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

increases in energy costs and other traveltravel-related expenses, including gas prices, which may affect travel patterns and reduce business and leisure travel;

reduced business and leisure travel due to geo-political uncertainty, including terrorism and acts of war, government shutdowns, travel-related health concerns, including widespread outbreaks of infectious or contagious diseases in the U.S. and the related impacts such as the Company experienced in connection with the COVID-19 pandemic,impacts, inclement weather conditions, including natural disasters such as hurricanes, earthquakes and wildfires, and government shutdowns, airline strikes or equipment failures, or other disruptions;

reduced travel due to adverse national, regional or local economiceconomic, political and market conditions;

ability of a hotel franchisefranchisor to fulfill its obligations to franchisees;

The performance of the lodging industry has historically been highly cyclical and closely linked to the performance of the general economy both nationally and within local markets in the U.S. The lodging industry is also sensitive to government, business and personal discretionary spending levels. Declines in government and corporate budgets and consumer demand due to adverse general economic conditions, risks affecting or reducing travel patterns, lower consumer confidence or adverse political conditionsconditions, including government shutdowns, may lower the revenue and profitability of the Company’s hotels and therefore the net operating profits of its investments. An economic downturn or prolonged economic recession, including lower GDP growth, corporate earnings, consumer confidence, employment rates, income levels and personal wealth, may lead to a significant decline in demand for products and services provided by the lodging industry, lower occupancy levels, significantly reduced room rates, and declines in RevPAR. The Company cannot predict the pace or duration of an economic recession or cyclecycle, government shutdowns, or the cycles of the lodging industry. In the event conditions in the industry deteriorate or there is an extended period of economic weakness, the Company’s revenue and profitability could be adversely affected. Furthermore, even if the economy in the U.S. improves, the Company cannot provide any assurances that demand for hotels will increase from current levels, nationally or more specifically, where the Company’s properties are located.

The Company’s wholly-owned taxable REIT subsidiaries (“TRSs”) (or subsidiaries thereof) operate substantially all of its hotels pursuant to franchise or license agreements with nationally recognized hotel brands. These franchise and license agreements contain specific standards for, and restrictions and limitations on, the operation and maintenance of the Company’s hotels in order to maintain uniformity within the franchisor system. The Company has been and, in the future, may be required to incur costs to comply with these standards and these standards could potentially conflict with the Company’s ability to create specific business plans tailored to each property and to each market. Failure to comply with these brand standards may result in monetary penalties or the termination of the applicable franchise or license agreement. In addition, as the Company’s franchise and license agreements expire, the Company may not be able to renew them on favorable terms, or at all. If the Company were to lose or was unable to renew a franchise or license agreement, the Company would be required to re-brand or de-flag the hotel, which could result in a decline in the value of the hotel, the loss of marketing support and participation in guest loyalty programs, and harm to the Company’s relationship with the franchisor, impeding the Company’s ability to operate other hotels under the same brand. Additionally, the franchise and license agreements have provisions that could limit the Company’s ability to sell or finance a hotel which could further affect the Company.

Although substantially all of the Company’s hotels operate under the brands noted above, the Company has previously acquired and may from time to time in the future acquire independent hotels or hotels affiliated with other brands, and/or may choose to operate hotels independently of a brand if the Company believes that these properties will operate most effectively as independent hotels. However, without the support and recognition of a large established brand, the capability of these independent or less recognized branded hotels to market the hotel, maintain guest loyalty, attract new guests, and operate in a cost-effective manner may be difficult, which could adversely affect the Company’s overall operating results.

The hotel industry is highly competitive. Each of the Company’s hotels competes for guests primarily with other hotels in its immediate vicinity and secondarily with other hotels in its geographic market. The Company also competes with numerous owners and operators of vacation ownership resorts, as well as alternative lodging companies, including third-party providers of short-term rental properties and serviced apartments that can be rented on a nightly, weekly or monthly basis. An increase in the number of competitive hotels, vacation ownership resorts and alternative lodging arrangementsaccommodations in a particular area could have a material adverse effect on the occupancy, ADR and RevPAR of the Company’s hotels in that area and lower the Company’s revenue and profitability.

The Company’s third-party hotel managers are responsible for hiring and maintaining the labor force at each of the Company’s hotels. Although the Company does not directly employ or manage employees at its hotels, the Company is still subject to many of the costs and risks generally associated with the hotel labor force. Labor costs can increase due to many factors, includingincluding, but not limited to, a shortage of hospitality workers, increased dependence on contract workers, increased wages and employee benefit costs, changes in laws and regulations, increased labor turnoverturnover, termination costs, including costs associated with labor law claims, and increases in a unionized labor force. Significant labor shortages could prohibit the Company’s hotels from operating at full capacity which could result in a decrease in operating revenues. An increased exposure to a unionized labor force could lead to labor disputes, causing higher labor costs, either by increases in wages or benefits or by changes in local labor regulations that raise hotel operating costs. The Company has experienced, and may in the future experience, increased costs due to these factors.

The Company has ongoing needs for hotel renovations and capital improvements, including maintenance requirements and updates to brand standards under all of its hotel franchise and management agreements and certain loan agreements. In addition, from time to time, the Company will need to make renovations and capital improvements to comply with applicable laws and regulations, to remain competitive with other hotels and to maintain the economic value of its hotels. As properties increase in age, the frequency and cost of renovations needed to maintain appealing facilities for hotel guests may increase. The Company may also need to make significant capital improvements to hotels that it acquires, or may be involved in the development of new hotels. Construction delays and cost overruns, including increases in the cost of labor, goods and materials and delays and cost increases caused by supply chain disruptions,disruptions or tariffs, have increased and may continue to increase renovation or development costs for the Company and have delayed and may in the future delay the acquisition or opening of hotels or the length of time that rooms are out of service. Occupancy and ADR are often affected during periods of renovations and capital improvements at a hotel, especially if the Company encounters delays, or if the improvements require significant disruption at the hotel. The costs of renovations and capital improvements the Company needs or chooses to make at the Company’s existing hotels, or the costs related to the development of new hotels, could reduce the funds available for other purposes and may reduce the Company’s profitability.

The Company’s business strategy includes identifying and completing accretive hotel acquisitions. The Company competes with other investors who are engaged in the acquisition of hotels, and these competitors may affect the supply and demand dynamics and, accordingly, increase the price the Company must pay for hotels it seeks to acquire, or these competitors may succeed in acquiring those hotels. Any delay or failure on the Company’s part to identify, negotiate, finance on favorable terms, consummate and integrate such acquisitions could materially impede the Company’s growth. The Company may also incur costs that it cannot recover if it abandons a potential acquisition. Also, if the Company does not reinvest proceeds received from hotel dispositions into new properties in a timely manner, the Company’s profitability could be negatively impacted. The Company’s profitability may also suffer because futurehotel acquisitions of hotels may not yield the returns the Company expects and the integration of such acquisitions may disrupt the Company’s business or may take longer than projected. Furthermore, the Company may be subject to unknown or contingent liabilities related to hotels it acquires.

Although the Company anticipates maintaining relatively low levels of debt, it may periodically use, and has used, financing to acquire properties, perform renovations to its properties, or make shareholder distributions or share repurchases in periods of fluctuating income from its properties. The credit markets have historically been volatile and subject to increased regulation, and as a result, the Company may not be able to obtain debt financing to meet its cash requirements, including refinancing any scheduled debt maturities, which may adversely affect its ability to execute its business strategy. If the Company refinances debt, such refinancing may not be in the same amount or on terms as favorable as the terms of the existing debt being refinanced. If the Company is unable to refinance its debt, it may be forced to dispose of hotels or issue equity at inopportune times or on disadvantageous terms, which could result in higher costs of capital.capital and may reduce the Company’s profitability.

The Company’s existing indebtedness, whether secured by mortgages on certain properties or unsecured, contains, and indebtedness that the Company may enter into in the future likely will contain, customary covenants that may restrict the Company’s operations and limit its ability to enter into future indebtedness. In addition, the Company’s ability to borrow under its unsecured credit facilities is subject to compliance with its financial and other covenants, including, among others, a minimum tangible net worth, maximum debt limits, minimum interest and fixed charge coverage ratios, and restrictions on certain investments. The Company’s failure to comply with the covenants in its existing or future indebtedness, or its inability to make required principal and interest payments, could cause a default under the applicable debt agreement, which could result in increased interest rates and the acceleration of the debt, requiringor require the Company to repay such debt with capital obtained from other sources, which may not be available to the Company or may only be available on unfavorable terms.

The Company and its hotel managers and franchisors 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, personally identifiable information, reservations, billing and operating data. The Company and its hotel managers and franchisors rely on commercially available and internally developed systems, software, tools and monitoring to provide security for processing, transmission and storage of confidential data. Such data may include employee, operator and customer information, such as personally identifiable information, includingand information relating to payroll and financial accounts. The Company’s corporate information technology systems are not used to process business transactions with its guestshotel guests, and those systems currently have no connectivity to hotel and/or third-party management and brand technology platforms. A number of hotels, hotel management companies,hospitality and consumer-facing brands have been subject to successful cyber-attacks, including those seeking guest credit card information. Moreover, the risk of a cybersecurity incident or disruption, particularly through cyber-attack or cyber intrusion, including by computer hackers, nation-state affiliated actors and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. The safety and security measures taken by the Company and its hotel managers, third-party vendors and franchisors have not been, and in the future may not be, able to completely prevent damage to the technology networks or systems, theensure systems’their improperproper functioning, or theprevent improperagainst cybersecurity incidents, including those resulting in unauthorized access to or disclosure of personally identifiable information.

