922,000$1.0 million and $1.2$1.3 million infor the 2026 quarter and the 2025 quarter, respectively. The decrease in interest income in the 2026 quarter was primarily attributable to lower excess cash balances in the 2026 quarter compared to the 2025 quarter.

Interest Expense and Amortization of Discounts and Loan Costs. Interest expense and amortization of discounts and loan costs increaseddecreased $6.8$14.5 million, or 10.1%,20.6%, to $73.6$55.7 million induring the 2026 quarter compared to the 2025 quarter. The increasedecrease wasis primarily due to higher default interest and late charges recorded on mortgage loans in defaultdecreases of $10.1$9.3 million andfrom higherour Hotel Dispositions, $3.6 million from lower interest expense and amortization of discounts and loan costs at our comparable hotels ofand $3.3 million. These increases were partially offset by decreases of $5.8$1.6 million from ourlower Hoteldefault Dispositionsinterest and $944,000late fromcharges therecorded pay-offon ofmortgage the Oaktree loanloans in February 2025.default.

Interest Expense Associated with Hotels in Receivership. Interest expense associated with hotels in receivership decreased $2.2$2.8 million, from $10.0$10.5 million in the 2025 quarter to $7.8$7.6 million in the 2026 quarter. The decrease is due to fewer hotels being under receivership in the 2026 quarter compared to the 2025 quarter. On June 25, 2025 and December 22, 2025, the Courtyard Oakland Airport and SpringHill Suites BWI Airport mortgage loans were transferred to a third-party purchaser. On March 4, 2026, the SpringHill Suites Plymouth Meeting’s mortgage loanMeeting was also transferred to a third-party purchaser. As a result, the contract asset and corresponding indebtedness associated with hotels in receivership and accrued interest associated with hotels in receivership were reduced for the amounts attributable to each hotel. Interest expense associated with hotels in receivership additionally includes interest expense related to the Hilton Santa Cruz Scotts Valley Derecognition. See note 6 to our consolidated financial statements.

Write-off of Premiums, Loan Costs and Exit Fees. Write-off of premiums, loan costs and exit fees was $1.3 million$305,000 in the 2026 quarter and $4.6$1.5 million in the 2025 quarter. In the 2026 quarter, we incurred fees of $1.3 million from loan refinances and modifications. In the 2025 quarter, we incurred fees of approximately $1.8$1.5 million related to loan refinances and modifications, $2.2 million related to prepayment penalties and exit fees on loan refinances, wrote-off $378,000 of unamortized loan costs and incurred $193,000 non-reimbursed legal fees relating to the repaying the Oaktree loan.modifications.

Gain (Loss) on Extinguishment of Debt. Gain (loss) on extinguishment of debt resulted in a loss of $25,000$2.0 million in the 2026 quarter and a loss of $13,000$2,000 in the 2025 quarter. The loss in the 2026 quarter primarily related to write-offs related to our Hotel Dispositions.

Realized and Unrealized Gain (Loss) on Derivatives. Realized and unrealized gain (loss) on derivatives changed by $3.5 million$880,000 from aan $2.7 million$836,000 loss in the 2025 quarter to a $757,000$44,000 gain in the 2026 quarter. In the 2026 quarter, we recognized $757,000 of net unrealized gains of $44,000 on our derivativesderivatives, which were primarily attributable to interest rate caps.

In the 2025 quarter, we recordedrecognized net unrealized and realized losses of $2.3$1.3 million andon $369,000,our respectively,derivatives. associated with interest rate caps and we recorded anThese unrealized loss of $901,000 from the revaluation of the embedded debt derivative in the Oaktree Agreement. These losses were partially offset by anet realized gaingains of $692,000$473,000 related to payments from counterparties on interest rate caps and an unrealized gain of $184,000 associated with interest rate floors.caps.

Income Tax (Expense) Benefit. Income tax expense increased $435,000,$2.4 million, from income tax expense of $317,000$119,000 in the 2025 quarter to income$2.6 tax expense of $752,000million in the 2026 quarter. The increase in income tax expense in the 2026 quarter was primarily attributable to an increase in the taxable income of our TRS entities.

(Income) Loss from Consolidated Entities Attributable to Noncontrolling Interests. Our noncontrolling interest partners in consolidated entities were allocated losses of $655,000$341,000 and $1.8$1.4 million in the 2026 quarter and the 2025 quarter, respectively. Noncontrolling interests in consolidated entities represented an ownership interest of 70.7% in 815 Commerce MM and, prior to September 2, 2025, an ownership interest of 0.30% in Stirling OP. See notes 1 and 2 to our consolidated financial statements.

Net (Income) Loss Attributable to Redeemable Noncontrolling Interests in Operating Partnership. Redeemable noncontrollingNoncontrolling interests in operating partnership were allocated a net lossincome of $1.0$1.7 million in the 2026 quarter and a net loss of $451,000$631,000 in the 2025 quarter. Redeemable noncontrolling interests represented ownership interests of 1.43%1.41% and 1.60%1.56% in the operating partnership asat ofJune March 31,30, 2026 and 2025, respectively.