Cybersecurity incidents, whetherincluding throughintentional or unintentional physical or electronic break-ins, cyber-attacks, cyber intrusions or the deployment of ransomware overor theother Internet,extortion tactics, malware, computer viruses, attachments to emails, social engineering or phishing schemes, or fraudulent schemes, have created and may in the future create system disruptions, shutdowns, deployment of malware or ransomware, theft of the Company’s data, or unauthorized access to or disclosure of confidential information. Any failure to maintain proper function, security and availability of information systems could interrupt operations, interfere with the Company’s ability to comply with financial reporting requirements, damage the reputations of the Company, the Company’s hotel managers or franchisors, and subject the Company to liability claimsclaims, notification and monitoring requirements or regulatory penalties that may not be fully covered by insurance, all of which could have a material adverse effect on the business, financial condition and results of operations of the Company. The Company has incurred, and will continue to incur, expenses to comply with data protection standards and protocols imposed by law, regulation, industry standards and contractual obligations. Increased regulation of data collection, use and retention practices, including self-regulation and industry standards, changes in existing laws and regulations, enactment of new laws and regulations, increased enforcement activity, and changes in interpretation of laws, could increase the Company’s cost of compliance and operation, limit its ability to grow its business or otherwise harm its business. Due to the complexity and interconnectedness of the Company’s information systems and networks, and those upon which the Company and its hotel managers and franchisors rely, the process of upgrading or patching protective measures could itself create a risk of cybersecurity issues or system disruptions for the Company, as well as for its hotel managers, franchisors, and others who rely upon, or have exposure to, such information systems and networks. Further, adoption of artificial intelligence (“AI”) tools by the Company or by third parties may pose new cybersecurity challenges. Threat actors may use AI tools to automate and enhance cybersecurity attacks against the Company. The Company uses software and platforms designed to detect such cybersecurity threats, including AI-based tools, but these threats could become more sophisticated and harder to detect and counteract, which may pose significant risks to the Company’s data security and systems. In addition, unauthorized access to, disclosure of, or loss of personally identifiable information or confidential or proprietary information could result in damage to the Company or the hotel management company’s or franchisor’s reputation, a loss of confidence among hotel guests, reputational harm for the Company’s hotels, legal liability, potential litigation, and increased regulatory oversight, including governmental investigations, enforcement actions, and regulatory fines, investigatory costs and costs to comply with notification and monitoring requirements. The Company has processes in place to deter, detect and report cybersecurity incidents but there can be no guaranty that those processes will be successful in preventing every attempted intrusion or attack. While the Company is not aware of any cybersecurity incidents that have materially affected it as of December 31, 2024, there can be no guarantee that the Company will not be the subject of future attacks, threats or incidents, that may have a material impact on its business strategy, results of operations or financial condition. While the Company maintains cybersecurity insurance, there are no assurances that the coverage would be adequate in relation to any incurred losses. Moreover, as cyber-attacks increase in frequency and magnitude, the Company may be unable to retain or obtain cybersecurity insurance in amounts and on terms it views as adequate for its operations.

The Company maintains comprehensive insurance coverage for commercial general liability, property, business interruption, cyber threats and other risks with respect to all of its hotels either under insurance policies obtained by the Company or by its third-party managers. These policies offer coverage features and insured limits that the Company believes are customary for similar types of properties. There are no assurances that coverage will be available or at reasonable rates in the future. Also, various types of catastrophic losses, like earthquakes, hurricanes and other storms, wildfires, or certain types of terrorism, may not be insurable or may not be economically insurable for all or certain locations, and the Company has no control over these decisions by insurance carriers. Even when insurable, these policies may have high deductibles and/or high premiums. Additionally, although the Company may be insured for a particular loss, the Company is not insured against the impact a catastrophic event may have on the hospitality industry as a whole. There also can be risks such as certain environmental hazards that may be deemed to fall outside of the coverage. In the event of a substantial property loss, the Company’s insurance coverage may not be sufficient to cover the full current market value or replacement cost of its lost investment. Should an uninsured loss or a loss in excess of insured limits occur, the Company could lose all or a portion of the capital it has invested in a hotel, as well as the anticipated future revenue from the hotel. In that event, the Company might nevertheless remain obligated for any mortgage debt or other financial obligations related to the hotel. Inflation, changes in building codes and ordinances, environmental considerations and other factors might also prevent the Company from using insurance proceeds to replace or renovate a hotel after it has been damaged or destroyed. The Company also may encounter challenges with an insurance provider regarding whether it will pay a particular claim that the Company believes to be covered under the relevant policy. Under those circumstances, the insurance proceeds the Company receives might be inadequate to restore its economic position in the damaged or destroyed hotel. Additionally, as a result of substantial claims, insurance carriers may reduce insured limits and/or increase premiums, if insurance coverage is provided at all, in the future. Property insurance premiums in the hotel industry generally have increased in recent years, and exposure to certain markets has resulted in increased costs.costs to the Company. The Company has experienced, and may continue to experience, premium increases and coverage changes applicable to its portfolio.

The Company is subject to the risks associated with the physical effects of climate change, including more frequent or severe storms, extreme temperatures, droughts, wildfires, hurricanes, flooding, and utility outages, any of which could have a material adverse effect on the Company’s properties, operations and business. The markets in which the Company operates have experiencedexperienced, and may continue to experienceexperience, increases in storm intensity and rising sea levelslevels, causingwhich have caused and in the future may cause damage to the Company’s properties. Over time, these conditions could result in declining hotel demand or the Company’s inability to operate the affected hotels at all. Climate change also may have indirect effects on the Company’s business by increasing the cost of (or making unavailable) property insurance on terms the Company finds acceptable, as well as increasing the cost of renovations, energy and water at its properties. The federal government and some of the states and localities in which the Company operates have enacted certain climate change laws and regulations and/or have begun regulating carbon footprints and greenhouse gas emissions and may enact new laws in the future. Although these laws and regulations have not had any known material adverse effect on the Company to date, they could impact companies with which the Company does business or result in substantial costs to the Company, including compliance costs, construction costs, monitoring and reporting costs, and capital expenditures for environmental control facilities and other new equipment. Climate change, and any future laws and regulations, or future interpretations of current laws and regulations, could have a material adverse effect on the Company.

The Company and its hotels are subject to various U.S. federal, state and local regulatory requirements.requirements and laws creating private rights of action. These requirements are wide-ranging and include among others, state and local labor laws, fire and life safety requirements, state laws such as the California Climate Corporate Data Accountability Act, and federal laws such as the Americans with Disabilities Act of 1990 and the Accessibility Guidelines promulgated thereunder (“ADA”) and the Sarbanes-Oxley Act of 2002. Liabilities and costs associated with complying with these laws and requirements are and could continue to be material. If the Company fails to comply with these various laws and requirements, it could incur governmental fines or private damage awards. In addition, existing laws or requirements could change, and future laws and requirements might require the Company to make significant unanticipated expenditures, which could have material and adverse effects on the Company.

Heightened focus on corporate responsibility, specifically related to ESG practices,responsibility may impose additional costs and expose the Company to new risks.

Companies across industries face increasing scrutiny from various stakeholders on how they address a variety of Environmental,corporate Social and Governance (“ESG”)responsibility matters. Potential and current employees, hotel brands, hotel management companies and vendors may consider these factors when establishing and extending business relationships and hotel guests may consider these factors when choosing a hotel. With this increased focus, public reporting regarding ESGcorporate responsibility practices has become more broadly expected. The Company summarizes its existing ESGcorporate responsibility programs in its annual Corporate Responsibility Report, which is available on its website. The focus on and activism around ESGthis topic and related matters may constrain business operations or cause the Company to incur additional costs. The Company may face reputational damage in the event the Company’s corporate responsibility initiatives do not meet the standards set by various constituencies, including those of third-party providers of corporate responsibility ratings and reports. Furthermore, if competitors outperform the Company in such metrics, potential or current investors may elect to invest with the Company’s competitors, and employees, hotel brands, hotel management companies, vendors and guests may choose not to do business with the Company, which could have a material and adverse impact on the Company’s financial condition, the market price of its common shares and its ability to raise capital. Moreover, while the Company makes voluntary disclosures in its Corporate Responsibility Report regarding its ESGpractices practices,around governance, energy and water use and conservation and social responsibility, certain disclosures are based on assumptions that may differ from actual results. In addition, the Company alsomay willin the future be required by local, state and federal authorities to make certain mandatory disclosures asrelated to greenhouse gas emissions and climate-related risks, including specific disclosures required by certain California has instituted disclosure requirements that will be applicable to the Company and the SEC is currently evaluating potential new ESG disclosure and other requirements that would impact the Company.legislation. The Company anticipates incurring additional expenses and expending employee resources to comply with the disclosure mandates.

As the Company continues to invest in and focus on ESGcorporate responsibility practices that the Company believes are appropriate for its business, the Company could also be criticized by ESG detractors for the scope or nature of its initiativescorporate orresponsibility goals.initiatives. The Company could be subjected to negative responses of governmental actors (such as anti-ESGretaliatory legislative treatment, loss of federal contracts or other government business or legislation or retaliatoryexecutive legislativeaction treatmenttargeted against such practices), hotel brands, hotel management companies and hotel guests, that could have a material adverse effect on the Company’s reputation, financial condition and results of operations.

The Company is subject to various claims and litigation from guests, tenants, occupants, visitors, contractors and other individuals as a result of the operation of the Company’s hotels. The Company, as landlord, is also a party to certain lease, license and other occupancy agreements with third parties that have involved, and in the future may involve, the Company in claims, disputes, litigation and proceedings arising from, or related to, those agreements, including the failure to pay rent. The Company cannot predict when and how often these claims will arise nor can it predict the outcome or the cost to prosecute, resolve or defend against the claims. The nature of litigation is highly uncertain and, regardless of the outcome of any pending or threatened claims, the Company has incurred and may in the future,future incurincur, legal and other costs, including the diversion of employee time and resources in responding to the claims, settlement expenses and loss of revenue. Although insurance may be available to cover some or all of the costs to defend and resolve these claims and the resulting litigation, it is possible that certain claims may not be covered by insurance or that the insurance coverage and policy limits may not be adequate to satisfy the expense, judgment, settlement or other resolution arising from the claims, which could result in substantial costs to the Company and adversely affect its financial position and results of operations. In addition, the frequency of claims and the outcome of litigation may affect the future availability or the cost of some of the Company’s insurance coverage, increasing its costs and exposing it to risks which could materially and adversely affect its financial results and cash flows.

A REIT may own up to 100% of the stock of one or more TRSs. A TRS may hold assets and earn income that would not be qualifying assets or income if held or earned directly by a REIT. Both the subsidiary and the REIT must jointly elect to treat the subsidiary as a TRS. A corporation of which a TRS directly or indirectly owns more than 35% of the voting power or value of the stock will automatically be treated as a TRS. Overall, no more than 20% (25% commencing in 2026) of the value of a REIT’s assets may consist of stock or securities of one or more TRSs. The rules also impose a 100% excise tax on certain transactions, including the leases, between the TRS and the REIT that are not conducted on an arm’s-length basis.

The Company is a Virginia corporation that has elected to be treated as a REIT for U.S. federal income tax purposes. The Company is self-advised and invests in income-producing real estate, primarily in the lodging sector, in the U.S. As of December 31, 2024,2025, the Company owned 221217 hotels with an aggregate of 29,76429,583 guest rooms located in urban, high-end suburban and developing markets throughout 37 states and the District of Columbia,Columbia includingand two hotels with a total of 206 guest rooms classified as held for sale, one of which was sold to an unrelated party in February 2025, while the other is expected to be sold in the first quarter of 2025. Substantiallysubstantially all of the Company’s hotels operateoperated under Marriott or Hilton brands. TheAs of December 31, 2025, the hotels are operated and managed under separate management agreements with one of 16 hotel management companies, none of which are affiliated with the Company. The Company’s common shares are listed on the NYSE under the ticker symbol “APLE.”

The Company continually monitors market conditions and attempts to maximize shareholder value by investing in properties that it believes provide superior value over the long term. Consistent with this strategy and the Company’s focus on investing in rooms-focused hotels, induring 2024,the year ended December 31, 2025, the Company acquired two hotels for an aggregate purchase price of $196.3approximately $117.0 million: an existing 234-guest-room126-guest-room ACHomewood HotelSuites in Washington,Tampa, D.C.Florida and a 262-guest-roomnewly Embassyconstructed Suites260-guest-room Motto in Madison,Nashville, WisconsinTennessee that was purchased at the completion of development. The Company utilized its available cash, proceeds from the salesales of propertiesproperties, which included proceeds from two separate 1031 Exchanges, and borrowings under its Revolvingunsecured Creditcredit Facilityfacilities to fund these acquisitions. The Company plans to utilize its available cash, net proceeds from the sale of shares under the ATM program, proceeds from the sales of properties or borrowings under its unsecured credit facilities for any future hotel acquisitions.

As of December 31, 2024,2025, the Company had one outstanding contract, which was entered into during Maythe 2023,third quarter of 2025, for the potential purchase of a hotel in Nashville,Anchorage, TennesseeAlaska for an expected purchase price of approximately $98.2$65.5 million. The hotel is under development as a 160-guest-room AC Hotel and is currently planned to be completed and opened for business in latethe 2025,fourth asquarter aof 260-guest-room Motto.2027. As of December 31, 2024,2025, a $1.1$2.0 million contract deposit (refundable if the seller does not meet its obligations under the contract) had been paid. If the closing occurs, the Company plans to utilize its available cash or borrowings, including borrowings under its unsecured credit facilities available at closing, to purchase the hotel under contract. Although the Company is working towards acquiring this hotel, there are a number of conditions to closing that have not yet been satisfied, and there can be no assurance that closing on this hotel will occur under the outstanding purchase contract. If the seller meets all of the conditions to closing, the Company is obligated to specifically perform under the purchase contract and acquire this hotel. As this hotel is under development, at this time, the seller has not met all of the conditions to closing.

For its existing portfolio, the Company monitors each property’s profitability, market conditions and capital requirements and attempts to maximize shareholder value by disposing of properties when it believes that superior value can be provided from the sale of the property. As a result, during the year ended December 31, 2024,2025, the Company sold sixseven hotels into five separate transactions with unrelated parties for a combined gross sales price of approximately $63.4$73.3 million, resulting in a combined gain on the sales of approximately $19.7$13.1 million, net of transaction costs. The Company used a portion of the net proceeds from the sale of two of the hotelsone hotel in March 2025 to complete a like-kind exchange, in accordance with Section 1031 of the Internal Revenue Code of 1986, as amended,Exchange for the acquisition of the ACHomewood HotelSuites in Washington,Tampa, D.C.,Florida, which was completed in MarchJune 2024.2025. Similarly, a portion of the proceeds from the sale of two hotels in November 2025 were used to complete a 1031 Exchange for the acquisition of the Motto in Nashville, Tennessee, which was completed in December 2025. The net proceeds from the sale of the other four hotels were used for share repurchases and general corporate purposes.

See Note 2 titled “Investment in Real EstateEstate,” and Note 3 titled “Assets Held for SaleDispositions” and DispositionsNote 13 titled “Contract Commitments” of the Consolidated Financial Statements and Notes thereto in Part II, Item 8, in this Annual Report on Form 10-K, for additional information concerning these transactions.

As of December 31, 2024,2025, the Company owned 217 hotels with a total of 29,583 guest rooms as compared to 221 hotels with a total of 29,764 guest rooms, including two hotels with a total of 206 guest rooms classified as held for sale, as compared to 225 hotels with a total of 29,900 guest rooms as of December 31, 2023.2024. Results of operations are included only for the period of ownership for hotels acquired or disposed of during all periods presented. During 2025, the Company acquired two hotels and sold seven hotels. During 2024, the Company acquired two hotels and sold six hotels. DuringOn 2023,April 4, 2025, the Company acquiredrecovered sixpossession hotelsfrom a third-party hotel operator and didreinstated not disposeoperations of anyits hotels.209-guest-room New York Property through a third-party manager engaged by the Company. Results of the hotel operations forof the Company’s independent boutique hotel in New York, New York Property are included only forafter theApril period4, prior to the lease agreement becoming effective in May 2023.2025. See further discussion in Note 2 titled “Investments in Real Estate” and Note 3 titled “Assets Held for Sale and Dispositions” of the Consolidated Financial Statements and Notes thereto in Part II, Item 8, in this Annual Report on Form 10-K. As a result, the comparability of results for the years ended December 31, 20242025 and 2023,2024, as discussed below, is also impacted by these transactions.

The following table reflects certain operating statistics for the Company’s 219216 hotels owned and held for use as of December 31, 2024.2025, and excludes the New York Property (“Comparable Hotels”). The Company defines metrics from Comparable Hotels as results generated by the 219216 hotels owned and held for use as of the end of the reporting period.period, excluding the New York Property. For the hotels acquired during the reporting periods shown, the Company has included, as applicable, results of those hotels for periods prior to the Company’s ownership using information provided by the properties’ prior owners at the time of acquisition and not adjusted by the Company. This information has not been audited, either for the periods owned or prior to ownership by the Company. For dispositions and assetsthe heldNew forYork sale,Property, results have been excluded for the Company’s period of ownership.

The following table reflects certain operating statistics for the 209206 hotels owned and held for use by the Company as of January 1, 20222023 and during the entirety of the reporting periods being comparedcompared, excluding the New York Property (“Same Store Hotels”). This information has not been audited.

As discussed above, hotel performance is impacted by many factors, including the economic conditions in the U.S. as well as each individual locality. EconomicDuring indicatorsthe year ended December 31, 2025, demand was modestly impacted across the portfolio by weather related travel disruption in January and February, reduced government travel, the prolonged government shutdown and heightened macroeconomic uncertainty in the U.S. have generally been stable throughout 2024. As a result, the Company’s Comparable Hotels and Same Store Hotels revenue and operating results havedecreased modestly improvedslightly during the year ended December 31, 2024,2025, compared to the year ended December 31, 2023, which is consistent with the overall lodging industry. The Company expects low single digit RevPAR growth for its Comparable Hotels for 2025 as compared to 2024, which is comparable to broader industry expectations.2024. For the year ended December 31, 2024,2025, the Company’s hotelshotels, in generalgeneral, have shown results that have been broadly consistent with applicable industry, brand and chain scale averages. In 2026, the Company expects RevPAR to be similar for its Comparable Hotels as compared to 2025, which is consistent with broader expectations for applicable industry chain scale averages, and assuming the current macroeconomic environment continues.

The Company’s principal source of revenue is hotel revenue consisting of room, food and beverage, and other related revenue. For the years ended December 31, 20242025 and 2023,2024, the Company had total revenue of $1.4 billion andin $1.3each billion,respective respectively.year. For the years ended December 31, 20242025 and 2023,2024, respectively, Comparable Hotels achieved combined average occupancy of 75.1%74.1% and 74.4%,75.3%, ADR of $158.94$159.09 and $158.09$159.31 and RevPAR of $119.36$117.95 and $117.67.$119.92. ADR is calculated as room revenue divided by the number of rooms sold, and RevPAR is calculated as occupancy multiplied by ADR.

Hotel operating expense consists of direct room operating expense, hotel administrative expense, sales and marketing expense, utilities expense, repair and maintenance expense, franchise fees and management fees. For the years ended December 31, 20242025 and 2023,2024, hotel operating expense totaled $837.9$847.3 million and $780.7$837.9 million, respectively, or 58.5%60.0% and 58.1%58.5% of total revenuerevenue, for each respective year.respectively.

The increase in hotel operating expense for the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023,2024, was ledprimarily by the additional hotels acquired in 2023 and 2024 and amplifieddriven by increased labor costs, repairsutility costs, repair and maintenance and salescosts and marketing costs driven bygeneral inflationary pressures throughout the overall economy, as well as revenue growth for certain variable expenses.economy. The Company continues to feel upward pressure on wagetotal ratespayroll costs given a competitive labor market.market where the demand for strong hotel talent remains high. However, the rate of wage growth has slowedslowed, and management companies have made progress in reducing their use of contract labor, which costs more on average than in-house labor. The Company anticipates a slightly more favorablesimilar operating expense environment assuming the impact of inflationary pressures moderates in 2025.2026. The Company continues to monitor its management companies’ efforts to realize operational efficiencies and mitigate the impact of cost pressures resulting from inflation and a tight labor market. The Company will continue to support its management companies into implementingimplement adjustments to the hotel operating model in response to continued changes in the operating environment and guest preferences, including itstheir efforts to maximize operational efficiency.

Property taxes, insurance and other expense for the years ended December 31, 20242025 and 20232024 totaled $84.4$89.7 million and $79.3$84.4 million, respectively, or 6.4% and 5.9% of total revenuerevenue, for each respective year.respectively. The increase in property taxes, insurance, and other expense was primarily due to an increase in casualty insurance premiums and increases in property taxes in certain locations,markets and liability insurance premiums, partially offset by decreases at other locations due to successful appeals of tax assessments, decreases in property insurance premiums and a state franchise tax refund received during the third quarter of 2024 resulting from legislative changes.premiums. The Company will continue to proactively pursue tax assessment appeals in certain jurisdictions in an attempt to minimize tax increases, as warranted.

General and administrative expense for the years ended December 31, 20242025 and 20232024 was $42.5$32.3 million and $47.4$42.5 million, respectively, or 3.0%2.3% and 3.5%3.0% of total revenue, respectively. The principal components of general and administrative expense are payroll and related benefit costs, executive incentive compensation, legal fees, accounting fees and reporting expenses. The decrease in general and administrative expense in 20242025 as compared to 20232024 was primarily due to a decrease in the Company’s executive incentive compensation plan accrual, partially offset by increased payroll and related benefit costs.accrual.

Impairment of depreciable real estate was approximately $5.7 million for the year ended December 31, 2025, consisting of impairment losses at two hotel properties identified by the Company in the third quarter of 2025. Impairment of depreciable real estate was $3.1 million for the year ended December 31, 2024, consisting of impairment losses at two hotel properties identified by the Company in the third quarter of 2024, and one property identified in the fourth quarter of 2024. Impairment of depreciable real estate was $5.6 million for the year ended December 31, 2023, consisting of impairment losses at two hotel properties identified by the Company in the fourth quarter of 2023. See Note 3, titled “Assets Held for Sale and Dispositions” of the Consolidated Financial Statements and Notes thereto in Part II, Item 8, in this Annual Report on Form 10-K, for additional information concerning these impairment losses.

Depreciation and amortization expense for the years ended December 31, 20242025 and 20232024 was $190.6$192.6 million and $183.2$190.6 million, respectively. Depreciation and amortization expense primarily represents expense of the Company’s hotel buildings and related improvements, and associated personal property (furniture, fixtures, and equipment) for their respective periods owned. The increase was primarily due to the acquisitioncapitalization of twonewly acquired hotels in the first half of 2024 and six2025, hotelswhich andhad onehigher free-standingpurchase parkingprices garagecompared into 2023,the wherecarrying fivevalues of the six hotels anddisposed of during the free-standingsame parking garage were acquired in the fourth quarter of 2023,periods, as well as renovations completed throughout both 2024 and 2023.2025. The increase was partially offset byAdditionally, the saletiming of sixthe hotelsacquisitions, reclassifications to held for sale, disposals and renovations impacted depreciation, as assets acquired or placed into service earlier in 2024.the year contributed more to each respective year’s depreciation than those acquired or renovated later in the year or disposed of earlier.

Interest expense related to the Company’s debt instruments for the year ended December 31, 20242025 increased compared to the year ended December 31, 20232024 as a result of higher average borrowings associated with variable-rate debt and higher average interest rates on the Company'sCompany’s variable-rate debt. The average proportion of variable-rate debt duethat tois thefixed currentby inflationaryinterest environment.rate Theseswaps higherwas borrowings financed acquisitions, share repurchases and repayment of matured secured debt obligations during the year ended December 31, 2024. The proportion of fixed-rate debt decreasedlower over the year ended December 31, 20242025 compared to the same period of 2023,2024, as the Company had three interest rate swaps in effect on $150.0 million of variable-rate debt mature during 2025 and six interest rate swaps in effect on $285.0 million of variable-rate debt that maturedmature during 20242024. whileHowever, this was partially offset as the Company entered into two new interest rate swaps in effect on $100.0 million of variable-rate debt during the third quarter of 2025 and four new interest rate swaps in effect on $200.0 million of variable ratevariable-rate debt during 2024, but at a higher fixed raterates than the swapsswap agreements that expired. If the Company continues to replace expiring interest rate swaps in the current interest rate environment with new agreements, the Company expectsanticipates those new agreements to generally be at higher rates than the expiring swap agreements. Interest expense related to the Company’s unsecured credit facilities in 2026 is expected to be similar to or slightly lower than in 2025, with similar borrowings and slightly lower average interest rates.

The Company calculates MFFO by further adjusting FFO for the exclusion of amortization of finance ground lease assets, amortization of favorable and unfavorable operating leases, net and non-cash straight-line operating ground lease expense, as these expenses do not reflect the underlying performance of the related hotels. The Company presents MFFO when evaluating its performance because it believes that it provides further useful supplemental information to investors regarding its ongoing operating performance. In addition, MFFO is a component of a key compensation measure of operational performance within the 20242025 Incentive Plan. Effective January 1, 2026, in calculating MFFO, the Company expects to exclude share-based compensation expense, as it represents a non-cash transaction, consistent with the MFFO presentation of the majority of other public lodging REITs. For the year ended December 31, 2025, the expense recorded for share-based compensation totaled $7.7 million.

The Company further excludes actual corporate-level general and administrative expense for the Company as well as Adjusted EBITDAre from the non-hotel property (the New York Property) from Adjusted EBITDAre (Adjusted Hotel EBITDA) to isolate property-level operational performance over which the Company’s hotel operators have direct control. The Company believes Adjusted Hotel EBITDA provides useful supplemental information to investors regarding operating performance and it is used by management to measure the performance of the Company’s hotels and effectiveness of the operators of the hotels. In addition, Adjusted EBITDAre and Adjusted Hotel EBITDA are both components of key compensation measures of operational performance within the 20242025 Incentive Plan. Effective January 1, 2026, in calculating Adjusted EBITDAre, the Company expects to exclude share-based compensation expense, as it represents a non-cash transaction and the add back to net income is consistent with the calculation of Adjusted EBITDA for the Company’s financial covenant ratios under its credit facilities and consistent with the presentation of Adjusted EBITDA for the majority of other public lodging REITs. For the year ended December 31, 2025, the expense recorded for share-based compensation totaled $7.7 million.

Non-hotel property onlyconsists includesof the results of one hotel in New York,the New York Property that iswas leased to a third-party hotel operator. The Company is in the process of removing the operator frombefore possession ofwas therecovered hotel.and operations reinstated through a third-party manager on April 4, 2025. This property’s Adjusted EBITDAre results are not included in Adjusted Hotel EBITDA startingbeginning inwith the second half of 2023.2023 through the first quarter of 2025.

As of December 31, 2024,2025, the Company owned 221217 hotels with an aggregate of 29,76429,583 guest rooms located in 37 states and the District of Columbia, including two hotels with a total of 206 guest rooms classified as held for sale, one of which was sold to an unrelated party in February 2025, while the other is expected to be sold in the first quarter of 2025.Columbia. See “Management and Franchise Agreements” in Part I, Item 1, Business, appearing elsewhere in this Annual Report on Form 10-K, for a table summarizing the number of hotels and guest rooms by brand. Refer to Part I, Item 2, of this Annual Report on Form 10-K for tables summarizing the number of hotels and guest rooms by state, and summarizing the location, brand, manager, date acquired or completed and number of guest rooms for each of the 221217 hotels the Company owned as of December 31, 2024.2025.

The Company has engaged in, and is expected to continue to engage in, transactions with related parties. These transactions cannot be construed toas bebeing at arm’s length, and the results of the Company’s operations may have been different if these transactions were conducted with non-related parties. See Note 6, titled “Related Parties” of the Consolidated Financial Statements and Notes thereto in Part II, Item 8, in this Annual Report on Form 10-K, for additional information concerning the Company’s related party transactions.

As of December 31, 2024,2025, the Company had approximately $1.5 billion of total outstanding debt consisting of $254.3$184.3 million of mortgage debt and $1.2$1.4 billion outstanding under its credit facilities, excluding unamortized debt issuance costs and fair value adjustments. As of December 31, 2024,2025, the Company had available corporate cash on hand of approximately $10.3$8.5 million, and unused borrowing capacity under its Revolving Credit Facility of approximately $567.5$586.9 million.million after taking a $2.1 million letter of credit into account.

The credit agreements governing the unsecured credit facilities contain mandatory prepayment requirements, customary affirmative and negative covenants and events of default. The credit agreements require that the Company comply with various covenants, whichcovenants include, among others, a minimum tangible net worth, maximum debt limits, minimum interest and fixed charge coverage ratios, and restrictions on certain investments. The Company was in compliance with the applicable covenants as of December 31, 2024.2025.

On February 23, 2024, the Company entered into an equity distribution agreement pursuant to which the Company may sell, from time to time, up to an aggregate of $500 million of its common shares under the ATM Program under the Company’s current shelf registration statement. During the yearyears ended December 31, 2025 and 2024, the Company did not sell any common shares under the ATM Program, and no common shares were sold during the year ended December 31, 2024 under the Priorprevious ATM$300 Program,million at-the-market offering program, which was terminated in February 2024 in connection with the commencement of the current ATM Program. During the year ended December 31, 2023, the Company sold approximately 12.8 million shares under the Prior ATM Program at a weighted-average market sales price of approximately $17.05 per common share and received aggregate gross proceeds of approximately $218.6 million and proceeds net of offering costs, which included $2.6 million of commissions, of approximately $216.0 million. The Company used the net proceeds from the sale of these shares to pay down borrowings under the Revolving Credit Facility, for acquisitions of hotel properties and for general corporate purposes. As of December 31, 2024,2025, approximately $500 million remained available for issuance under the ATM Program. The Company plans to use future net proceeds from the sale of shares under the ATM Program, or under a similar successor program, for general corporate purposespurposes, which may include, among other things, acquisitions of additional properties, the repayment of outstanding indebtedness, capital expenditures, improvement of properties in its portfolio and working capital. The Company may also use the future net proceeds to acquire another REIT or other company that invests in income producingincome-producing properties. Future offerings will depend on a variety of factors to be determined by the Company, including market conditions, the trading price of the Company’s common shares and opportunities for uses of any proceeds.

The Company'sCompany’s current annual distribution rate, payable monthly, is $0.96 per common share. As it has done historically, due to seasonality, the Company may use its Revolving Credit Facility to maintain the consistency of the monthly distribution rate, taking into consideration any acquisitions, dispositions, capital improvements and economic cycles. While management currently expects monthly cash distributions to continue at $0.08 per common share, any distribution will be subject to approval of the Company’s Board of DirectorsDirectors, and there can be no assurance of the classification, timing or duration of distributions at any particular distribution rate. The Board of Directors monitors the Company’s distribution rate relative to the performance of its hotels on an ongoing basis and may make adjustments to the distribution rate as determined to be prudent in relation to other cash requirements of the Company or to the extent required to maintain the Company’s REIT status. If cash flows from operations and the Revolving Credit Facility are not adequate to meet liquidity requirements, the Company may utilize additional financing sources to make distributions. Although the Company has relatively low levels of debt, there can be no assurance it will be successful with this strategy, and it may need to reduce its distributions to minimum levels required to maintain its qualification as a real estate investment trust.REIT. If the Company were unable to extend its maturing debt in future periods or if it were to default on its debt, it may be unable to make distributions.

In May 2024,2025, the Company’s Board of Directors approved a one-year extension of its existing Share Repurchase Program, authorizing share repurchases up to an aggregate of $335.4$262.6 million. The Share Repurchase Program may be suspended or terminated at any time by the Company and will end in July 20252026 if not terminated or extended earlier. The Company previously entered into and expects to continue to enter into written trading plans as part of the Share Repurchase Program that provide for share repurchases in open market transactions that are intended to comply with Rule 10b5-1 under the Exchange Act. During the year ended December 31, 2024,2025, the Company purchased, under its Share Repurchase Program, approximately 2.44.6 million of its common shares at a weighted-average market purchase price of approximately $14.16$12.55 per common share for an aggregate purchase price, including commissions, of approximately $34.7$58.3 million. RepurchasesPurchases under the Share Repurchase Program have been funded, and the Company intends to fund future share repurchases, with cash on hand, proceeds from dispositions or availability under its unsecured credit facilities, subject to applicable restrictions under the Company’s unsecured credit facilities (if any). The timing of share repurchases and the number of common shares to be repurchasedpurchased under the Share Repurchase Program will also depend upon prevailing market conditions, regulatory requirements and other factors. As of December 31, 2024,2025, approximately $300.8$242.5 million remained available for purchase under the Share Repurchase Program.

Management routinely monitors the condition and operations of its hotels and plans renovations and other improvements as it deems prudent. The Company is committed to maintaining and enhancing each property’s competitive position in its market. The Company has invested in and plans to continue to reinvest in its hotels. Under certain loan and management agreements, the Company is required to place in escrow funds for the repair, replacement and refurbishing of furniture, fixtures, and equipment at the applicable hotels, based on a percentage of the hotel’s gross revenues, provided that such amount may be used for the Company’s capital expenditures with respect to those hotels. As of December 31, 2024,2025, the Company held approximately $31.0$28.0 million in reserves related to these properties. During 2024,2025, the Company invested approximately $78.3$88.2 million in capital expenditures. The Company anticipates spending approximately $80 million to $90 million during 2025,2026, which includes various comprehensive renovation projects for approximately 2021 properties, however, inflationary pressures orpressures, supply chain shortages,shortages or tariffs, among other issues, may result in increased costs and delays for anticipated projects. The Company does not currently have any existing or planned projects for new property development.

As of December 31, 2024,2025, the Company had approximately $361.0$335.4 million of principal and interest payments due on its debt over the next 12 months. Included in this total areis mortgagesa secured by four properties totaling $63.9$19.6 million mortgage that maturematures in the second andquarter of 2026, a $51.6 million mortgage covering three properties that matures in the fourth quartersquarter of 20252026, a $61.0 million Revolving Credit Facility balance at December 31, 2025, and twoa $130.0 million unsecured term loansloan, totalingboth $225.0of million thatwhich mature in the third quarter of 2025.2026. The Company plans to pay outstanding amounts and service payments due upon the upcoming debt maturity dates using one or a combination of any of the following: funds from operations, borrowings under its Revolving Credit Facility, proceeds from new financing, available credit extensions under its unsecured credit facilities or by refinancing the maturing debt. The Company may also pursue amendments with its lenders to extend the maturity date of any expiring loans. TheBoth proportionthe $130 million term loan facility and the Revolving Credit Facility mature on July 25, 2026, but they can be extended up to one year, subject to certain conditions including covenant compliance and payment of variable-rateadditional debtfees. thatThe isCompany fixed by interest rate swapspresently has decreased during the yearability endedto Decemberexercise 31, 2024 as the Company had six interest rate swaps in effect on $285.0 millionboth of variable-ratethese debtextensions, thathowever, maturedit while the Company entered into four new interest rate swaps in effect on $200.0 million but at higher rates than the expiring swap agreements. If the Company replaces expiring interest rate swaps in the current interest rate environment with new agreements, the Company anticipates those new agreementsplans to bepursue at higher rates than the expiring swap agreements. See Note 4 titled “Debt”refinancing of the Consolidatedmaturing Financial Statements and Notes thereto in Part II, Item 8, in this Annual Report on Form 10-K, for more detail regarding future maturities of the Company’s debt instruments as of December 31, 2024.debt.

As of December 31, 2024,2025, the Company had one outstanding contract, which was entered into during Maythe 2023,third quarter of 2025, for the potential purchase of a hotel in Nashville,Anchorage, TennesseeAlaska for an expected purchase price of approximately $98.2$65.5 million. The hotel is under development as a 160-guest-room AC Hotel and is currently planned to be completed and opened for business in latethe 2025,fourth asquarter aof 260-guest-room Motto.2027. As of December 31, 2024,2025, a $1.1$2.0 million contract deposit (refundable if the seller does not meet its obligations under the contract) had been paid. If the closing occurs, the Company plans to utilize its available cash or borrowings, including borrowings under its unsecured credit facilities available at closing, to purchase the hotel under contract. Although the Company is working towards acquiring this hotel, there are a number of conditions to closing that have not yet been satisfied, and there can be no assurance that closing on this hotel will occur under the outstanding purchase contract. If the seller meets all of the conditions to closing, the Company is obligated to specifically perform under the purchase contract and acquire this hotel. As this hotel is under development, at this time, the seller has not met all of the conditions to closing.

Each of the Company’s 221217 hotels owned as of December 31, 20242025 is operated and managed under separate management agreements with one of 16 hotel management companies, none of which are affiliated with the Company. ThirteenAs of December 31, 2025, nine of the Company’s hotels are managed by affiliates of Marriott. The remainder of the Company’s hotels are managed by companies that are not affiliated with either Marriott, Hilton or Hyatt, and, as a result, thethose branded hotels they manage wereare required to obtain separate franchise agreements with each respective franchisor. See Note 9, titled “Management and Franchise Agreements” of the Consolidated Financial Statements and Notes thereto in Part II, Item 8, in this Annual Report on Form 10-K, for additional information pertaining to the management and franchise agreements, including a listing of the Company’s hotel management companies.

The Company relies on the performance of its hotels and the ability of its hotel operators to increase revenue to keep pace with inflation. Hotel operators, in general, possess the ability to adjust room rates daily to reflect the effects of inflation on the Company'sCompany’s operating expenses. However, competitive pressures and other factors could limit the operators’ ability to raise room rates and, as a result, the Company may not be able to offset increased operating expenses with increases in revenue. Additionally, tariff-induced inflation could increase certain operating and renovation costs, as some supplies and construction materials are imported, as well as negatively impact leisure travel by reducing the discretionary income of consumers.

Being in the real estate industry, the Company is exposed to natural disasters on both a local and nationalregional scale. Although management believes the Company has adequate insurance to cover this exposure, there can be no assurance that such events will not have a material adverse effect on the Company’s financial position or results of operations.

Upon acquisition of real estate properties, the Company estimates the fair value of acquired tangible assets (consisting of land, buildings and improvements, and furniture, fixtures and equipment) and identified intangible assets and liabilities, including in-place leases, and assumed debt based on the evaluation of information and estimates available at that date. Fair values for these assets are not directly observable and estimates are based on comparable asset sales and other information which is subjective in nature, including comparable land sales as well as industry and Company data regarding building and furniture, fixturefixtures and equipment costs, including adjustments for estimated depreciation based on the age of the property acquired and time since its most recent renovation. The Company has not assigned any value to management contracts and franchise agreements as such contracts are generally at current market rates based on the remaining terms of the contracts and any other value attributable to these contracts is not considered material. Acquisitions of hotel properties are generally accounted for as acquisitions of a group of assets, with costs incurred to effect an acquisition, including title, legal, accounting, brokerage commissions and other related costs, being capitalized as part of the cost of the assets acquired, instead of accounted for separately as expenses in the period that they are incurred. The underlying assumptions are subject to uncertainty and thus any changes to the allocation of fair value to each of the various line items within the Company’s consolidated balance sheets could have an impact on the Company’s financial condition as well as results of operations due to resulting changes in depreciation and amortization as a result of the fair value allocation. The acquisitions of real estate subject to this estimate totaled two properties, for a combined purchase price of approximately $117.0 million for the year ended December 31, 2025 and two properties for a combined purchase price of approximately $196.3 million for the year ended December 31, 2024 and seven properties, including six hotels and one free-standing parking garage, for a combined purchase price of $289.8 million for the year ended December 31, 2023.2024.

The Company records impairment losses on hotel properties used in operations if indicators of impairment are present, and the sum of the undiscounted cash flows estimated to be generated by the respective properties over their estimated remaining useful life, based on historical and industry data, is less than the properties’ carrying amount. Indicators of impairment include a property with current or potential losses from operations, when it becomes more likely than not that a property will be disposed of before the end of its previously estimated useful life or when events, trends, contingencies or changes in circumstances indicate that a triggering event has occurred and an asset’s carrying value may not be recoverable. The Company monitors its properties on an ongoing basis by analytically reviewing financial performance and considers each property individually for purposes of reviewing for indicators of impairment. As many indicators of impairment are subjective, such as general economic and market declines, the Company also prepares an annual recoverability analysis for each of its properties to assist with its evaluation of impairment indicators. The Company performs quarterly recoverability analyses by comparing each property’s net book value to its estimated operating income based on assumptions and estimates about the property’s future revenues, expenses and capital expenditures after disruptive events such as renovations or newly opened hotels in the same market. The Company’s planned initial hold period for each property is generally 39 years. If events or circumstances change, such as the Company’s intended hold period for a property or if the operating performance of a property declines substantially for an extended period of time, the Company’s carrying value for a particular property may not be recoverable, and an impairment loss will be recorded. Impairment losses are measured as the difference between the asset’s fair value and its carrying value. The Company’s ongoing analyses and annual recoverability analyses have identified impairment losses on two properties recorded in 2025, three properties recorded in 2024,2024 and two properties recorded in 2023 and two properties recorded in 2022 totaling approximately $3.1$5.7 million, $5.6$3.1 million and $26.2$5.6 million, respectively, as discussed in Note 3, titled “Assets Held for Sale and Dispositions” of the Consolidated Financial Statements and Notes thereto in Part II, Item 8, in this Annual Report on Form 10-K.

On January 17,20, 2025,2026, the Company declared a monthly cash distribution of $0.08 per common share. The distribution iswas payablepaid on February 18,17, 2025,2026, to shareholders of record as of January 31,30, 2025.2026.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).amended. Forward-looking statements are typically identified by use of statements that include phrases such as “may,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “target,” “goal,” “plan,” “should,” “will,” “predict,” “potential,” “outlook,” “strategy,” and similar expressions that convey the uncertainty of future events or outcomes. Such statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of Apple Hospitality REIT, Inc. and its wholly-owned subsidiaries (the “Company”) to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.

The Company is a Virginia corporation that has elected to be treated as a REIT for U.S. federal income tax purposes. The Company is self-advised and invests in income-producing real estate, primarily in the lodging sector, in the U.S. As of MarchJune 31,30, 2026, the Company owned 217216 hotels with an aggregate of 29,58329,459 guest rooms located in urban, high-end suburban and developing markets throughout 37 states and the District of Columbia, including one hotel with 124 guest rooms classified as held for sale, which was sold in April 2026.Columbia. Substantially all of the Company’s hotels operate under Marriott or Hilton brands. The hotels are operated and managed under separate management agreements with 15 hotel management companies, none of which are affiliated with the Company. The Company’s common shares are listed on the NYSE under the ticker symbol “APLE.”

The Company continually monitors market conditions and attempts to maximize shareholder value by investing in properties that it believes provide superior value over the long term. Consistent with this strategy and the Company’s focus on investing in rooms-focused hotels, as of MarchJune 31,30, 2026, the Company had one outstanding contract, which was entered into during the third quarter of 2025, for the potential purchase of a hotel in Anchorage, Alaska for an expected fixed purchase price of approximately $65.5 million. The hotel is under development as a 160-guest-room AC Hotel and is currently planned to be completed and opened for business in the fourth quarter of 2027. As of MarchJune 31,30, 2026, a $2.0 million contract deposit (refundable if the seller does not meet its obligations under the contract) had been paid. If the closing occurs, the Company plans to utilize its available cash or borrowings, including borrowings under its unsecured credit facilities available at closing, to purchase the hotel under contract. Although the Company is working towards acquiring this hotel, there are a number of conditions to closing that have not yet been satisfied, and there can be no assurance that closing on this hotel will occur under the outstanding purchase contract. If the seller meets all of the conditions to closing, the Company is obligated to specifically perform under the purchase contract and acquire this hotel. As this hotel is under development, at this time, the seller has not met all of the conditions to closing.

As of June 30, 2026, the Company had one outstanding development project. During the third quarter of 2025, the Company entered into a fixed-price contract with a third party to develop a dual-branded property, consisting of an AC Hotel and a Residence Inn, on Company-owned land in Las Vegas, Nevada, adjacent to its existing SpringHill Suites. The Company expects to spend a total of approximately $143.7 million to develop the hotels,AC Hotel and Residence Inn, which are currently planned to be completed and opened for business in the second quarter of 2028. Upon completion, the AC Hotel and Residence Inn are expected to contain approximately 237 and 160 guest rooms, respectively. As of June 30, 2026, the Company has capitalized $9.9 million related to the construction of the AC Hotel and Residence Inn.

For its existing portfolio, the Company monitors each property’s profitability, market conditions and capital requirements and attempts to maximize shareholder value by disposing of properties when it believes that superior value can be provided from the sale of the property. As a result, during the threesix months ended MarchJune 31,30, 2026, the Company enteredsold intoone ahotel purchase and sale agreement withto an unrelated party for the sale of one hotel for a gross sales price of approximately $8.7 million.million, Sinceresulting the buyer under the contract completed its due diligence and madein a non-refundable deposit, as of March 31, 2026, the Company classified this hotel as assets held for salegain on its consolidated balance sheet at its carrying value (which is less than the contract price, net of costs to sell). The Company completed the sale of approximately $0.2 million, net of transaction costs. The Company used the hotelnet inproceeds Aprilfrom 2026.the sale to repay amounts outstanding under the Revolving Credit Facility.

See Note 3 titled “Assets Held for Sale and Dispositions” and Note 10 titled “Contract Commitments” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, for additional information concerning these transactions.

As of MarchJune 31,30, 2026, the Company’s independent boutique hotel in New York, New York (the “New York Property”) was included in the Company’s hotel and guest room counts. On April 4, 2025, the Company recovered possession of this property and reinstated operations of the hotel's 209 guest rooms through a third-party manager engaged by the Company. Therefore, starting in April 2025, the New York Property was included in the Company’s hotel and guest room counts. From May 2023 through March 2025, the Company classified the property as a “non-hotel property” and excluded it from hotel and guest room counts, as it was leased to a third-party hotel operator. Following the third-party hotel operator's failure to make lease payments, the Company commenced legal proceedings in 2024 to remove the third-party hotel operator from possession of the property. In April 2025, the Company and the third-party hotel operator entered into an agreement to mutually release all claims, to terminate the lease and for the third-party hotel operator to voluntarily surrender possession of the property back to the Company.

As of MarchJune 31,30, 2026, the Company owned 217216 hotels, including one hotel classified as held for sale,hotels with a total of 29,58329,459 guest rooms as compared to 219221 hotels with a total of 29,55829,893 guest rooms as of MarchJune 31,30, 2025. Results of operations are included only for the period of ownership for hotels acquired or disposed of during the current reporting period and the prior year. During the threesix months ended MarchJune 31,30, 2026, the Company did not acquire or dispose of any properties.properties and sold one property on April 15, 2026. During the threesix months ended MarchJune 31,30, 2025, the Company didacquired notone acquireexisting anyhotel properties,on butJune 10, 2025, and sold two properties, including one property sold on February 12, 2025 and one property sold on March 19, 2025. On April 4, 2025, the Company recovered possession from a third-party hotel operator and reinstated operations of its 209-guest-room New York Property through a third-party manager engaged by the Company.

The Company continually evaluates the performance of each property and may transfer management responsibilities to a different third-party manager to improve operational efficiency and maximize asset value. In markets or regions where the Company owns multiple properties, it may consolidate hotels under specific third-party managers to leverage regional expertise, gain operating efficiencies, and enhance overall portfolio performance. DuringIn the three months ended March 31,January 2026, the Company transitioned the remaining nine hotels managed by affiliates of Marriott, as of December 31, 2025, to separate management companies that are not affiliated with Marriott, Hilton or Hyatt. In 2025, the Company transitioned the management responsibilities for nine other hotels to different third-party management companies with which it already had existing management agreements for other properties, a portion of which involved transitions from hotels previously managed by affiliates of Marriott to management companies unaffiliated with Marriott, Hilton, or Hyatt.

In evaluating financial condition and operating performance, the most important indicators on which the Company focuses are revenue measurements, such as average occupancy, average daily rate (“ADR”) and revenue per available room (“RevPAR”), and expenses, such as hotel operating expenses, general and administrative expenses and other expenses described below. RevPAR and operating results may be impacted by regional and local economies and local regulations as well as changes in lodging demand due to macroeconomic factors including inflationary or deflationary pressures, higherchanges in energy pricescosts, economic expansion or a recessionary environment.

The following table reflects certain operating statistics for the Company’s 216 hotels owned and held for use as of MarchJune 31,30, 2026 (“Comparable Hotels”). The Company defines metrics from Comparable Hotels as results generated by the 216 hotels owned and held for use as of the end of the reporting period. For the hotels acquired during the reporting periods shown, the Company has included, as applicable, results of those hotels for periods prior to the Company’s ownership using information provided by the properties’ prior owners at the time of acquisition and not adjusted by the Company. For dispositions and assets held for sale,dispositions, results have been excluded for the Company’s period of ownership.

The following table reflects certain operating statistics for the 213 hotels owned and held for use by the Company as of January 1, 2025 and during the entirety of the reporting periods being compared, excluding the New York Property (“Same Store Hotels”).

As discussed above, hotel performance is impacted by many factors, including the economic conditions in the U.S. as well as each individual locality. The Company’s Comparable Hotels and Same Store Hotels revenue and operating results increased modestly for the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025, reflecting broad-based improvement in both business and leisure travel demand beyond the impact of prior-year headwinds, including reduced government travel following the current administration's efforts to curtail government spending and broader U.S. macroeconomic uncertainty in 2025. Additionally, the 2026 FIFA World Cup events hosted in the U.S. drove incremental short-term demand and average daily rates across a number of markets during the month of June. The Company expects RevPAR to improvecontinue seasonallyto overshow improvement as compared to 2025 for the remainder of the year. Prior expectations were for full-year 2026 RevPAR to be in line with 2025, consistent with broader industry chain-scale outlooks; however, basedBased on performance through the firstsecond quarter, the Company currently expects full-year 2026 RevPAR to modestly exceed 2025 levels, assuming no material changes in the macroeconomic environment.

The Company’s principal source of revenue is hotel revenue consisting of room, food and beverage, and other related revenue. For the three months ended MarchJune 31,30, 2026 and 2025, the Company had total revenue of $337.7$402.6 million and $327.7$384.4 million, respectively. For the six months ended June 30, 2026 and 2025, the Company had total revenue of $740.3 million and $712.1 million, respectively. For the three months ended MarchJune 31,30, 2026 and 2025, respectively, Comparable Hotels achieved combined average occupancy of 72.8%80.1% and 71.3%,78.8%, ADR of $157.35$169.90 and $157.26,$164.19 and RevPAR of $114.61$136.17 and $112.14.$129.30. For the six months ended June 30, 2026 and 2025, respectively, Comparable Hotels achieved combined average occupancy of 76.5% and 75.1%, ADR of $163.96 and $160.93 and RevPAR of $125.45 and $120.80. ADR is calculated as room revenue divided by the number of rooms sold, and RevPAR is calculated as occupancy multiplied by ADR.

Compared to the same periodperiods in 2025, during the three and six months ended MarchJune 31,30, 2026, respectively, the Company’s Comparable Hotels ADR generallyincreased remainedby unchanged3.5% and 1.9%, while occupancy increased by 2.1%1.6% and 1.9%, resulting in an increase in Comparable Hotels RevPAR of 2.2%.5.3% and 3.8%. Revenue increased for the three and six months ended MarchJune 31,30, 2026 compared to the same periodperiods in 2025, reflecting improved demand beyond the impact of prior-year headwinds, including reduced government travel and broader U.S. macroeconomic uncertainty in the first quarter of 2025 following the current administration’s efforts to curtail government spending.spending and broader U.S. macroeconomic uncertainty in 2025. Revenue growth for the second quarter of 2026 was further driven by increased demand in markets that hosted FIFA World Cup events, as well as broad-based RevPAR improvement across the portfolio, including markets outside those hosting FIFA World Cup events, reflecting growth in both business and leisure travel demand. Markets with significantly above-average growth in the firstsecond quarter of 2026, compared to the same period in 2025, for the Company included Atlanta, Anchorage, Chicago, Fort Lauderdale,Worth, LasHouston, Vegas,Kansas Madison,City, Miami,Philadelphia, OklahomaSouth CityBend and Seattle.St. Louis. For the remainder of 2026, the Company expects RevPAR to beexceed similar2025 levels for its Comparable Hotels as compared to 2025,Hotels, which is consistent with broader expectations for applicable industry chain scale averages assuming the current macroeconomic environment continues. Future revenues could be negatively impacted by, among other things, historical seasonal trends, deterioration of consumer sentiment, a recessionary macroeconomic environment, inflationary pressures, a continuation of reduced government travel or continued geopolitical uncertainty.

Hotel operating expense consists of direct room operating expense, hotel administrative expense, sales and marketing expense, utilities expense, repair and maintenance expense, franchise fees and management fees. ForHotel operating expense for the three months ended MarchJune 31,30, 2026 and 2025 totaled $227.6 million and $220.6 million, respectively, or 56.5% and 57.4% of total revenue for the respective periods. For the six months ended June 30, 2026 and 2025, hotel operating expense totaled $206.9$434.5 million and $199.9$420.4 million, respectively, or 61.3%58.7% and 61.0%59.0% of total revenue for the respective periods. The increaseincreases in hotel operating expense for the three and six months ended MarchJune 31,30, 2026, as compared to the same periodperiods in 2025, waswere primarily driven by higher occupancy levels, which resulted in increased variable operating expenses, including labor, utilitieslabor and administrative costs. WhileUtilities theseexpense costsincreased naturally increase with improved operating performance, such expenses have been well controlled by the Company relativedue to thea additionalcombination occupancy-drivenof activity.increased occupancy and increases in overall utility rates. Additionally, ongoing inflationary pressures across the broader economy contributed to the increase in operational costs for the period. While total payroll costs remain elevated due toreflect a competitive labor market, wage growth has moderated, and management companies have continued to reduce their use of contract labor.moderated. For the remainder of 2026, the Company anticipates a similar operating expense environment. The Company continues to monitor and support its management companies’ efforts to realize operational efficiencies and mitigate the impact of various cost pressures resultingwhile fromresponding inflation and a tight labor market. The Company will continueeffectively to support its management companies to implement adjustments to the hotel operating model in response to continued changes in guest preferences and the overall operating environment and guest preferences, including their efforts to maximize operational efficiency.

Property taxes, insurance and other expense for the three months ended MarchJune 31,30, 2026 and 2025 totaledwas $22.5$21.8 million and $23.4$22.9 million, respectively, or 6.6%5.4% and 7.1%5.9% of total revenue for the respective periods. For the six months ended June 30, 2026 and 2025, property taxes, insurance and other expense totaled $44.3 million and $46.2 million, respectively, or 6.0% and 6.5% of total revenue for the respective periods. The decreasedecreases in property taxes, insurance and other expense for the three and six months ended MarchJune 31,30, 2026, as compared to the same periodperiods in 2025, waswere primarily due to decreases in property insurance premiums and successful appeals of real estate tax assessments from prior periods in certain jurisdictions. The Company will continue to proactively pursue tax assessment appeals in certain jurisdictions in an attempt to minimize tax increases, as warranted.

General and administrative expense for the three months ended MarchJune 31,30, 2026 and 2025 was $10.8$13.2 million and $9.2$8.1 million, respectively, or 3.3% and 2.1% of total revenue for the respective periods. For the six months ended June 30, 2026 and 2025, general and administrative expense was $24.0 million and $17.3 million, respectively, or 3.2% and 2.8%2.4% of total revenue for the respective periods. The principal components of general and administrative expense are corporate payroll and related benefit costs, executive incentive compensation, legal fees, accounting fees and reporting expenses. The increaseincreases in general and administrative expense for the three and six months ended MarchJune 31,30, 2026, as compared to the same periodperiods in 2025, waswere primarily due to increased accruals forbased on anticipated operating performance under the Company’s executive incentive compensation plan.

Depreciation and amortization expense for the three months ended MarchJune 31,30, 2026 and 2025 was $49.5$49.7 million and $47.9$48.0 million, respectively. For the six months ended June 30, 2026 and 2025, depreciation and amortization expense was $99.2 million and $96.0 million, respectively. Depreciation and amortization expense primarily represents expense of the Company’s hotel buildings and related improvements, and associated personal property (furniture, fixtures, and equipment) for the respective periods owned.of Forownership. theThe threeincreases months ended March 31, 2026, depreciation and amortization expense slightly increased byof approximately $1.6 million and $3.2 million for the three and six months ended June 30, 2026, respectively, as compared to the same periodperiods in 2025, were primarily due to the acquisitions of two hotels in the second and fourth quarters of 2025, which had higher purchase prices compared to the carrying values of the seveneight hotels disposed of in 2025,2025 and 2026, as well as renovations completed throughout 2025 and the first quarterhalf of 2026.

Interest and other expense, net, for the three months ended MarchJune 31,30, 2026 and 2025 was $20.1$20.8 million and $19.4$21.0 million, respectively. InterestFor the six months ended June 30, 2026 and 2025, interest and other expense, net,net forwas the$40.9 three months ended March 31, 2026million and 2025$40.4 ismillion, respectively, and was net of approximately $0.9 million and $0.8 million, in each respective period,respectively, of interest capitalized associated with renovation projects.

Interest expense related to the Company’s debt instruments for the three and six months ended MarchJune 31,30, 2026 increasedremained slightlyrelatively unchanged compared to the same periodperiods of 2025 as a result of higher average borrowings associated with variable-rate debt, partially offset by lower average interest rates on the Company's fixed and variable-rate debt and lower average borrowings associated with fixed-rate debt. The Company anticipates interest expense for the remainder of 2026 will be relatively similar to the interest expense for the same period of 2025 as athe resultbenefit of increased borrowings being offset byexpected lower average interest rates.rates is offset by a reduced benefit from interest rate swaps. The proportion of variable-rate debt that is fixed by interest rate swaps was lower over the threesix months ended MarchJune 31,30, 2026 compared to the same period of 2025, as the Company had one interest rate swap in effect on $75.0 million of variable-rate debt mature during the first half of 2026 and three interest rate swaps in effect on $150.0 million of variable-rate debt mature during 2025. However, this was partially offset as the Company entered into two new interest rate swaps in effect on $100.0 million of variable-rate debt during the third quarter of 2025, but at higher fixed rates than the swap agreements that expired. If the Company continues to replace expiring interest rate swaps in the current interest rate environment with new agreements, the Company anticipates those new agreements to be at higher rates than the expiring swap agreements.

The following table reconciles the Company’s GAAP net income to FFO and MFFO for the three and six months ended MarchJune 31,30, 2026 and 2025 (in thousands):

The Company further excludes corporate expense, defined as actual corporate-level general and administrative expense, excluding share-based compensation expense, for the Company as well as Adjusted EBITDAre from the non-hotel property (the New York Property) from Adjusted EBITDAre (Adjusted Hotel EBITDA) to isolate property-level operational performance over which the Company’s hotel operators have direct control. The Company believes Adjusted Hotel EBITDA provides useful supplemental information to investors regarding operating performance and it is used by management to measure the performance of the Company’s hotels and the effectiveness of the operators of the hotels. In addition, Adjusted EBITDAre and Adjusted Hotel EBITDA are both components of key compensation measures of operational performance within the 2026 Incentive Plan.

The following table reconciles the Company’s GAAP net income to EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted Hotel EBITDA for the three and six months ended MarchJune 31,30, 2026 and 2025 (in thousands):

As of MarchJune 31,30, 2026, the Company owned 217216 hotels with an aggregate of 29,58329,459 guest rooms located in 37 states and the District of Columbia, including one hotel with 124 guest rooms classified as held for sale which was sold in April 2026.Columbia. The following tables summarize the number of hotels and guest rooms by brand and by state:

The following table summarizes the location, brand, manager, date acquired or completed and number of guest rooms for each of the 217216 hotels that the Company owned as of MarchJune 31,30, 2026. As noted below, as of MarchJune 31,30, 2026, 14 of the Company’s properties are subject to ground leases and 10nine of its hotels are encumbered by mortgage debt.

As of MarchJune 31,30, 2026, the Company had $1.6$1.5 billion of total outstanding debt consisting of $182.7$161.7 million of mortgage debt and $1.4$1.3 billion outstanding under its unsecured credit facilities, excluding unamortized debt issuance costs. As of MarchJune 31,30, 2026, the Company had available corporate cash on hand of approximately $7.8$10.2 million, and unused borrowing capacity under its Revolving Credit Facility of approximately $558.8$602.0 million after taking into account aoutstanding $2.1 million letterletters of credit.credit of approximately $2.0 million.

The credit agreements governing the unsecured credit facilities contain customary affirmative and negative covenants and events of default. TheAs of June 30, 2026, the covenants include,included, among others, a minimum tangible net worth, maximum debt limits, minimum interest and fixed charge coverage ratios, and restrictions on certain investments. The Company was in compliance with the applicable covenants as of MarchJune 31,30, 2026.

See Note 4, titled “Debt” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, for details regarding the Company’s debt agreements as of MarchJune 31,30, 2026.2026 and amendments to those agreements subsequent to that date.

On February 23, 2024, the Company entered into an equity distribution agreement pursuant to which the Company may sell, from time to time, up to an aggregate of $500 million of its common shares under the ATM Program. No common shares were sold under the Company’s ATM Program during the three and six months ended MarchJune 31,30, 2026 or during the year ended December 31, 2025. As of MarchJune 31,30, 2026, $500 million remained available for issuance under the ATM Program. The Company plans to use future net proceeds from the sale of shares under the ATM Program, or under a similar successor program, for general corporate purposes, which may include, among other things, acquisitions of additional properties, the repayment of outstanding indebtedness, capital expenditures, improvement of properties in its portfolio and working capital. The Company may also use the future net proceeds to acquire another REIT or other company that invests in income-producing properties. Future offerings will depend on a variety of factors to be determined by the Company, including market conditions, the trading price of the Company’s common shares and opportunities for uses of any proceeds.

The Company generally must distribute annually at least 90% of its REIT taxable income, subject to certain adjustments and excluding any net capital gain, in order to maintain its REIT status. On MarchJune 19,18, 2026, the Company declared a monthly cash distribution of $0.08 per common share, paid on AprilJuly 15, 2026, to shareholders of record as of MarchJune 31,30, 2026. For the three and six months ended MarchJune 31,30, 2026, the Company paid distributions of $0.24 and $0.48 per common shareshare, respectively, for a total of $56.6 million.million and $113.2 million, respectively. Subsequent to quarter end, on AprilJuly 20,17, 2026, the Company declared a monthly cash distribution of $0.08 per common share, payable on MayAugust 15,17, 2026, to shareholders of record as of AprilJuly 30,31, 2026.

In May 2025,2026, the Company’s Board of Directors approved a one-year extension of its existing Share Repurchase Program, authorizing share repurchases up to an aggregate of $262.6$242.5 million. The Share Repurchase Program may be suspended or terminated at any time by the Company and will end in July 20262027 if not terminated or extended earlier. The Company previously entered into, and expects to continue to enter into, written trading plans as part of the Share Repurchase Program that provide for share repurchases in open market transactions that are intended to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).Act. The Company did not repurchase any common shares under the Share Repurchase Program during the three and six months ended MarchJune 31,30, 2026. During the threesix months ended MarchJune 31,30, 2025, the Company purchased, under its Share Repurchase Program, approximately 1.93.4 million of its common shares at a weighted-average market purchase price of approximately $13.61$12.83 per common share for an aggregate purchase price, including commissions, of approximately $26.3$43.2 million. PurchasesPast purchases under the Share Repurchase Program have been funded, and the Company intends to fund future share repurchases,repurchases with cash on hand, proceeds from dispositions or availability under its unsecured credit facilities, subject to applicable restrictions under the Company’s unsecured credit facilities (if any). The timing of share repurchases and the number of common shares to be purchased under the Share Repurchase Program will also depend upon prevailing market conditions, regulatory requirements and other factors. As of MarchJune 31,30, 2026, approximately $242.5 million remained available for purchase under the Share Repurchase Program.

Management routinely monitors the condition and operations of its hotels and plans renovations and other improvements as it deems prudent. The Company is committed to maintaining and enhancing each property’s competitive position in its market. The Company has invested in and plans to continue to reinvest in its hotels. Under certain loan agreements, the Company is required to place in escrow funds for the repair, replacement and refurbishment of furniture, fixtures, and equipment at the applicable hotels, based on a percentage of the hotel’s gross revenues, provided that such amount mayto be used for the Company’s capital expenditures with respect to those hotels. As of MarchJune 31,30, 2026, the Company held approximately $8.8$5.3 million in reserves related to these properties. During the threesix months ended MarchJune 31,30, 2026, the Company invested approximately $27.5$39.8 million in capital expenditures. The Company anticipates spending approximately $80$85 million to $90$95 million during 2026, which includes various comprehensive renovation projects for approximately 2118 properties,properties. however,The increase of $5.0 million from the Company’s previous estimate and the change in the number of comprehensive renovation projects are primarily a result of prioritizing two larger projects: the renovation of its Embassy Suites in Anchorage, Alaska and the rebranding of the Residence Inn in Seattle, Washington. The Company’s expectations reflect its ongoing prioritization and management of its overall capital spending to keep its hotels competitive, while weighing larger investments toward the highest return opportunities. Estimates of future capital expenditures are subject to change, and inflationary pressures, supply chain shortagesdisruptions, tariffs, or tariffs, among other issues,factors maycould result in increasedadditional costscost andincreases or delays forto anticipated projects.

As of June 30, 2026, the Company had one outstanding development project. During the third quarter of 2025, the Company entered into a fixed-price contract with a third party to develop a dual-branded propertyproperty, whichconsisting will includeof an AC Hotel and a Residence InnInn, on Company-owned land in Las Vegas, Nevada on land the Company owns that isNevada, adjacent to its existing SpringHill Suites. The Company expects to spend a total of approximately $143.7 million to develop the hotels,AC Hotel and Residence Inn, which are currently planned to be completed and opened for business in the second quarter of 2028. As of June 30, 2026, the Company has capitalized $9.9 million related to the construction of the AC Hotel and Residence Inn.

As of MarchJune 31,30, 2026, the Company had approximately $359.7$292.6 million of principal and interest payments due on its debt over the next 12 months. IncludedThis inamount thisincludes totalpayments istotaling $51.3 million on a $19.5loan millionsecured mortgage that matures in the second quarter of 2026, a $51.0 million mortgage coveringby three properties that matures in the fourth quarter of 2026, anas $89.1well as $46.0 million outstanding under the Revolving Credit FacilityFacility, balancewhich atwas Marchscheduled 31,to mature on July 25, 2026, but was amended and restated on July 23, 2026, extending the maturity date to July 24, 2030. Also included in the total above is a $130.0 million unsecured term loan,loan bothwhich was scheduled to mature on July 25, 2026, but was amended and restated on July 24, 2026, to increase the amount of whichthe matureterm inloan facility to $160 million and to extend the thirdmaturity quarterdate ofto 2026.July 24, 2033. The Company plans to pay outstanding amounts and service payments due upon the upcoming debt maturity dates using one or a combination of any of the following: funds from operations, borrowings under its Revolving Credit Facility, proceeds from new financing, available credit extensions under its unsecured credit facilities or by refinancing the maturing debt. The Company may also pursue amendments with its lenders to extend the maturity date of any expiring loans. Both the $130 million term loan facility and the Revolving Credit Facility mature on July 25, 2026, but they can be extended up to one year, subject to certain conditions including covenant compliance and payment of additional fees. The Company presently has the ability to exercise both of these extensions; however, it plans to pursue refinancing of the maturing debt.

Interest expense related to the Company’s unsecured credit facilities over the next 12 months is expected to be similar to the previous 12 months, with similarcomparable borrowings and slightly lower average interest rates. The average proportion of variable-rate debt that is fixed by interest rate swaps is expected to be lower over the next 12 months compared to the threesix months ended MarchJune 31,30, 2026. The Company hashad twoone interest rate swapsswap in effect on $200.0$75.0 million of variable-rate debt mature in the second quarter of 2026 and has one interest rate swap in effect on $125.0 million of variable-rate debt that will mature in the second half of 2026. If the Company replaces expiring interest rate swaps in the current interest rate environment with new agreements, the Company anticipates those new agreements to generally be at higher rates than the expiring swap agreements. See Note 4 titled “Debt” and Note 5 titled “Fair Value of Financial Instruments” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q for more detail regarding future maturities of the Company’s debt instruments and interest rate swap agreements as of MarchJune 31,30, 2026.

As of MarchJune 31,30, 2026, the Company had one outstanding contract, which was entered into during the third quarter of 2025, for the potential purchase of a hotel in Anchorage, Alaska for an expected fixed purchase price of approximately $65.5 million. The hotel is under development as a 160-guest-room AC Hotel and is currently planned to be completed and opened for business in the fourth quarter of 2027. As of MarchJune 31,30, 2026, a $2.0 million contract deposit (refundable if the seller does not meet its obligations under the contract) had been paid. If the closing occurs, the Company plans to utilize its available cash or borrowings, including borrowings under its unsecured credit facilities available at closing, to purchase the hotel under contract. Although the Company is working towards acquiring this hotel, there are a number of conditions to closing that have not yet been satisfied, and there can be no assurance that closing on this hotel will occur under the outstanding purchase contract. If the seller meets all of the conditions to closing, the Company is obligated to specifically perform under the purchase contract and acquire this hotel. As this hotel is under development, at this time, the seller has not met all of the conditions to closing.

On AprilJuly 15, 2026, the Company paid approximately $18.9 million, or $0.08 per common share, in distributions to shareholders of record as of MarchJune 31,30, 2026.

On AprilJuly 20,17, 2026, the Company declared a monthly cash distribution of $0.08 per common share. The distribution is payable on MayAugust 15,17, 2026, to shareholders of record as of AprilJuly 30,31, 2026.